North West Consolidated Beef Producers - All for one and one for all!

North West Consolidated Beef Producers - All for one and one for all!
by Bonnie Warnyca - 2, 2009

Although the North West Consolidated Beef Producers (NWCBP) promote themselves as a not for profit organization, their goal is exactly the opposite. By amassing and target marketing more groups of feeder cattle, they believe it will not only make feedlots more profitable, but will, in turn, create a brighter economic picture for the cow/calf producer. So far, the fed cattle membership at least, seems to be penciling out a premium over market price.

Introduced into the Canadian fed cattle marketplace just two years ago, the NWCBP membership has grown from a baker's dozen to 111, with a one time capacity of 350,000 head. On average, they have managed to achieve almost $19 over market price for their membership, selling roughly 125,000 finished cattle in each year. Nothing to sneeze at when you consider they've shaken up such an age old tradition of commodity marketeering.

Closely mirrored after the American's Consolidated Beef Producers program, but an individual entity, they are still in close collaboration with their mentor. A quick history lesson about CBP reveals that it was created by a group of cattle feeders down in the Texas Panhandle, where roughly 80 to 85% of the cattle were a captive supply, who wanted to get to some price discovery. Since the creation of CBP in 2000, those numbers have dropped significantly to around 60 to 65%.

"We talk with our American counterpart's daily sharing market information," says NWCBP field man, Keith Robertson from the Canadian office located at Strathmore. "We have scheduled conference calls as well but we are totally a stand alone company. We lease their software program which tracks all the animals and sales and then runs our invoices after the animals are sold. We are paid on a per head basis, after the sale is complete and the animals transported. The seller is paid directly from the packer or buyer."

By Monday noon each week, the Show List, or the number of finished cattle available, along with weights and descriptions are sent to the North American packers. Price negotiations can run the entire week up until Friday when the deals are done. "We have four field reps which check each and every one of the pens to be sold," offers Robertson. "This particular week we have 3,600 head on offer which represents 14 different members in Alberta and Saskatchewan. Between the four field men, we visit each feedlot and make sure the groupings are uniform and write a description of each lot, which helps the packer determine where the cattle fit. The not so secret reason for our success is being able to market the right cattle, at the right time, into the right program."

Market volatility has brought its share of challenges
Even with packaging fed cattle loads, this group has not been immune to the downturn in the market and the world-wide economic woes. "Normally, when the Canadian dollar drops, cattle prices should increase," Robertson reminds us. "It hasn't happened. But, we can consistently give our members higher than market returns, and we do that by volume marketing."

NWCBP has seen a shift in their sales from year one to year two. Year one, roughly 20% of their inventory sold south, and last year, only 6% headed south leaving the balance sold into the domestic market. With the COOL legislation affecting the number of Canadian cattle to be fed in the U.S., for the time being, this company is unsure of how things will shake out in 2009. "Last year," says Robertson, "when we did our pre annual forecasts, we thought we'd have more cattle to sell, but more cattle went south to be fed because of the lower feed costs. I think we'll have more cattle on feed up here this year and we'll have more to sell in our program. We recognize that our members don't sell all their fed numbers through NWCBP, as each year brings its own set of challenges and our membership are seasoned marketers and take advantage of market options."

In 2008, NWCBP added cows and bulls to their roster allowing members to market them through the program for a flat fee of $10 per head. They sold 4,000 cows, but don't expect to bring those numbers up in any one year. The Canadian cow herd numbers dropped a whopping 900,000 and the lesser number of calves available to enter the system will obviously impact this year's marketing plan.

Although NWCBP has achieved marked success selling into branded programs, Robertson believes that the old Musketeer motto of, "All for one and one for all," is the only thing that will give Canadian cattle solid footing in the international marketplace. "We have to have ONE Canadian branded beef product to take to the international marketplace," suggests Robertson. "So many different groups are trying to out hustle each other for export customers, but I believe that if we pool all the programs, expertise and money behind the Canadian logo we will achieve more success industry wide. We've got customers frequently asking for age verified beef. If the majority of Canadian cattle become age verified, we would lose that premium, but, as we do more and more things that set our beef apart, we will finally be able to stabilize the Canadian livestock industry." (According to statistics from the Canadian Cattle Identification Agency, in 2008, there were a total of 1,386,788 beef birthdates registered in Alberta with only 217,416 in Saskatchewan. That brings Alberta's total to 3,227,166 or 61.27% with a total of 974,724 or 18.50% in Saskatchewan)

"There has been too much duplication," he continues. "Having so many different agencies and brands just confuses our customers."

Speaking of setting ourselves apart, Robertson thinks that by going back to feeding all fed cattle Vitamin E, we may win the COOL wars by having a beef product with longer shelf life. He says that in an American grocery meat case with U.S. branded and Canadian branded products sitting side by side and priced the same, a later expiration date, may give the consumer a reason to choose Canadian beef.

What would happen to branded programs such as, "If it ain't Alberta, it ain't beef", or Sterling Silver, Angus beef etc.?" <>/B>
"Again," says Robertson, "Let's get our Canadian industry on stronger footing and these types of programs will rise to the top by filling specific customer preferences." On the bright side, Robertson and his colleagues are somewhat encouraged by the recent comments from the new American administration, citing Canada as an important ally, friend and their biggest trading partner. A public message unheard of in recent years. Will they exclude our livestock industry while trying to get our water and energy? Let's hope not.

There's a small, but mighty group of field men that work for NWCBP. Keith Robertson comes with a feedlot background, ten years as a market analyst with Can Fax, and 3 1/2 years as the Executive Director of the Manitoba Cattle Producers Association. Vern Lonsberry was a negotiator for Western Feedlots at High River for 25 years; Will Low, responsible for both Saskatchewan and Manitoba members, spent eight years as a buyer for Cargill and Wade Pearson also worked for Western for 15 years.

When asked about future company growth, Robertson replied that the membership numbers are always increasing and he threw us a tidbit just before hanging up the phone. "We've often been asked whether we would ever market feeder calves," he says. "We haven't said we wouldn't."