USPB rewards producers for quality
AMES – While a job well done may be its own reward, U.S. Premium Beef believes producers who raise high-quality cattle should also command a financial incentive.
USPB’s average grid premium hit a record high of $30.95 per head in 2009, and Iowa producers have fared well in this system.
“USPB is designed to reward the kind of beef that consumers want and will pay for,” said Steve Hunt, chief executive officer of USPB, who spoke at the Iowa Cattlemen’s Association annual meeting in Ames on Jan. 5. “In Iowa, we’re proud to work with 184 members in 55 counties, and it’s noteworthy that the top 25 percent received premiums of $47 per head after freight.”
Headquartered in Kansas City, Mo., USPB is a vertically integrated beef marketing company owned by beef producers in 36 states. Since the mid 1990s, USPB has offered producers the opportunity to own the cattle they raise on their farms, ranches and feedlots, all the way through value-added processing.
USPB owns National Beef Packing Company LLC, the nation’s fourth largest beef processing company. National Beef has three beef processing plants located in Liberal and Dodge City, Kan., and Brawley, Calif.
Producers from all segments of the U.S. beef industry, including purebred and commercial cow-calf producers, backgrounders, farmer-feeders and commercial cattle feeders, are stockholders in the company. These producers are paid on individual animal values based on quality. Producers also receive individual animal carcass data to help them improve the quality of the beef they produce.
Since beginning operations in 1997, USPB stockholders and associates have realized more than $140 million in dividends and cash distributions based on the earnings of the value-added processing company they own.
“Cattle producers have had a love-hate relationship with packers for years, but USPB’s business model is different from all the rest, because it involves producers from the start,” said Kent Pruismann, a cattle producer from Rock Valley, who serves as ICA president.
Pursuing new ventures
USPB began marketing its members’ cattle on Dec. 1, 1997, selling more than 8,000 head of cattle per week by 1998. Since then, the company has marketed approximately 13,000 head of cattle per week. Continuous growth has defined USPB’s history, said Hunt, who noted that the company’s net sales rose from $4.1 billion in 2004 to $5.4 billion in 2009.
USPB cattle supply the beef for a number of branded products, including Black Canyon Premium Reserve, Certified Premium Beef, Black Canyon Angus Beef and Naturewell Natural Beef, NatureSource Natural Beef, Vintage Natural Beef, Certified Angus Beef, Certified Angus Beef Prime and Certified Hereford Beef.
“Walmart has been a great partner for us in the case-ready beef market,” said Hunt, who added that high-quality beef produced from the National Beef Packing Company is also being marketed direct to consumers through the Kansas City Steak Company, a mail order company.
USPB continues to look for new business ventures that fit with the company’s core competencies and add value for producers.
In 2009, the company purchased a wet, blue tannery in St. Joseph, Mo. “We’re now developing business relationships with car companies and other firms that want high-end leather products,” Hunt said.
Exports also offer new opportunities. While 20 percent of the world’s beef production occurs in the United States, Hunt noted that 95 percent of the world’s 6.7 billion people live outside the U.S.
A growing middle class around the globe is driving the demand for more protein, he said. China, which has 1.3 billion people, has seen a 30 percent increase in per-capita beef consumption since 2001. “Our future will rest on our ability to get into these foreign markets,” Hunt said.
USPB continues to accept new producers who want to earn premiums for producing better quality beef. Although USPB conducted a stock offering that ended in 1998, new producers wanting to market their cattle through USPB have been able to do so by leasing and/or buying delivery rights or units from existing stockholders.
All producers who market their cattle through USPB must become associates of the company, and this costs $100 for a lifetime membership.
Producers who lease USPB delivery rights to market their cattle through the company receive all of the benefits of the program, including the right to be paid on USPB’s quality-based grid, the ability to receive individual animal carcass data at no additional cost and a transportation credit that defers trucking costs on approximately 110 miles.
For more information on USPB, log onto www.uspremiumbeef.com.
You can contact Darcy Dougherty Maulsby by e-mail at email@example.com.
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