Northern America Beef Supply Chain Study Tour – Part 2

Welcome back for part two of this series where we delve into the Northern America commercial Angus cattle industry.

In part one we covered a brief background on some of the ranchers, feedyards and processors visited in US and Canada.

Part two covers the ins-and-outs of the American Angus Association’s commercial programs and it’s Certified Angus Beef brand.

American Angus Association

At the American Angus Association (AAA) head office in St Joseph, Missouri, I was enthusiastically greeted by the AAA team.

As in Canada, the key programs of interest at AAA were their commercial verification and marketing programs.

AngusLink is a suite of value-added programs for commercial producers where different USDA Process Verified Programs (PVP) are validated for a supporting claim when selling cattle.

These PVPs include Age & Source, HGP Free, Calf Management, Cattle Care, NeverEver3 (no antibiotics or HGPs, and no animal by-products fed), Good Agricultural Practises and the US version of Angus Verified. Any cattle that have these verifications are essentially called ‘Program Cattle’ and bring premiums in different marketplaces.

In 2021, AngusLink cattle earned an average premium of $0.43 AUD/kg liveweight, increasing from a $0.34 AUD/kg liveweight premium in 2020. Similar to the Canadian market, Angus Verified cattle in the US have a minimum Angus breed content of 50% and must be sired by a registered Angus bull.

AngusLink includes a Genetic Merit Scorecard (GM Scorecard). The GM Scorecard, with associated electronic ID (EID) tags, gives ranchers the ability to effectively communicate the genetic merit of their cattle to potential buyers, differentiate their cattle from others on sale day, and have electronic identification to maintain their verification status.

The GM scorecard also serves as a platform for the rancher to track genetic progress to ensure next year’s calf crop is better than the last.

Targeting the Brand

An extension from AngusLink is the ‘Targeting the Brand’ marketing program that identifies high performing registered Angus bulls and Angus Verified cattle.

The Targeting the Brand logo is used for marketing purposes in bull sale catalogues and online commercial cattle sales. Its use requires compliance to the following criteria:

1. Registered Angus bulls with above average Marbling and Feeder Index.
2. Angus Verified cattle with a GM Scorecard Grid Score of 125 or great.

It’s interesting to note that only 25% of Angus bulls in the US meet this requirement.

Targeting the Brand helps commercial bull buying customers easily find bulls with added carcass value and brings premiums for bulls that achieve this status.

Similarly, commercial Angus Verified cattle gain market premiums based on expected superior carcass performance.

Joe Goggins of Vermilion Ranch and Northern Livestock Video Auctions in Billings, Montana said the AngusLink program is a major component of online video sales and is seen as the base standard for Angus cattle.

“Angus is the base price in the US and there are only discounts for everything else,” said Joe.

Joe also observed that for AngusLink to continue its success, it needed to be directly linked to Certified Angus Beef premiums and promoted by seedstock breeders to highlight superior performing bulls.

This sentiment was echoed by Art (new appointed Board member of AAA) and Stacy Butler from Spring Cove Ranch Angus in Bliss, Idaho who believed enrolling cattle in Angus Verified with the GM Scorecard was the best solution for commercial producers to have that competitive edge, along with the associated EIDs that the major four processors, JBS Cargill, Tyson Foods and National Beef all preferred.

Rancher Neil Helmick near Boise, Idaho said that AngusLink had opened markets for their operation with processors coming directly to them to purchase cattle, receiving a $0.85 AUD/kg premium in 2021.

Morgan Ranches Dave and Ann Rutan, located at Rome, Oregon and Jordan Valley, Idaho have enrolled cattle in AngusLink since 2008 and sold over 10,000 calves through the program.

Dave commented that they didn’t get much benefit initially when the program was new, however over time and as acceptability for AngusLink has grown in the market, they are enjoying reputation and premiums for their ‘program cattle’.

“AngusLink cattle bring a premium over Angus anything else,” said Dave.

Feedlot Manager, Casey Cobb of Dalhart Cattle Feeders in Texas believes that AngusLink provides great traceability for their business, and this is highlighted by the use of EID tags, which are not mandatory in the US, unlike in Australia with NLIS.

Certified Angus Beef

Certified Angus Beef (CAB), located in Wooster, Ohio is a subsidiary company of the American Angus Association and is the single largest branded beef brand in the world.

My time at CAB was a definite highlight of the tour. On arrival I presented to the full staff monthly breakfast, fielding fantastic enthusiasm and engagement from the whole team, even if they only picked up every 3rd word I said as they struggled with my ‘Ocker’ accent.

This was followed by a site tour, several meetings and a stunning CAB lunch prepared by on-staff chef, Brad Parker.

CAB has an outstanding facility, which has grown considerably over the past 5 years, housing 130 of its 160 staff, Culinary Centre consisting of fully equipped catering kitchen, carcass breakdown rooms and 120 person dining space, merchandise store and a newly completed CAB owned print shop, point-of-sale warehouse, and meeting room facility across the road.

Additionally, CAB has recently purchased a 109 acre farm located within 10 minutes of their facility. The farm is leased back to the original owner to run a small Angus herd to be used by CAB to expose and educate its customers to how cattle and beef are raised.

The CAB business model is quite unique in that it licenses all processors, distributors, and food service businesses.

Each of these sectors in the supply chain report product sales back to CAB which allows CAB to follow their product right through the supply chain and ensure their brand is only being used by those businesses that they partner with.

It would be remiss of me not to briefly describe the US beef grading system at this point while talking about CAB.

The US grading system has three grades. Prime, Choice and Select with Prime being the best and Select at the bottom.

Having a uniquely simple system has ensured that from the producer, right through the consumer, there is an understanding and awareness of the grades, and this influences the purchasing decisions of the customer.

For reference, the minimum grade required to qualify for CAB is upper 2/3 Choice and Prime, along with 10 carcass specification that must also be met.

CAB Carcass Specification
1. Modest or high marbling
2. Medium to fine marbling texture
3. Less than 30 months of age
4. 10 to 16 square inch ribeye area
5. 476kg hot carcass weight or less
6. 1 inch or less fat thickness
7. Superior muscling
8. Practically free of capillary ruptures
9. No dark cutters
10. No neck hump exceeding 2 inches

It was only 10 years ago that a mere 18% of animals identified as Angus met the brand requirements, whereas now that has jumped to a healthy 36% acceptability as Angus genetics have improved over time and made it easier for CAB to meet the growing demand for their product.

The identification of an Angus animal in the US is significantly different to Australia.

CAB utilises the United States Department of Agriculture (USDA) definition of Angus for acceptance to the brand which states ‘the main body must be solid black with no other colour behind the shoulder, above the flanks, or breaking the midline behind the shoulders, excluding the tail’.

Cattle are reviewed for hide colour on entry to the kill floor and if they meet all 10 carcass specification for eating quality when graded, they’re considered eligible for the CAB brand.

5.9 million cattle were certified through the program in 2021. CAB enjoys outstanding consumer trust and loyalty with a recent survey showing 98% of consumer know the CAB brand. Quite inspiring!

Joe Goggins supports CAB and believes there is an opportunity for a purebred Angus CAB product to be developed to further drive premiums for ranchers.

This sentiment was echoed by Texas rancher, Bodey Langford, keen to see an Angus genetic component added to the CAB requirements rather than just a ‘black’ component.

Art & Stacy Butler of Spring Cove Ranch in Bliss, Idaho, who were the 2019 recipient of the CAB Seedstock Commitment to Excellence Award, believe the promotion of CAB drives demand for Angus cattle and that ultimately marble score and eating quality would dictate if the carcass was identified as CAB, maintaining a better eating experience for the consumer.

Art went on further to comment after hearing about Angus in Australia that “it would appear while demand for Angus has turned the Australian herd ‘Angus’, in our case here, it has turned the US herd ‘black’”.

Feedlot Manager, Casey Cobb of Dalhart Cattle Feeders in Texas believed that the premiums that go along with being Angus and CAB were not always being passed back onto the rancher.

“If the cattle are Angus or black but don’t meet the CAB carcass requirements, they don’t make it into the brand, and we don’t get the CAB premium,” said Casey.

Casey highlighted that CAB was the only premium for Angus cattle available to the feed yard but went on to say “Ranchers who are already part of the existing Angus Verified program will be in the box seat once those premiums start to flow back….and I truly believe that it will.”

Founder and CEO of Harmony Beef in Calgary, Alberta Canada is a loyal supporter of CAB and an enthusiastic processor of the brand, sighting constant demand for the product being one of the major upsides to the program.

Harmony Beef is a family-owned business and process 550 head/day.

With the significant investment and support from CAB driving demand for the product through the distribution, food service and consumers sectors, it is an ideal system to ensure processors can easily find premium markets to move the product into.

Jeff Lawrick, Customer Marketing Manager from Gordon Food Service, which is the 3rd largest food distributor in the world commented that for their business, “CAB is a real differentiator in the market”.

“The scale and support from CAB are second to none and highly valued by us,” said Mr Lawrick.

Mr Lawrick went on to say, “The CAB Barn program is something we really like and use to connect our customers to the ranchers who are producing the product”.

Distributor Franklin Hall, CEO and owner of Lone Star Meats based in Austin, Texas emphasised that through their support, CAB had made Lone Star Meats part of an elite group, and this went a long way to cementing the relationship and how they work together.

“CAB is what we call ‘the right customer’, ‘the gold standard’, and we want to focus on those relationships,” said Mr Hall.

Like all opportunities however, there also come risks.

Risks include cases where CAB product is sold by a processor to a non-licensed distributor, who then on sells the product at a discounted price to gain market share, leading to eroded premiums received for CAB product at times.

A further identified risk lies in the lack of Angus genetic component required for CAB acceptance with animals being identified soles on coat colour. This may lead to product not always be Angus.

This risk can be mitigated in part by the brand carcass specifications that maintain the high eating quality standard of CAB product.

Mr Hall spoke to this saying that not only does the product have consistent, superior eating quality, but that CAB bring the importance of Angus heritage to the brand.

Mr Hall went on to say, “CAB enjoys huge trust from consumers based on delivering a quality eating product every day of the week and that is what is most important to the consumer”.

“When it comes to breed, the customer doesn’t get that caught up in the weeds,” said Mr Hall.

With many sectors of the supply chain investing heavily in CAB, expect that they will work very hard to protect the CAB brand and that investment.

Feature Image: Dalhart Cattle Feeders, Dalhart, Texas

Liz Pearson, Commercial Supply Chain Manager