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PARTICIPATION IN ALLIANCES AND CONTRACTS

This study highlights participation in alliances and contracts, success in the seedstock business, supermarket trends, case-ready products, top grocery retailers, animal welfare standards, nutrient content of lean beef, and the rapid growth of aquaculture.

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PARTICIPATION IN ALLIANCES AND CONTRACTS

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  1. PARTICIPATION IN ALLIANCES AND CONTRACTS • 15% of producers surveyed currently market at least a portion of their calves through an alliance or coop. Number of calves marketed by participants is increasing at an average annual rate of 11%. • 65% of alliances returned carcass or performance data, 46% required or recommended certain genetics, 18% would supply specific bull genetics, and 10% would supply female genetics. • 55% of producers surveyed indicated they would agree to long-term contracts (3-5 yrs.) to market calves to a specific feedlot or alliance, depending upon the price level at which they would agree. SOURCE: Cattle-Fax

  2. KEYS TO SUCCESS IN THE SEEDSTOCK BUSINESS • Find the money to get started and survive during the first difficult years. • Know where your expertise lies and then put it to use. • Seek out and listen to the most successful people in the business and never stop learning. • As you grow, hire the best people available. The cattle business has only three significant assets—cattle, people and land. • Get out of the way of your ego! Listen to your customers, your partners, and your employees. Also, study your competitors. SOURCE: Seedstock Digest (anonymous producer).

  3. SUPERMARKET TRENDS A study by FMI revealed the following: • Fast-food chains have given back to supermarkets some of the market share gains they won in recent years. • Percent of consumers eating fast food once or more a week has fallen from 38 to 32%. • Take-out and home delivery meals have also declined. • When consumers select a supermarket, their priorities are: 1) cleanliness; 2) produce quality; 3-tie) meat quality and price. SOURCE: Food Marketing Institute.

  4. MAJOR FORCES DRIVING THE PROGRESSION TO CASE-READY PRODUCTS 1st – Labor savings. 2nd – Out-of-stock and shrink in the meat case. 3rd – Convenience and consumer satisfaction. 4th – Food safety. SOURCE: Dan Murphy, Meat Marketing and Technology

  5. LARGEST GROCERY RETAILERS IN THE U.S. Percent of total supermarket sales: • Top 3 control 31.2% of sales. • Top 5 control 42.1% of sales. • Top 10 control 62.0% of sales. • Top 20 control 76.3% of sales. SOURCE: FMI (2001 sales).

  6. TOP TEN GROCERY RETAILERS IN U.S. No. Sales % Market Company stores (billion $) share Kroger 3,211 $ 50.7 12.8% Albertson’s 2,573 $ 38.3 9.7% Safeway 1,762 $ 34.3 8.7% Ahold USA 1,446 $ 34.3 8.7% Wal-Mart Supercenters 1,060 $ 20.1 5.1% TOTAL TOP 5 10,052 $166.6 42.1% Sam’s Club 498 $ 18.4 4.6% Costco 363 $ 17.7 4.5% Delhaize America 1,406 $ 15.2 3.8% Publix 675 $ 14.7 3.7% Winn-Dixie 1,150 $ 12.9 3.3% TOTAL TOP 10 14,204 $245.5 62.0% SOURCE: FMI (2001 sales).

  7. DEVELOPMENT OF ANIMAL WELFARE STANDARDS • The nation’s two largest supermarket companies, Kroger and Albertson’s, have announced their support of standards being developed by FMI (Food Marketing Institute) and NCCR (National Council of Chain Restaurants). • The FMI-NCCR standards are not mandatory but are “expected” of their supermarket and restaurant members, respectively. • To date, the following restaurant companies have developed separate animal husbandry/welfare standards to be required of their suppliers: -McDonald’s -Burger King -Wendy’s -Applebee’s SOURCE: Rod Smith, Feedstuffs, 7/8/02.

  8. NUTRIENT CONTENT OF LEAN BEEF • A 3-oz. serving of lean beef contributes only 9% of the calories to an average 2000-calorie diet. • Conversely, it supplies more than 10% of the recommended daily allowances for: -Protein……………………..................................... 50% -Zinc………………………………………………….. 39% -Vitamin B12…………………………………………. 37% -Selenium……………………………………….…... 24% -Phosphorus……………………………………….. 20% -Niacin……………………………………………….. 18% -Vitamin B6……………......................................… 16% -Iron…………………………………………...……… 14% -Riboflavin………………………………………....... 12% SOURCE: USDA and NCBA.

  9. AQUACULTURE IS GROWING AT A RAPID PACE • Globally, fish is the most important single source of high-quality protein, providing 16% of the world’s animal protein consumption. And demand is increasing. • Because growing numbers of fish species are being harvested into extinction, aquaculture will become one of the largest food-producing industries in the world within 10 years. • Today farmed seafood makes up about a third of U.S. seafood consumption, and is increasing rapidly. • Virtually all catfish and trout eaten around the world now come from farms, as do two-thirds of the shrimp. SOURCE: FAO

  10. U.S. IMPORTS OF GOODS (2001) Item $ Billions Food, feeds & beverages $ 46.7 Petroleum & products $103.8 Industrial supplies, except petroleum & products $167.2 Automotive vehicles, engines & parts $189.7 Consumer goods, except automotive $283.7 Capital goods, except automotive $298.8 *Computers, peripherals & parts $ 74.4 *Civilian aircraft, engines & parts $ 31.3 *Other capital goods $193.1 SOURCE: U.S. Dept. of Commerce.

  11. TOP TEN ANIMAL HEALTH COMPANIES (2001) 2001 Sales Company (million $) Merial 1,636 Pfizer 1,022 Intervet 956 Bayer 930 Fort Dodge 776 Schering-Plough 694 Elanco 686 Novartis 550 Pharmacia 469 Idexx 386 SOURCE: Fountain Agricounsel.

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