Yankton Livestock: Premiums for non-hormone treated cattle available
February 17, 2011
Yankton Livestock Auction Market is one of a handful of USDA-approved sale barns currently selling non-hormone treated cattle (NHTC) at premiums as high as $150/head.
General Manager there, Dean Price, said the majority of the meat is being shipped to European markets and there is currently more demand than supply.
“There’s no telling how long demand will remain this strong,” Price said. “Right now I have orders I can’t fill because I haven’t located enough of this type of cattle.”
It was November 2010 when the Yankton sale barn received notice of the USDA approval. The sale barn’s sister company, Yankton Land & Cattle Co., was already approved to raise NHTC cattle. The close proximity of the 7,000-head feedlot to the sale barn gave Price and his associates added impetus for obtaining approval to sell the animals. Since approval was granted, three or four other sale barns in adjacent states have also applied for and have been sanctioned to hold NHTC sales.
“This is one of the fastest growing markets for beef right now,” Price said. “Producers have been raising NHTC animals since 1983. Before this, producers were selling these animals through video auctions, otherwise packers had to go to individual ranchers to purchase them. Being able to bring the cattle to the sale barn makes the process less time consuming and expensive for packers.”
In order for cattle to be classified as NHTC, the ranch must establish a quality manual that documents a number of aspects of the production process. Family members and employees must be trained on all the requirements and procedures. Calves cannot receive any type of growth promotant throughout the production process. The ranch must be approved by a third-party verifier before they can market their animals as NHTC. Each animal is tagged with a program-compliant ear tag as close to birth as possible. An independent audit of the ranch is conducted each year to verify compliance.
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“One of the key things they required was a system for providing the cattle with a 60.32 megacal diet the last 100 days before they’re processed,” Price said. “That’s what’s required for the proper net-energy-for-gain. We were already doing that in our feedyard. We also had to have a process in place to tag animals with an electronic ID button when they arrive to document what the shipping papers state matches our paperwork.”
With the USDA approval in place, Price began to see beef producers with NHTC cattle coming from as far away as Wyoming to sell their animals. Producers from North and South Dakota and Nebraska regularly sell NHTC animals through the auction market.
“This program isn’t for everyone,” Price said. “Depending on input costs, genetics and the miles you have to travel to sell the cattle, the premiums may not offset production costs. For many ranchers the premiums are allowing them to realize a significant profit on every animal.”
Maintaining NHTC records doesn’t entail much cost. Cattle can still be treated with antibiotics and consume many common commercial feeds.
“You can feed Rumensin and CTC Crumbles, those types of feed,” Price explained. “Heifers can’t be treated with MGA if they’re going to be slaughtered. The main thing is that they can’t be treated with hormones.”
Past premiums for NHTC animals have ranged from $20-$60/head. Current premiums for feeder cattle vary, but have averaged $75 and have been has as high as $89/head. Finished cattle are bringing premiums of $150/head.
“What analysts say is that beef producers can breakeven if they receive a premium of $7-$12 per head,” Price said. “One of the attractive things about NHTC is that it’s a lot easier to produce that kind of beef than what’s required for meat to be certified as natural or organic. Source and aging are built right into the program, and that’s becoming more and more common. Those premiums aren’t as high as they were initially.”
Since foreign beef markets are just beginning to reopen, some industry experts believe the demand for U.S. beef could continue to gain strength for a while.
“The domestic market could strengthen, too,” Price said.
Integrated Management Information, Inc. (IMI Global) a leading provider of verification and Internet solutions for the agricultural/livestock industry under the Where The Food Comes From® brand, worked with Price to obtain the necessary USDA approval. IMI Global offers a process verified program (PVP) umbrella for Verified Natural Beef™ (VNB), NHTC and source- and age-verification (SAV).
IMI Global CEO John Saunders noted that Yankton Livestock “worked very hard” to ensure compliance in all the PVP programs.
“This in turn gives their producer customers access to cutting edge marketing opportunities and the ability to enhance their return on investment like never before,” Saunders said.
Additional third-party verifiers include Sampson, Micro Beef, Ag Info and Verified Beef.
One advantage Yankton Livestock Auction Market has in selling NHTC animals is their ability to keep the animals on the required feed ration if buyers don’t process the animals within a few days. The ration required to meet certification under the 0 Tax Quota is available at the sale barn’s feedyard for buyers who need to hold cattle for a brief period.
“We see the NHTC program as a way we can add value for cattlemen selling their animals here,” Price said. “Companies are willing to pay premiums if ranchers are willing to follow the programs. There are some real opportunities with NHTC for beef producers. We’re very pleased that we can be part of making that happen.”