The Starting Point...
 
In the spring of 2000, I attended a Value-Chain Tour in Holland, where I was able to see working value chains in action. I also had the opportunity to attend the Chain Management in Agribusiness and the Food Industry Conference in the university city of Wageningen. The result? I have an even greater sense of the challenges that are inevitably faced in the forming of a value chain, and I am even more convinced that incorporating the value chain concept into the beef production chain is essential to remain competitive.

What is a value-chain? A formal definition was provided at the conference: Relatively enduring inter-firm cooperative arrangements, involving flows and linkages that use resources and/or governance structures from autonomous organizations for the joint accomplishment of individual goals linked to the corporate mission of each sponsoring firm. Ultimately, this process is driven by consumer demand. A simpler definition comes from a primary producer in Holland, Think of a value-chain as a way to move from production-driven to demand driven. If the consumer wants me to kiss my ewes, I will kiss my ewes. Do we get an increased price? No. But we have been able to stay in business while prices are dropping. We have removed inefficiencies in the production chain and are working to increase our market share. Because the whole production chain is working together, we have the flexibility to respond to market demand. This allows us to reposition ourselves in the market, remaining competitive. The Key? Everyone from cow-calf to feedlot to processor to retailer is working together.

Is there an advantage for the cow-calf producer? Being actively involved in the entire chain of production from cow-calf through to the retailer  has several advantages. Short-term examples; Information will be shared between sectors (e.g., individual carcass data) allowing each sector to optimize their production practices. Costs may be reduced, for example, duplication of vaccinations prevented through standardized health protocols. Additionally, cow-calf producers will be able to take advantage of the strong relationships that Highland has developed with service professionals in the beef industry, in the areas of health, nutrition, computerization and banking.  Currently, we have all been enjoying good prices, but we know that the nature of the cash flow in the beef industry is challenging to manage. The concept of the beef chain is that eventually those fluctuations will be shared among the partners in the alliance on an on-going basis, rather than being shouldered by one sector at a time.

Will I have to change my farm practices? Maybe. The alliance must be consumer driven, and the consumer is asking for the assurance of a safe food product. We are currently in the process of developing protocols that closely follow the suggested practices found in the Canadian Cattlemen's, Quality Starts Here, Good Production Practice Manual for cow-calf and feedlots.

The Holland visit strongly reaffirmed to me that the beef industry must listen to new market signals. I liken the changes that we must make in our industry, to the changes that Holland has seen in wind generation. They still use their resource of wind but traditional, much-admired windmills are seldom found on the landscape. New and more efficient turbines now grace the horizons of Holland, as we must find a new, more efficient and responsive way to produce high quality beef.

Page Stuart