Insight from the Packer with Chad Barker

Whether cattlemen are marketing their calves through a sale barn, selling strictly through video sales or retaining ownership through the feedlot, one commonality shared by every producer is the desire to continue developing high-quality fat cattle.
 
On this episode we are joined by Chad Barker with National Beef, along with our very own Miranda Reiman, to discuss: 
 
- What cattle buyers are looking for
- Branded beef programs
- The thought behind growing heavier cattle without getting animals too large
- And more!

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Transcript

Lynsey McAnally (00:02):
Angus At Work, a podcast for the profit-minded cattleman. Brought to you by the Angus Beef Bulletin, we have news and information on health, nutrition, marketing, genetics and management. So let’s get to work, shall we?

Hello and welcome back to Angus At Work! Whether cattlemen are marketing their calves through a sale barn, selling strictly through video sales or retaining ownership through the feedlot. One commonality shared by many producers is the desire to grow high-quality fat cattle. I’m Lynsey McAnally, and on today’s episode we are joined by Chad Barker with National Beef, along with our very own Miranda Reiman, to discuss what buyers want, branded programs and how producers can make heavier cattle without getting those animals too large. So, let’s dive in!

Miranda Reiman (01:06):
Welcome to Angus At Work. I’m your host Miranda Reiman, and I am coming to you live from the Feeding Quality Forum here in Dodge City, Kan. And across the table from me, I have Chad Barker. Hi, Chad.

Chad Barker (01:17):
Hi, good morning. How are you?

 Miranda Reiman (01:19):
Good. With that introduction, do you want to give me just a little bit of background on yourself and what you do there at National Beef?

Chad Barker (01:27):
Yeah, you bet. Hello, everyone. My name’s Chad Barker. I’ve worked for National Beef. I’ve been in my current role since 2016. I worked for National Beef for almost 18 years and for 29 years I’ve bought or sold fat cattle, so I’ve been in the industry here for a little bit. We have small ranch — kind of a hobby if you will — but we’re up to almost 40 cows now. And so I do enjoy all aspects of the beef industry and while I am the ‘big bad packer,’ somebody’s got to do it. I do feel fortunate that I work with National Beef. I think with our relationship with U.S. Premium Beef and some of our suppliers, they’ve always made that a priority and enjoy that part of it. And we do certainly try to work collaboratively, if you will, with these guys and especially with the advance of grid marketing. I just think it’s the best tool we’ve seen in almost any industry as far as sending signals in terms of what we want and if it lines up with what they want to do, then hopefully we all can be successful.

Miranda Reiman (02:42):
Absolutely. You talked a lot about relationships from the stage when you were giving the Packer Perspective there. Why don’t you just give me a little idea of how you approach procurement week to week? What are you looking for? What are you thinking of as you start the week?

Chad Barker (02:59):
A great part of our business is that every week, every day, every hour seems to be a different challenge and it just keeps it interesting and exciting. And then if that doesn’t do it for you, we’ve taken a lot of pride in working with young people that want to get into the business. And that gets you excited, too, when you get an opportunity to remember all those years back when that was you sitting across from the table. So you try to share some of that information and give the young people and our industry an opportunity to work in our part of the business if they choose to or want to. And we just try to secure some of the best talent we can in procurement specifically. And everyone in our group don’t use that letter of the alphabet very much. It’s about we. I try to instill that and it starts at the top with National and then works its way down. But most of my cattle buyers start in the Kansas City corporate office with us as cattle schedulers. And everyone in my department takes it upon themselves to get to know them at a personal level. So you want to have a professional relationship, but you have to have a professional relationship. It’s a job. They’re paying us to do specific things, but what I’ve found over time is if somebody wants to work for you, it’s a lot better than them having to work for you. And, selfishly, my job gets a lot easier when I get the right guy or gal in the right job doing something they’re passionate about. So we work hard to try to accomplish that.

Miranda Reiman (04:41):
Absolutely. So as you send your team out in the field every week, you’re giving them a certain number of head that they need and certain targets to hit. I mean, what kind of advice are you giving them as they go out and are looking at lists and things?

Chad Barker (04:56):
Yeah. Much like the grid - which sends signals to cattle feeders, ranchers, seed stock operators — hopefully those things drive our margin so [these guys] understand the grids. They’re part of a lot of the grid negotiations, but just understanding where the value is and what is expected of them. Like I mentioned, they sit in that office for sometimes one to five years until they get an opportunity to buy cattle. So they look at the things we measure, they understand the things that add value, and just as importantly, they understand how they’re expected to handle and manage their area. They’re a representation of us in the country and we want them to be positive, be a resource, be an asset for the feedlots. We’re all in the relationship business, and it’s important that — at least from their perspective as a cattle buyer — calling on a feedlot that they know they can count on us for certain things and we want to be that answer. We want to be that solution for them if we can. And we’re certainly not for everyone or everything, but ours simply put our target as we want to try to buy as big a black steer as possible. But weight’s important to us. We like heavy cattle, we like high quality cattle and we have a variety of branded programs that try to add value.

Miranda Reiman (06:30):
You bring up that weight. I think that’s something that, gosh, we’ve been talking about in this industry for a long time. Those increasing weights. And I think probably a lot of us thought we would be at the point already where we said, ’Ah, this is too much. This is the line, absolute line.’ But we’ve continued to push higher. What have you guys done to be able to manage those bigger cattle and make sure that you can effectively process them and things like that? Yeah, that’s a great question. There is a limitation to what we can physically fit through our facility. And most of the time it starts right in the serpentine going to the box. So if they can’t fit, are too wide or too tall, there’s a point in there where we just can’t quite get them through. We haven’t quite got there yet in mass, but as an industry I think we’re close. But I probably would’ve told you five years ago, I thought we were close. As long as we continue to pay for them by the pound, which we will, there’s always going to be motivation to make them bigger. We’ll just have to manage it. I think if I would or could challenge the industry, it would be work on the percent of cattle. Can we move the average up without making the top side heavier? So how do you work on those cattle that are in the bottom of that curve, if you will, and get those to a point of production where it’s a little heavier? I think it’s in their best interest, and I know that’s a focus for National as well. Sure. And we saw that this morning in one of the presentations by Dr. Pete Anderson. Economically it makes sense for everybody in the chain, I think too.

Chad Barker (08:10):
Yeah, yeah. Right now, almost all the market indicators would tell you, ‘Yeah, go ahead and feed one a little bit longer.’ Those signals will change and different parts of the cycle will come and go. But I think the steady increase in weight is probably something we’ll see and continue to see. But perhaps it comes, like I said, from the bottom cattle that are in the bottom percent of weight. And it’s amazing what we’ve accomplished in quality grade and performance. And I don’t think when ranchers, seedstock operators and feedlots decide to focus on same points, I don’t believe there’s anything they can’t accomplish. And that’s the curious part of our business and things that we enjoy. To your original question about what every day holds, I mean, there’s things today and yesterday that I heard that made me question some of the things that I do daily and why don’t I look at this? And so it’s fun to be part of those conversations and collaborate.

Miranda Reiman (09:07):
For sure. When you are thinking ahead to what you’re going to have in your box each week and how important is it for you to be able to predict seasonally or even week to week, the quality and the type of cattle you’re going to get in every week?

Chad Barker (09:25):
It’s a big part of our time. Honestly. We spend probably more time on that than actually the price, because we’re selling that in any move in grade. While 2% doesn’t sound like much of a change, you spread that over 70,000 cattle all of a sudden, either somebody’s not getting the CAB or Prime that they wanted, or we have more Select to sell. They’ve made so much progress. And that Choice/Select volume is specifically on the Select side of it, can be so small that eventually a lot of the customers are forced to buy Choice. And then if it drops back down, well, they’ve changed what they do and now they want Choice. So I don’t think there’s any doubt that there will be a day where we look at Select numbers close to no real numbers. It’s just with Genetic Merit and with advances in nutrition and feeding quality and genetics it’s just such a better eating experience. So it is important we produce that product Choice and higher.

Miranda Reiman (10:39):
Sure. As we think about predictions, of course news around our shop at Angus — big news this summer — was that you guys started to pay premiums for those AngusLink cattle that had the Genetic Merit Score. Do you want to explain a little bit about that premium structure for us?

Chad Barker (10:54):
Yeah, sure. We actually started last week with our first settlements. And so as I understand it, these cattle are provided a score from 0 to 200. And when we looked at how the cattle at a 100 graded or performed, that was an incremental increase from what we get today on an average. And so we put a value to that. We’re still learning our way here and understanding what we’re doing and how we’re going to do it. So I’m sure it’ll evolve just like everything else we do. But today we pay $5 for that, and then in December we’re going to add another layer to it. So anything that’s over 150, will receive a $10/head premium for that score. So that’s important for us. We get that kind of quality. So once we get maybe six months or a year’s worth of data, we then confirm we’re going to get exactly what we expect to get from these cattle. All early indications are they’re going to be that way or better. So that’s really exciting. And then the other advantage, or one of the other reasons we kind of wanted to do it was just for our feeding partners. Those cattle have some efficiencies in feed conversion and gains? They stand to benefit as well. So we very much want them to be successful. And so this program made a lot of sense to us. It has advantages for them. It has advantages for us. And for me personally, it was a little bit of an obstacle to get past. I’ve always been someone that trusted my evaluation skills that put a lot of stock in what we’ve seen, challenged all of our cattle buyers to be good evaluators, to pick the right cattle for us. And I think, as I alluded to yesterday, that was a little easier job when we were picking Choice to Select. But as you start trying to pick cattle that are going to be 40 or 50% Prime, I wish I could do that. Maybe someday I’ll get good enough at it that I can. But what I’ve learned is the data’s there, you need to take advantage of it and have confidence in it. So that’s the volume of cattle that were in the program. When we sat down with the American Angus Association, that’s what gave us the confidence to go ahead and move forward with this because it was a sizable amount of cattle. So again, compliments to those guys for sticking with that and staying with it. And we’re just pretty excited to see where this can go and hopefully it pays dividends for everyone.

Miranda Reiman (13:34):
Well, of course, we appreciate your partnership and that economic signal that it sends back to our producers, those that are investing in genetics and management and really raising the right kind. They’ve got now another avenue to recoup some of that. Some people might say, ’Yeah, but your quality grade’s been going up.’ I mean, quality’s just been going up. Do you even need to pay for that? I mean, what’s your response to that? We don’t want you to change your mind, just so you know!

Chad Barker (14:01):
No, no, no. Going back now, we’re just excited to go forward. Yeah, it’s making that kind of progress on its own is pretty gradual. And I think as an industry, we all need to challenge ourselves to embrace some of the new technology that’s there and utilize some of this information because what we do is a three year process when they start deciding to breed those calves or even longer before it finally gets to us. So we know it takes a while to make those differences and to make progress and make change. But I guess if you don’t take advantage of the information that’s there, it’s do we lose our hierarchy in the protein world? I mean, you just don’t want to take anything for granted. There’s a lot of competition out there in terms of being center of the plate. And I think if we do a good job of embracing the technology and using it, we can shorten how long it takes us. Well, look how long it took us to get to 80% Choice. I’ve been working on it for 15 years. I would tell you with the Genetic Merit program and some of the programs similar to that, that as an industry, we can make that kind of major change in half the amount of time. So that’s the challenge, but how do you accomplish that? We’re still trying to do everyone’s daily jobs. Yeah. But that’s what we all signed up for. We’re passionate about the business. We work hard, and we want to be efficient. We want to be sustainable and have value all the way through the pipeline.

Miranda Reiman (15:44):
Excellent. Well, I think that’s definitely something that all of our listeners probably agree with or can say. Yeah, that’s what we want to be on our own farms and ranches as well. So I’m going to end with a question. We always end with. The cattle business is really a people business and there’s plenty of bad news out in the world. We want to know something good, whether it’s personal or professional.

Chad Barker (16:05):
Something good. No, that was a tricky one!

Miranda Reiman (16:12):
I mean, this interview’s about over ...

Chad Barker (16:16):
Yeah! I guess to me, the thing that motivates me and the thing I’m most proud about is the relationships that we have developed with some of our customers that we sell our product to. And then a lot of the suppliers that we work with in Kansas — and really all across the country. So we want to be a resource, we want to be an asset for them. And to accomplish that, we have to work together. And we’ve really come a long way on that. I guess I don’t put much stock in bad news. So we’re going to focus on the good stuff and try to do what we think we’re good at, which is putting cattle in a box.

Miranda Reiman (17:01):
I love that. Well, thank you so much for your time today! Thank you also for hosting the pre-event tour for the Certified Angus Beef Feeding Quality Forum here. I know a lot of people appreciated the chance to go through a plant. Maybe it was their first time. So thank you for your willingness to open the doors there, and thank you so much for your time today.

Chad Barker (17:20):
You’re welcome.

Lynsey McAnally (17:30):
Listeners, for more information on making Angus work for you, check out the Angus Beef Bulletin and the Angus Beef Bulletin EXTRA. If you have questions or comments, let us know at abbeditorial@angus.org. And we would appreciate it if you would leave us a review on Apple Podcast and share this episode with any other profit-minded cattlemen. Thanks for listening, this has been Angus At Work!