By DON STONEMAN

Gardiner warns that the cattle industry must make drastic changes if it is to fend off fast-closing protein competitors, chicken and pork. Beef is losing about five per cent of its share of the meat market every year, Gardiner told Beef Improvement Ontario's annual meeting in Guelph last month. At that rate, the industry will approach "meltdown" in five years, and be "irrelevant" in the meat industry, he asserted.

Cattlemen have to work together, Gardiner said. "You aren't my competitors," he told Ontario producers. "You are my colleagues. A trade action against Canada over beef imports is on the wrong track." So are the beef producers who are fighting so-called "captive supplies" to packing plants.

The industry's future lies in "value-based marketing," Gardiner said. Cattle are priced on a grid system depending on their meat value, with premiums and discounts from a base price. As well as being a rancher, Gardiner is also one of the founders of U.S. Premium Beef, a marketing co-op with its own packing plants and a growing base of members who see a future in value-based marketing.

Value-based marketing is being fought by the beef producers who make their money "upgrading junk" cattle to average, Gardiner said. Ten years ago, one pig in five in the U.S. was sold on a value-based system. Today, it's about 90 per cent, he said. Gardiner predicted that value-based marketing will soon dominate the beef industry. There will come a time when a producer won't be able to sell scruffy cattle raised on a few acres of rough land, Gardiner said. "They will only be worth half as much" as cattle with known genetics and proven performance records.

Cattlemen also have to change their attitudes about raising cattle. "I'm not a cattle breeder. I produce beef and meals," he said. Gardiner said the beef industry has fallen behind pork and chicken because it failed to produce what the consumer wanted - good, consistent meat at a reasonable price. He is critical of the industry's failure to correct its shortcomings. The National Cattlemen's Beef Association slogan "Eat Beef, It's Good" doesn't cut it, Gardiner said. "That's all we do," he said with exasperation.

But there is cause for optimism. Gardiner said some parts of the beef industry are making progress, citing the producers of Angus beef. Threatened by changes in the grading system, they adopted the certified Angus Beef program. Gardiner said Angus' real strength isn't in its genetics or its colour, but rather in the database of information behind it that can be used to identify fast-gaining, high-performance genetics.

If beef producers are to survive, they must produce beef that consumers want and accept responsibility for the product that they produce, Gardiner said.

Gardiner Ranch has been recording fertility and weight records on cows and calves since 1964, when it first went to all artificial insemination. Carcass data has been collected since 1970.

Gardiner said the key to success is using known genetics. AI is the best bet. Other keys include working with your vet in a herd health program, budgeting for pasture improvements to manage grass properly, and matching genetics to environment.

Gardiner said the Angus genetic database has propelled the breed's fortunes: "If you aren't working with a breed of cattle that has an information system you are dead."

The Gardiners have held birth weights while increasing growth rates in calves. Weaning weights have risen from 525 pounds to 825 pounds. Producing a bull for a stud "means nothing," Gardiner said. "That's a byproduct. I can't replicate the byproduct year after year and pay the banker." Some of their bulls gain six pounds per day on 86-day tests on a feed conversion of 4:1 or less.

In the 1970s, Gardiner bulls were gaining 2.8 pounds per day on a 7.48:1 feed conversion ratio, gaining less than their steers. "We made some big mistakes," he said. "We cut the good ones and made the others bulls."

Export markets still juicy for beef

Canadian Beef Export Federation (CBEF) president Ted Haney says sales to overseas markets bring producers between 2.5 and three cents a hundredweight on the price of steers and heifers sold to packers who export. That's money that can either raise income in a good market or cushion the fall when domestic sales sag.

Nearly a decade ago producers and processors set up the federation to establish new beachheads for Canadian beef marketers, who were heavily dependent on sales to the U.S. Ontario beef producers have been contributing about $25,000 a year to the federation. Contributions are expected to double in 1999.

The dollar value of beef exports to Japan in the first eight months of last year were up 27 per cent over 1997, says Haney, and are growing at an accelerated pace.

Sales to South Korea, Canada's No.2 market, suffered a 72 per cent drop. "We had what amounts to a nine-month hole in sales," Haney says. But packer members tell him that sales picked up in the last four months of the year.

Haney thinks when the year's sales are totalled, Canadian sales to that important market will be down about 40 to 45 per cent. "It appears that we are back in the game again in South Korea," he says.

A big CBEF target has been Mexico, and the efforts are paying off now with increased sales and, says Haney, much potential: "Mexico can get all the meat it wants from the U.S.," but buying from Canada adds to the competitive atmosphere. "They want a more competitive meat importing environment," adds Haney.

Mexico is a key market, he says, because it buys cuts that aren't in demand in Asian markets or in North America. Some of the flank and hip cuts, highly priced in Mexico, are ground into hamburger meat in Canada and U.S. It adds value to the beef that's sold, and packers bid the extra value into the cattle they buy, Haney says.

Canada processed a million tonnes of beef in 1997. About 3.5 per cent of that was exported. Publicly traded Iowa Beef Packers is selling 13 per cent of its meat production into Asia and Mexico from its U.S. plants. "I don't believe that Better Beef [in Guelph] and Cargill [in Alberta] have plans for anything less than that," Haney says.

Japan remains a key market, too. It's the only one in the world that pays the USDA Choice price for Canadian triple A graded beef, Haney says. The longer-term strategies are starting to pay off, Haney says.

Typically, Canadian packers - especially those in Ontario - are service oriented, Haney says. They take time to know their customer and what the customer wants, not just specifications, but packaging as well. The same strategy that works with customers in Ontario also works overseas, Haney says. It just takes longer to implement. - Don Stoneman

Poultry needs more eggheads

By JIM DALRYMPLE

Increased private and public research funding, training of poultry scientists and technology transfer personnel, and the use of technology are the keys to keeping the industry viable and competitive, according to producers, processors, research scientists, government and university reps.

While there are currently 15 institutions conducting poultry research, consisting of 10 universities, two agricultural technical colleges and three federal stations, Agriculture and Agri-Food Canada is only funding one full-time researcher at this time. The federal government's investment in research for the industry is at $780,000, a big drop from the previous contribution of $3.8 million five years ago.

One institution that has expanded its research role is the University of Alberta. Dr. Frank Robinson announced a $400,000 expansion in research facilities at the university as well as an industry commitment of $100,000 for each of the next five years.

Private industry is investing too. Landmark Group Inc., a privately owned Manitoba company that also owns Landmark Feeds and Elite Swine, has established its own Poultry Centre of Excellence, focusing on satellite conferences and co-op programs.

The drawback could be in getting privately funded research information out to the public. Speakers emphasized the importance of sharing new research and technology with all industry stakeholders.

A barrier to communication in the field is geography. Flying to Georgia to attend an industry conference can cost $450, for example, while attending the Ottawa conference cost up to $1,500. Internet use and satellite video conferencing could move technology to all points in Canada quickly and cheaply.

Discussion at the conference will be used by Dr. Roger Buckland, Canadian Agri-Food Research Council, to put together a report on research in Canada, due to be released this month.

Wholesaler relations key to pepper profits

BY CHRISTINA SELBY

Heather says in the winter they'll sit down and "talk to us about what they want, and we'll try to do it. We're committed to them and they're committed to us."

Heather takes care of the farm on a day-to-day basis as Rick works full-time as an engineer at Ontario Hydro. While he'd love to farm full-time, she says, the benefits and salary are too good to pass up.

Peppers are a tough crop, says Heather, because of their long growing season. Dry years, such as the summer of '98, are moneymakers, she says.

They were picking shepherds by the middle of August with a yield of 700 bushels per acre.

A common producer problem is markets drying up before the Ontario crop is finished. Heather says that whether it's tomatoes or peppers, once supply slows down many buyers drop provincial produce and bring in U.S. supply: "They jump ship as soon as the numbers are down."

The key to success in the wholesaling business is balancing the needs of growers against the needs of the big supermarket chains, says Bayshore's Neil Bullock. His approach is to "cut loose" the big chains and concentrate on the smaller ones. "I'll drop A&P" - their largest customer, with National Grocers close behind - "and supply Sunkist or Longos instead," he says, thereby keeping growers and suppliers happy.

Bullock always tries to give big buyers a couple of weeks' notice when supply starts to dwindle. "They stick with us and help us clean up the tail end," he says.

Two-thirds of the Rebuks' produce goes to Bayshore; most of the rest goes to G.A. Love. While they'll occasionally supply local markets, taking someone off the field to make the delivery is not always worth the money, says Heather.

Bayshore has growers as far west as London, down to Niagara and north to Bradford, representing about 150 Ontario vegetable producers. From a grower perspective, a large wholesaler gives the farmer clout in the marketplace, Bullock says. The head buyer at National Grocers has told him that sooner or later he'll have to call Bayshore, "because we have the numbers." Chainstore buyers need continuity of supply, he says, and Bayshore always knows what's in the field.

Distribution works like this: Say Bayshore has 5,000 cases of cauliflower to sell. Some go to A&P for $8 a case, while others go to Loblaws for $8.50; smaller accounts may get a few cases for $9 each. Prices are pooled together and growers get the average price less commission.

The percentage of a grower's crop going to Bayshore determines the company's commission. For 100 per cent of field crops, the company takes 13.4 per cent; for less than 100 per cent, the commission is 15 per cent. For greenhouse growers, Bayshore takes 9.75 per cent.

Growers are insulated from bad debts, says Bullock, as Bayshore pays the producer up front and chases any bad retail debt.

The company has an "open book policy" for growers who provide Bayshore with 100 per cent of their crop. Annual meetings are held and "growers have input into the direction the company should take," he says. "We're the growers' eyes and ears in the marketplace."

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