Taking Dead Aim At The US Cattle Business

AN OVER-VIEW OF THE USA CATTLE MARKET & FUTURE THREATS Global Animal Products, Inc. (US Office) Ken Ridenour, M.S.

TOPICS The USA Feedlot – Current Cattle Industry Beef Checkoff Program Future Threats Personal Opinion – Direction That The World Cattle Market Could Take In The Future

TOTAL CATTLE IN THE USA 97.1 million head (Jan. ’07) Average cow herd size – 35 head 97.1 million 3 rd consecutive year of expansion 33.3 million beef cows Heifers held back 5.9 million Calf crop estimated at 37.6 million head

TOTAL CATTLE AND BEEF PRODUCTION IN THE USA

USA FEEDLOT MARKET Cattle on feed February ,726,000 Cattle slaughtered – Week ending March 10, ,000 Average Live Weight – Week ending March 10, kg Average Carcass Weight – Week ending March 10, kg

FEEDER CATTLE (Steers) Amarillo, Texas Weight Price R/kg 10 MARCH kg kg kg kg kg17.36 Fat cattle on hoof Avg. Carcass price 24.20

RATION COST MARCH 2007 Rand/Metric Ton Corn (Texas Panhandle) 1, Alfalfa Hay 1, Finisher Ration (DMB) 1, Cost of Gain with all charges/kg Loss per head

ETHANOL 110 Operating Plants 8 of the above are expanding 73 plants are under construction billion liters of ethanol were produced in billion liters are expected to be produced by to 57 billion liters of ethanol are expected by 2012

ETHANOL 2006 ethanol production required 2.56 million hectares of corn – 20% of the US corn harvest An estimated 4 to 6 million more hectares of corn will be planted in the 2007 crop year For the first time in history over 50% of the corn produced in the USA will be used for something other than animal production

Beef Checkoff Program  Established as part of the 1985 Farm Bill  Totally funded by the beef producers and no Government funds are utilized  Funding is $1 USD per head on both domestic and imported beef  Fifty cents goes to the National Organization  Fifty cents goes to the State Organization

Mission Of The Beef Checkoff Program  Check program is dedicated;  To improving producer profitability  Expanding consumer demands  Strengthening Beef position in the market place  Research funding for all phases of the Beef Industry

Beef Checkoff Program Funding  Revenue $45,238,376 USD  Expenditures:  Promotion $24,800,185  Research $6,233,497  Consumer Information $5,637,074  Foreign Marketing $3,997,592  Producer Communications $2,029,143  Industry Information $1,091,269  Program Evaluation $226,538  USDA Oversight $143,722  Program Development $123,661  Administration $1,547,899

Beef Checkoff Program Conclusion  Acts as a catalyst for Change.  Doesn’t own cattle or retail outlets.  Can’t single-handedly turn around a bad market.  Designed to stimulate others to sell more beef.  Stimulate consumers to buy more beef.  Initiatives are accomplished by consumer advertising, marketing partnerships, public relations, education, research, and new product development.

THREATS TO THE CATTLE INDUSTRY (BSE)

B.S.E. A Closer Look At Mad Cow Disease New vCJD is reported in 200 people world wide United Kingdom 164 France21 Ireland4 Netherlands2 Canada1 Italy1 Japan1 Portugal1 Saudi Arabia 1 Spain1

Science & Research

Observations made in 100% of subjects All gained weight Talked excessively without making sense Became overly emotional Could not drive Failed to think rationally Refused to apologize when wrong Could not preform sexually Had to sit down while urinating Study presented at Europe’s annual human reproductive conference Study design – 100 men consumed 6 pints of beer in 1hour

Conclusion of Study There has to be female hormones in beer

Bio – Terrorism Foot and Mouth Disease

PER CAPITA CONSUMPTION OF RED MEAT AND POULTRY ( ) YEAR U.S. Pop., millions BEEFkgPORKkgLAMBkgPOULTRYkg

MATURING FEEDLOT INDUSTRY 3 Major Packers Cargill-Excel Swift (Monfort – ConAgra) Tyson (IBP) Vertical Integration Contract Growing for Packers

USA CATTLE INDUSTRY – LONG TERM Suburban Sprawl Land Price Government Land Environmental Impact and Regulations Government Subsidies

SUMMARY 30% of US feedlot head capacity is held in 10 companies Three beef packers control slaughter and marketing Maturing market for the feedlot industry – cattle business

CRYSTAL BALL PROJECTIONS Feedlot – Cattle will decrease More imports will be needed Australia South Africa Brazil Consumption – Beef will follow Lamb

Proud To Be Associated With The South Africa Feedlot Conference Beef It’s What’s For Dinner! Global Animal Products South Africa