Beef with the Digital Age
Now that consumers can easily compare companies online, prices have dropped for everything from car insurance plans to plane tickets. It's not that personal relationships with vendors don't matter anymore. But how many of us have sought the expertise of the local book or video store clerk, only to end up paying less for the product on Amazon or Netflix?
Independent businesses are also struggling to stay afloat under the brutal efficiencies and low margin's of the digital age. And America's cattle producers and auctioneers are no exception.
There are about 757,000 independent cattle producers in America who mostly sell their stock to auctioneers. These auction yards then turn around and sell most of the cattle to just four major meatpackers.
Cattle pricing has long been set at auction by expertise, reputation and personal salesmanship, according to an editorial in Midwest AG Net, a trade publication:
Over time, these markets and feedlots earn reputations for sourcing, marketing and feeding the specific quality and type of cattle highly coveted by the concentrated meatpackers. Thus, information about the source of the cattle acquired by said markets and feedlots is the proprietary information they use to maintain their competitive edge - and they often pay premiums to, or secure a higher price for, the cattle producers in order to acquire these cattle year-after-year.However, the old auction system could break down if a new proposal by the US Department of Agriculture's National Animal Identification System (NAIS) is passed. The government requires that every cattle producer brand its stock with a unique 15 digit identifier. This code connects the cattle to the exact place where they were raised and can be used to investigate disease outbreaks. The auctioneers have access to this data, which they keep from the meatpackers as "proprietary information." But the new proposal would give the four major meatpackers access to the codes, thus allowing them to easily purchase cattle directly from the ranchers that produce the beef they like.
The transition to a more database-driven cattle market will be painful but it's also inevitable. Regardless of the government's new rules, it could be only a matter of time before an entrepreneurial cowboy launches a new social network that directly connects the independent cattle producers with the meatpackers, cutting out the middlemen in the local auction markets along the way. How about CowBook or MyBeefSpace?
Photo by Flickr user "ckhartman," CC 2.0.