Champion Cattle Company - A Study in Efficiency and Market Savvy
However, critical to this was their ability to eliminate the many uncertainties in their stocker/finishing operation. Efficient, low cost weight gain is paramount at Champion.
In November 2003, Shepherd and Blackburn conceived this vision while visiting a feedlot in Kansas where cattle that Shepherd had backgrounded were being finished. The two returned to North Carolina with the goal of expanding Shepherd's backgrounding/stocker facility into a 1,000-head operation sending cattle to feedlots in the Midwest by the end of 2004 through a retained-ownership structure. After a few years of buying cattle and either shipping them to the Midwest or purchasing from local Midwestern beef producers, it became clear to the tandem that if they were going to be profitable, they needed to get their finishing done closer to where they purchased cattle.
“In 2006 we brought our feeding operation a little closer to the east coast and added backgrounding farms in Virginia and feedlots in Pennsylvania to our program,” Blackburn says. This move was made primarily because of the high cost of transporting cattle from the east coast to the feeders in the Midwest. They decided that since the majority of the cattle they purchase are from Virginia and the Carolinas it would make better economic sense to finish them closer to the point of purchase. “We can bring cattle from the Virginia area where we purchase a lot of cattle and unload them here with our feeder cattle,” he outlines, “and turn right around and load those same trucks with cattle we have just backgrounded and ship them right back to the finish yard in Pennsylvania. This keeps our trucks rolling and full.”
“We still purchase a lot of cattle in the Midwest,” Shepherd adds, “but rather than ship them all the way to NC, we’re working with a local partner in the Midwest who is preconditioning our cattle there and sending them to the feed lots out there. It keeps us diversified and cuts our transportation costs significantly.”
Cattle arrive at one of Champion's locations usually within twenty-four hours of purchase and are provided with clean water and fresh leafy hay. “We allow cattle a minimum of 24 hours to fill up on water and hay before their initial processing,” adds Farm Manager Seth Church who joined Champion Cattle Company in May of 2004. Church, an Agricultural Business Management graduate of North Carolina State University, says eliminating stress on these incoming calves is paramount to the quality of animal they produce and sell.
And stress is something Champion’s management and employees don’t tolerate. “Stress is a factor we take great consideration in keeping to a minimum because it is scientifically proven to be a major factor in Bovine Respiratory Disease (BRD),” notes Church. Processing facilities that allow cattle to flow easily through pens and working chutes is a critical aspect in low stress handling.
“And there is nothing more stressful than flies,” Shepherd stresses. “We have a huge fly problem. We see significant weight losses when we don’t have a good fly control program in place. Also, from a sanitary standpoint around our starter barns, we have to keep fly pressure under control. We looked at and used a lot of insecticide ear tags, but we really like the 40% diazinon-based Patriot insecticide cattle ear tags. We also use them in our grazing program when we turn cattle out on grass and in our feedlot program. We also incorporate Permectrin CDS around our barns to keep fly pressures under control as well. The cowboys really like that they don’t have to fight flies when they’re working cattle.”
And yes, they rotate tags to keep resistance under control, emphasizes Church. “Fly tags have been a part of our fly control program since Champion Cattle Company was formed. It is by far the most economical way to keep flies under control. We tag the animals and pretty much leave them to eat and grow.
“From a labor and economics standpoint,” Church claims, “insecticide ear tags makes total sense for us. In today’s cattle market, a pound of gain on a calf is worth at least $1.00/lb., if not more. That means we’re making at least $15 to $20 per calf by having good fly control. That’s a no-brainer in today’s cattle market.”
Because of their location, Church starts tagging in early April. “These cattle are tagged with the Patriot tag and then those cattle won’t be caught again until late summer. That is why we use the Patriot tag because we don’t worry about the tag not providing good control during the time period. However, with resistance always a concern, we’re looking at extending the control and staving off resistance with the rotation to Avenger ear tags this season. We haven’t used them yet; however, we have seen the data and it is impressive, especially for the length of the season we have to have fly control.”
According to Blackburn, “We let the market dictate the type of cattle we buy.” For instance, they can buy the weight cheaper than they can put it on right now, so that’s what they’re doing. Champion is structured to bend and flow with the markets and the customer’s demands. “When corn was $2/bushel, we could put it on cheaper than buying the weight. But with the current price of corn, we can buy the weight cheaper,” Blackburn notes. Currently they’re buying six-weight cattle and finishing those types of cattle.
In the summer of 2006, a computer system with management software to help in tracking the movement of cattle was installed. “This system allows them to monitor expenses associated with individual lots of cattle,” says Church. “We have found keeping records on the back of an envelope may not always provide us with all the details needed. The record keeping we do is as important to our bottom line as keeping the cattle inside the fence.”
And as the incoming President (2010-2011) of the North Carolina Cattlemen’s Association, taking the stress off of the cow/calf producer fits perfectly into Shepard’s future plans. “The foundation and future to value-added beef products for consumers starts and ends with the cow/calf producer,” Shepherd states. “If we can’t help make this segment of the beef business profitable, then producers like us who are in the feeder calf business will be out of business pretty quickly. This in turn hurts the feed companies and the entire food chain. It’s a daunting task that we take very seriously. We have to do something now, not 10 years from now.”
Shepherd, Blackburn, and Church strive to produce “quality pounds of beef” with reasonable profitability. The trio attributes their success to the diligence used when purchasing quality animals to introduce to the program, well-managed nutrition and effective animal health programs, and utilizing strategic marketing options.
Looks like the industry is in good hands.