Equity Cooperative Livestock coping with array of challenges
The livestock sales sector continues to be faced with internal and external challenges.
That was the message from Equity Cooperative Livestock Association president and chief executive officer Charles Adami to members and employees of the Reedsville auction market at the district 3 annual meeting here on March 18.
In his remarks on the 91st anniversary of the formation of the cooperative, Adami referred to three subjects - animal activists, production methods, and sustainability - which were not in vogue when 44 local livestock shipping associations formed Equity in March of 1922.
Through such organizations as Humane Society of the United States, People for the Ethical Treatment of Animals, and many others, animal activists are engaged in a goal of removing all animal protein from the human diet, Adami remarked.
Among their tactics are misrepresenting themselves to gain employment at facilities dealing with livestock and then taking videos of what they see there, he pointed out.
Those videos then become the basis of questionable assertions, Adami stated.
To the livestock industry, his advice is to reduce or eliminate the opportunities for obtaining such videos and for making other claims about mistreatment of livestock.
In addition to the media attention that undercover videos attract, Adami mentioned the uproar in 2012 about lean finely textured beef. It was widely referred to in the media at the time as "pink slime" and gave the livestock sector "a black eye," he indicated.
Another challenge in recent years is stance of large corporations (those whose names are on retail products or who are processors) to ask livestock producers to provide certifications about traceability of their animals and about sustainable production methods, Adami observed.
He noted that sustainability, which calls for production practices that do not deplete or damage resources, is something that livestock producers need to deal with.
Regarding traceability of animals, Adami mentioned the new federal Animal Disease Traceability rules, which took effect on March 11.
Based on requirements of a health certification from a veterinarian and numeric identification of each animal, they apply to virtually all bovines that are taken across state lines, including those going to fairs, breed shows, exhibitions, rodeos, or recreation events.
(Many of the new federal regulations were already in place in Wisconsin. A Wisconsin State Farmer story by Jan Shepel on Jan. 18 - available on the Internet - described the details of those regulations.)
For its part, Equity will provide the required animal identification for any animals going across states in any of its sales programs, Adami stated. He emphasized, however, that this matter is one several items that require more employee time and increase operating costs for the cooperative.
In somewhat a similar vein is the probable furlough of federal meat inspectors in upcoming months, Adami observed in reply to a questioner.
He said the accompanying shutdown of packing plants on furlough days would not be good for the livestock marketing sector.
Reviewing Equity's 2012 business year, Adami noted that the cooperative realized net proceeds of just under $1.679 million - a mere .3 percent return on gross revenues of slightly over $609 million for the year.
"That's little margin for error," he remarked. In 2011, Equity's net proceeds were $1.731 million.
To relieve some of its financial stress, Equity redeemed the more than 17,000 shares of preferred stock on which it was paying a 7 percent dividend - a rate that was appropriate when those shares were issued but not today, Adami reported.
During 2012, Equity's cost of operations was up by 8 percent per animal sold, largely because of a downturn in animal numbers compared to 2011, he pointed out.
Chief financial officer Nancy Bilz reported that the livestock total of 833,009 head for 2012 was down by three percent from 2011.
By category, cattle and calf totals were down by 2.5 percent and pigs and hogs were down by 12 percent. The goat and sheep total was up more than 2 percent.
In its service charges and commission fees, Equity took in an average of $15.54 per head in 2012, Bilz noted. The average costs were $13.53 per head, leaving the cooperative with proceeds of $2.01 per animal.
Aging Auction Markets
On a meeting night when special attention was given to Equity's history since 1922, Adami observed that most of the cooperative's auction facilities were constructed in the late 1950s or 1960s and are definitely showing their age.
He pointed out that most of spending of $561,000 by Equity in 2012 to upgrade its auction markets occurred at Altoona, Bonduel, Reedsville, Stratford, and Waukon (IA).
In addition to installing new equipment, significant attention is being given to employee safety, Adami noted.
He said this should pay off in improved handling of livestock, better prices, and reduced chances of adverse exposure and publicity. Across its system, Adami reported that Equity is holding one employee safety meeting per month.
District 3 director Steve Schleis of Kewaunee, who was re-elected to a third three-year term, also mentioned the safety campaign. During visitors by the directors, he also learned that each of the market facilities has different ways in working for the same goal.
He also reported that as of August in 2012 the cooperatives 10 directors began using an I-pad as their primary recordkeeping instrument.
Reedsville auction market manager Greg Cummings reported that this winter's weekly hay sales have been attracting 40-65 loads per sales day and that many of the purchases are being made by buyers from outside of the immediate area.
He also mentioned a machinery sale scheduled on April 20 and reminded attendees that the facilities are used for youth group training sessions on cattle judging and for weigh-ins on meat animal projects for Manitowoc County youngsters.
Equity's history served as the subject for a quiz that attendees were asked to answer and for concluding remarks by the cooperative's public relations director Janice Schyvinck.
Highlights in the questions and in Schyvinck's resume were the fact that railroads, not trucks, were the primary means of moving cattle to market in the early years of Equity, publication of a newsletter began in 1935, and Milwaukee (then with major stockyards) was the cooperative's headquarters until a move to Baraboo in 1964.
The first auction market opened at Richland Center in 1957, the Waukon (IA) market was purchased in 1990, a livestock credit corporation was formed in 1992, and in 1996 Equity acquired the six auction markets operated until then by Midwest Livestock Producers (a Farm Bureau affiliate).
This acquisition led directly to setting of a record in 1997 for the highest number of livestock ever sold by Equity in any year.
Equity's history was also highlighted in a two-page picture spread in the annual report for 2012 and with a video screen display of pictures throughout the district meeting here.
One task that Equity's board of directors won't be facing in the immediate future is selecting a new cooperative president and CEO to replace Adami. He has a contract that runs through 2014.
In his director's report, Schleis indicated that Adami had earlier informed the board that he intended to retire at the end of 2013. This was due in part to the surgery he underwent in January and from which he is recovering well.
Schleis reported that the board had started in one direction in looking for a replacement for Adami but decided on a different approach, which involves working with a consultant.
With Adami deciding to remain to the end of 2014, Schleis said the hiring search is on hold.