CALF_News_February_March_2021

14 CALF News • February | March 2021 • www.calfnews.net W arren Monfort knew his own strengths. A dedicated cattle feeder beginning in the early 1930s, he worked hard to purchase high- quality feeder cattle, sort them properly and feed them a good diet, treating animals almost like show cattle. He was proud of the animals he fed. His success was confirmed partly by rapid expansion. The capacity of his feedlot just north of Greeley, Colo., had increased to about 4,500 head by the time World War II ended; by the time his son Kenny joined the team in 1950, it had increased to 8,000. The lot’s size doubled to 16,000 head by 1955 and doubled again to 32,000 by 1960. Accomplishments were also evident in the reputation he was gaining among those buying the cattle. The animals were widely recognized for their quality – even though they were not necessarily financially rewarded for it at the ter- minal markets in Chicago, Omaha and Kansas City. No Love Lost The Monforts thought packers paid too little for their animals, which obvi- ously couldn’t be held for better markets. But this was only one of the reasons the Monforts hated packers. They also believed packers manipulated their own production to get the animals at the lowest price possible. Basically, they thought packers were merciless – and unscrupulous – when it came to how they treated their cattle suppliers. At the time, packers would charge a yardage fee for animals purchased, whether those animals had spent any time in the yards or not. And the Mon- forts always thought shrinkage – the amount of weight cattle lost on the way to plants or terminal markets – was calculated higher than it actually was. It was costing about $6 per head to market animals through terminal markets, and feeders like the Monforts picked up a big chunk of that. There were also limited marketing options. In the early 1900s, the beef- packing industry was controlled by what was known as the Big Five – Swift, Armour, Morris, Cudahy and Wilson. They slaughtered about 82 percent of the cattle and produced 95 percent of the fresh beef. They were pretty much the only game in town. On the other side, packers thought feeders would raise animals for maxi- mum weight gain and cared nothing for their quality and composition needs. They had razor-thin margins and, to keep their plants running, they would sometimes have to buy what they could get, regardless of cost or quality. They thought they were being more than fair, though. In the 1950s Swift was boasting that more than 73 cents of the average beef sales dollar went back to pay for livestock and other agri- cultural products. Kenny Monfort was focused on the other 27 cents. Looking for Options In fact, Warren and Kenny were frustrated by the lack of options for their increasing supply of high quality fat cattle. It fell on Kenny to see if there were any companies willing to locate closer to their lots. It turns out there weren’t. The major packers thought it was better to ship the cattle than to try to find new employees and ship the meat long distances. But Kenny came up with another solution. Capitol Pack in Denver was willing to operate a plant in Greeley if the Monforts would build it. Warren thought it was a terrible idea. They were cattle feeders, not packers, he insisted. The family should concentrate on what it did best. Margins also supported feeding. Mar- gins for packing plants were about 2 per- cent; feeding was in the 5 percent range. Kenny thought getting into that side of the business made sense, though. In By Walt Barnhart Contributing Editor C O V E R S T O R Y The Packer-Producer Divide Straddling Both Sides of the Fence Distrust among segments of the beef production chain has been common for more than a century. This has led some in the industry to explore a different model. Kenny hands a check for the first load of cattle at the new packing plant to Lee Dalton. At left is cattle buyer Bud Middaugh; at right is Lee Dalton’s brother Arnold.