Jarrod Gillig is President of Business Operations and Supply Chain - North America Protein at Cargill. In this role, he oversees operations for their beef division, as well as several other protein segments within Cargill’s scope.
Jarrod grew up on a farm near Odessa, MO, and has been with Cargill in a variety of roles over his tenure. In addition to his “day job," Jarrod and his family also have a small herd of cattle and his children are active in 4H and the National Junior Hereford Association.
My conversation with Jarrod is a continuation of several episodes (#3, 8 and 10) over the past month or two that have touched on fed cattle marketing and the challenges that we have seen over the past few years in cattle marketing—especially at the fed cattle level.
Jarrod Gillig is President of Business Operations and Supply Chain - North America Protein at Cargill. In this role, he oversees operations for their beef division, as well as several other protein segments within Cargill’s scope.
Jarrod grew up on a farm near Odessa, MO, and has been with Cargill in a variety of roles over his tenure. In addition to his “day job," Jarrod and his family also have a small herd of cattle and his children are active in 4H and the National Junior Hereford Association.
My conversation with Jarrod is a continuation of several episodes (#3, 8 and 10) over the past month or two that have touched on fed cattle marketing and the challenges that we have seen over the past few years in cattle marketing—especially at the fed cattle level.
Well, thank you for joining us once again, on episode 11 of practically ranching. This time we continue our marketing bent that we have been on for, oh, the last few weeks off and on, I guess. And, uh, We get talk with a packer this time. I know a lot of you who I've visited with have said, you know, if you're going to talk about marketing, you got to have a packer on there and you gotta make them be honest and transparent and tell it like it is, and you've got to do the same back to them. And so we're going to do that. Um, I'll. I'll come right out of the box and tell you... there will be a few of you who think I'm too easy on today's guest, Jarrod Gillig, from Cargill, and there'll be a few of you that may think I'm a little bit too hard on him. And honestly, I think that's about where I need to be. And maybe as an industry, that's where we need to be as we try to arrive at solutions and not just point the fingers of blame, but, uh, I have known Jared Gillig, since the late 1990s. Jared grew up in Odessa, Missouri on an Angus farm, and he came on to the national junior Angus association, board of directors the same year that I went off of that board. I'd just graduated from college and I think he was getting ready to start at Oklahoma state university, or maybe he was already down there. After he graduated from OSU, he went to work for Cargill. And he has served in various managerial roles at plants from Friona Texas to Spruce Grove, Alberta, Canada, back down to Plainview, Texas. He's he's led several of their protein segments, ground beef, Turkey, cooked meats. You name it. He's, he's kind of been throughout the Cargill structure, especially in that protein division. And today he heads up, as president of the business operations and supply chain for their north American protein division, he basically heads up the team that's in charge of beef operations. And so we've got a guy that, uh, that sees it all from labor issues to marketing issues, to supply chain issues. You name it he's, he's had to put the fire out. So I think you'll enjoy his perspective. It may be a little different than what you have in mind. It may solidify some things that you already believed, but hopefully it will help us all understand a little bit more about another segment of the beef industry. So thanks again for joining us and we'll look forward to visiting with Jared Gillig. Well, Jared, welcome to practically ranching. Uh, we appreciate you being here. I must admit, I am probably gonna be just a little slow on the draw and groggy, cuz I have spent the last five days with my kids at our Greenwood county fair, and as I saw somebody post on Facebook from another county, there's no tired, like county fair tired. So, um, if I'm slurring words or a little bit slow on the draw, I'll blame it on my kids in the four H program. How about you? I think maybe you've been doing something similar.
Jarrod:You bet. You bet. Yeah. So Matt, uh, first off, great, great to be here and, uh, look forward to our conversation and thanks for, thanks for pulling us together. I think the conversations like this are absolutely outstanding. And probably the best part of it is it is a conversation and, not a bunch of accusations going back and forth, so we can actually sit here and talk and debate a little bit. So anyway, so to start off with that, I, I really do look forward to the conversation. Yeah, so we just got back from our Herford junior nationals there in Louisville, uh, over the weekend, had our county fair while we were out there. And so kind of split and conquered had half the family, stay there at the county fair. And then, half of the family, with Herford out, out in, uh, Louisville. So I had a great time and, and, uh, yeah, it was good. It was a good time.
Matt:Which half did you get to, uh, take over?
Jarrod:So we, so when I say that, you know, uh, of course we're, we're a, we're kind of pulled into Herford now I know we're gonna talk about my history a little bit, but you know, so Jamie's got, uh, we got two sisters and a cousin that we still show with from a family standpoint. So we, we get a pretty big group going out with us. Between all the families will pull 14 or 15 head to spring shows. So, so when I say that there's two of those families, we went to Louisville and two of the families stayed home at county fairs.
Matt:Well, that's a typical packer making things bigger,
Jarrod:right? Uh, there you, there, here, you it's a hell of a string. It let go. Whenever you, you drive up on it. Yeah. That's,
Matt:that's pretty good. I, uh, I thought I was in over my head with five head of, of county fair steers and heifers between our three kids. But, you've once again, you've uh, you've outdone me Gill, so, well, I don't, I
Jarrod:don't know about. Well, it's a good time. And, you know, from a program standpoint, there's nothing better, you know, teaching your kids on livestock and doing that. We, we genuinely as a family, love it. And. It's a good time, so I wouldn't trade it for anything.
Matt:Good for you. Well, before we get too far into it, why don't you introduce, yourself and, and what your day job is today when you're not showing Herford with kids and then we'll, you can kind of go backwards and tell us a little bit about your childhood and education and, and upbringing there. If you would.
Jarrod:You bet. Yeah. So today, as I sit here, I'm I lead Cargill's, business operations, supply chain. So I'd be the president of Cargill's business operations, supply chain for Cargill protein, north America, um, based here out of Wichita. So what that encompasses, if you kind of think about everything we've got going on here. I've basically got the responsibility or my team's got the responsibility of 46 different sites across north America, where we'll do protein, obviously beef, you know, the conversation today, we do have a couple, cow facilities, operations. We've got, uh, case ready, we've got our grind operations. We've got our Turkey operations. And then we also do quite a bit of cooked meats. So we do, like your deli meats that you'll find in cases we do pizza toppings, and then we do some ready to eat meals as well. And then, we've also got our egg business. So, Cargill's involved in quite a bit across, uh, across many different proteins and it's, it's pretty exciting, obviously never a dull moment. And, uh, beef is a component of that.
Matt:So if I had to ask you, what's your. Toughest part of that job
is
Jarrod:what would it be? Without a doubt. It's yeah, today, I mean, it kind of ebb and flows quite frankly, as I think across my career, but you know what we're. You know, facing from a labor standpoint, um, you know, as I think of, uh, demands that customers have and, and how we can make sure that, that we stay relevant, you know, from an industry standpoint, uh, within the industry, but also, you know, making sure that we continue to service our customers, which is obviously why we're all here. It's, it's that labor component and, and, you know, I've got lines that are physically down, cuz I, I can't get labor into some of the plants. And, uh, figuring out how to navigate that. And quite frankly, differentiate, you know, in the past I would look at my competitor and think that was a, another protein facility specifically when I'm talking about labor and honestly it's, you know, it's Amazon, it's, it's anybody who's employing somebody. Uh, around these regions where we've got these plans, uh, because it, it really is a, it's a fight for talent. And, you know, I'm really proud of a lot of the work that our team does in differentiating how we, come forward for our employees. But, that, that is a huge, huge obstacle and continues to be a large obstacle for us. We've got about 28,000 employees across our facilities and, you know, I'd be today. We'd be, I don't know, 1800 folks down probably.
Matt:Wow. And that I don't think it matters what, uh, business we're in, but, um, That labor shortage. And I guess you could also throw in there it's tertiary, but it it's similar. The transportation woes and, and challenges that we all have, whether it be getting'em to the plant or getting it product from the plant to, uh, to the marketplace. Those labor and transportation woes are, are, front of mind. And, and as we talk here and at the sale barn cafe and at the county fair show ring, or wherever these conversations come up, most of the time that isn't even part of the conversation that I have with guys with manure on the boots and, the straw hat, uh, it is what's going on with price discovery on fed cattle. It is what's, what's wrong with the price of fed cattle and, and what have we gotta do to fix it? we always talk about the cattle cycle. We always talk about leverage. I remember all too well, the days of 2013 and 14 and early 15, and just smiling as big as we could be at$3 calves. Dollar 50, 60, 75 fed cattle. And, and we all knew it couldn't last, but it was sure fun while we were there. Uh, fast forward to the last two years and it hadn't been there as much fun. And, and I know it, every feed yard owner and manager knows it. And, and I, I think, you know, it too. From your standpoint, from the processing and packing industry standpoint, Are the price discovery methods that we've got still an effective way to, for, for this market to work or, or what, what needs to happen?
Jarrod:You know, Matt, you and I, spring shows, we ran into each other a couple different times and, and we kind of dove off onto this conversation a little bit and, and probably the first thing that, and I kind of started with this that, you know, there's probably things you and I are gonna agree to, and there's saying we're not, but, but ultimately it's having a convers. You know, sit sitting from a producers standpoint, it, there, there's no doubt, you know, back 10 years ago. I mean, we were all smiling and looking and now it's, you know, there's obviously a lot more frustration and that's, you know, when folks see me and talk to me, I mean, that's kind of what we, what we talk about a little bit, the, the question around, Hey, does the current method work? Um, you know, I, I would tell you, it is, it is a transaction. It's functional. The, the thing that I think we've gotta figure out is what does a different mouse trap look like? And, and how do we, how do we look from an equitable standpoint? What, what does that start to look like? You know, as I think about Cargill, we, we do think, and I've, we've been very open and, and talked about this and I've had an opportunity to go talk to, to way more folks in Washington DC than I probably anticipated But, but as we, as we go through that, you know, we do have a view that. There is a, uh, there's an opportunity to make sure that we are buying cattle, how folks wanna market them. Now, for us, that comes out being somewhere around that 30 to 35% is what we actually will trade you know, as you think about a negotiated trade, whether that be a negotiated grid or a negotiated live um, that's kind of where that ends up falling out on. The most important part for us, and as, as we sit here and talk about it and, you know, producers it's, how do producers wanna sell their cattle? Because one of the things he had talked about in, in the, the podcast you had with Sean Tiffany was outstanding, but you know, one of the things was,"Hey, we built these grids to actually create a benefit." And, uh, and that did benefit the beef market. I mean, you look about, you know, in 2000 we were running somewhere around 55% you know, prime and choice across the us. If, if you think from an industry standpoint, you know, you take it up today, we're on an 83%. I mean, in 2022, we, we recorded an 83%. So, so tell me that the system doesn't work, I mean, those grids are working right? But then, Hey, what is, what is the afterthought of that? And, and did we go too far? I mean, those are, those are all questions. We probably debate, but. Is another mouse trap out there. I, I think it sure could be. I don't have what that answer is right now. You know, the thing that concerns me, and it's something we talked about this spring is the number of producers that are walking, you know, that are saying, Hey, this isn't, you know, I can't do this. I mean, from an agriculture standpoint, you know, whether it's it's me and the small cowherd we've got, or, or you there with Dalebanks, that is the first step of our supply chain. As I, as I think about the sustainability of the beef market, you know, from a producer's standpoint, it's gotta work because that is the first step. In 2013, probably worked pretty good. Everybody was smiling. Right, right now the conversation is, is D. You and I both know with the cow slaughters, we're seeing the, this conversation's gonna flip. I mean, we could have an entirely different conversation. I anticipate, you know, the next six to eight months.
Matt:And that, that's the tough part from a cattle cycle standpoint. I mean, we've seen it for decades and decades and decades. And I think we saw an extended one and everybody was scratching their heads 10 years ago, 15 years ago as to why this 10 year 11 year cattle cycle that was relatively predictable... You know, I remember article after article that said, is the cattle cycle broken? Does the cattle cycle even exist? Well, it cycled back and it did it in a hurry. And, and I'm not sure if that's because of the way we market fed cattle today. I don't know if that's maybe because of some of these quality situations where had never seen a time that we increased demand for our product as much as we did. And so that threw it off. Maybe, you know, because the droughts were prolonged or more widespread. I mean, all these things are acting on it, but I guess, um, that leverage shift and the amount of shift that happened this time in the relatively short amount of time, away from the producer and to the packer is, is what I hear from folks who say there's a problem.
Jarrod:Yeah. And I, I think you gotta, you know, with, with that, You gotta, probably gotta go back and understand or, or why. And, and there's, you know, all kinds of articles written. I mean, there's, you know, some of the, some really, smart economists that have come through and, and it, it literally comes down to supply and demand and that, and again, that's not a, that's not an easy answer. That's not an answer a lot of folks wanna listen to, but, you know, I, I often get questions about,"Hey, talk to me about the, the fire that happened there, you know?" Oh yeah. Several years back. And then I, then I get the,"well, tell me about COVID and why did COVID have such an impact?" And, as I, as I go through those sayings and I, I mean, I I've even heard the ridiculousness of. You know, Hey, you know, what is the fire plant or, and, and I will tell you, sitting in these beef plants, you know, I I'm responsible when I was a GM. And even today, when you're responsible for 2,400 individuals, and the first thing I thought, whenever that article came across is,"were there people impacted. And what was the safety of that team?" Because those are, these are massive plans and any fire like that is, you know, we, we do practice, take care of a drills. We do practice, you know, emergency evacuations be because it is real, you know, there's 110,000 pounds of amonia sitting at these sites. You know, things bad can happen. So, so obviously the safety is the first thing. I, it never even crossed my mind that people would actually start accusing to say, Hey, you know, this was a plan. And I think we're by that. I mean, those, those days went by, but, but as you think about even COVID and you think about how we faced into that, you know, we we went through this system and, and it all appeared the same way we all did. I mean, I was a naysayer to it early on, you know, whenever you heard it happening in Asia and it's like,"eh, I don't know. I mean, how, what what's that effect gonna be to us?" March 23rd was the first case that, that we had as a, as a Cargill team. And, um, and it, it, that significantly changed everything and how I thought about a lot of stuff. And fortunately, I had some really smart folks in the plants working through,"what do we, how can we get people through, how can I do temperature screening in a fast pace? How can I make sure we've got, you know, separations so that we're, you know, kind of meeting the things that the government and OSHA was coming at us as well as things that, you know, the Cargill team." And, and we'd looked at to say, Hey, this is how we think we can do this effectively. You know, ultimately it did constrain my volume. I mean, I, I had plants that I had to shut down for a period of time. I had plants that I idled you know, whether it went back to one shift or, you know, those are significant changes that occurred quickly and simultaneously you've got from a demand standpoint, you've got one of the greatest demand curves we've probably ever seen in beef, which was remarkable. As people stayed home, they wanted to invest in beef. And I think that is the best message for. That we can never see simultaneously I couldn't supply it. And, and that's me speaking, but as an industry, obviously, that's what occurred across the industry. and the thing I'm most fortunate of, and I've been cited in this in a couple different places where where the fact that people were being told every day not to go to work. Yep. They had their families, they had, and yet I had employees walking into these protein plants, every. and, uh, and you know, that, that actually provides more proud, more proud moments to me than, having some of these other conversations, because I am extremely fortunate for the team we've got, that makes us successful every day.
Matt:Yeah. You, you covered several points and I was trying to remember all of them here but all of them, point to the irony in this whole debate and discussion between producer and packer processor. The irony of it is: the reason you all are making so much money right now that everybody wants to be upset about. I, I personally am tickled when the guy that I sell to makes good money. Let's put it in bull terms because that's what I speak in the most. When my customer is profitable, he comes and is more willing to buy the top end bulls that I'm willing to sell at a higher price. So I think it's a great thing. We'll get to the part about not getting the higher price here in just a second, but the irony of this is just what you said. We have grown demand since I graduated in college in 96, we have grown demand, an unbelievable amount and, and anybody that wants to argue that we can show them plenty of places that prove that, that the consumer is more confident and is more satisfied with beef today than ever. And that's why they did what they did during COVID. Yeah, they were used to spending money at a restaurant or on vacation and they couldn't do those because it was all closed down. And so they went to the retail counter and, and bought that beef. But the fact of the matter is they went and bought the beef. And that's, that's a tip of the hat to producers and their genetics. That's a tip of the hat to feed yards and the way they, they handle and feed cattle. Um, that's a tip of the hat to you all in the processing segment for giving those consumers what it is they said they wanted instead of just honking and chunking like we did 30 years ago and throwing it all in the same box. We find new cuts, we specify and sort these, these carcasses into quality grades better today and more differentiated and, and we delivered that consumer what they wanted and they paid for it. meanwhile, you mentioned. Creating this better mouse trap that, that Sean, Tiffany and I mentioned that we've touched on in a couple of different, podcasts here over the last couple months. Whose responsibility is that if we're talking about building this better mouse trap to, to do a better job of discovering price of, of marketing and negotiating, whatever we wanna say, establishing true value based off of that consumer dollar, that's coming back all the way down through the chain. Whose job is that in your opinion, to create this better mouse trap for marketing fed cattle.
Jarrod:Ideally it's each segment, each segment of the industry has gotta play a role in that is, I mean, it, it's easy to say,"Hey, the Packers, the packer needs to just pay me more." So, so let's go back. Let's go back and, and, uh, sit in my seat here just for a quick second. Sure. That's what, that's what I want and say,"Hey Jared, I, I wanted you to pay X number of dollars more per. That that's, that's fine. So, so I can do that. I am an extremely competitive individual and as we sit here and think about the competition, our, our competition is literally the other Packers that are out there, whether it's it's the big four or the, or the big, the other three, you know, there's other ones that are, that I are extremely formidable, competitors. So as, as we think about doing that, so I am disadvantage my sales team against basically every other packer that's out there. That's gonna be selling beef. And what I mean by that is, Hey, I, I can provide an extra$5 or$3 I mean, just name the number to say, we're gonna go. So first off I'm. I need help figuring out which feed yards you want me to create a favor to? Right. Because I, I don't have a, I mean, I'm actually not a significant portion of this business. Now, you know, depending on what week you look at, I mean, I, you could tell me, Hey, you know, Jared, you're anywhere between 19 and 21%, of the industry, but at, at which you can argue to say, Hey, that's for. But I hate to tell you, I've gotta sell beef against that other 80%.
Matt:Right.
Jarrod:And I've got pat, I've got feeders that are gonna come to me and say, well, why did you pay that to so andSo. I mean, so from an industry standpoint, right, right. Or wrong, I, I think it's gotta be each segment of the industry creating it. And what does this value start to look like? Like how, how do we actually create it all the way to that consumer? I mean, there's some pretty unique stuff out there. And on the podcast he had with Sean, Tiffany, you actually, I, I believe it was actually you who referenced the ranchers Renaissance. And, uh, and you go back in time. I mean, you know, there's a lot of conversations around a box beef calculator.
Matt:Right.
Jarrod:And, uh, and I'll tell you in the last couple of years, there's a lot of producers that would've said, Hey, box beef calculator is what we need to do, but let me go back to 20 13, 20 14, 20 15, you know, we, we operated our on a box beef calculator. Now that was before my time, you know, I was merely a superintendent on night shift Fab in Friona, TX, Texas at the time. So I, I don't know why it dissolved exactly. I can't, I honestly don't have the answers for that, but I can tell you that we operated off of box beef calculator and we no longer do. And it's the ebbs and flows of, because somebody's gotta make a decision of what that, what that looks like, right? So, When the packer or when the margin in the beef is great, everybody wants a box beef calculator. Right. You know what we're about ready to flip into that. I anticipate because of the number of cow slaughter and everything else with the cow herd. I don't know that those days are gonna be a real, you know, I don't know that a bunch of folks are gonna be knocking down my door saying, Hey, I want to do a box week calculator. Right? I probably need to have Dr. Glen Dolezal on here, cuz I think that was his baby, if I remember right at Oklahoma state, and then adopted by the rancher Renaissance and that's yeah, that's past history that I'd kind of filed away. I remember asking him one time back in this would've been about 14 or 15 and that's when I wanted the conversation to occur because things were really good. And I have said this before. I think we do a better job as cattleman discussing big issues when we're not scared to death and, and pissed off. And yeah, nobody
Matt:wanted to talk about any of that type of, of, I shouldn't say nobody, but I had a hard time in our industry getting folks to address the issues of price discovery in 2014 and 15, because they were grinning from ear to ear, everything was rosy. And that to me was the time to talk about it. Now everybody wants to talk about it. And so, so here we are, but, uh, that's, I that'd be a good history to bring Dr. Dolezal yeah, Glen, Glen's a great resource. I mean, there's a bunch of stuff, you know, with, with, I, I get the opportunity, obviously with Glen on our team, I get to, uh, work with doc quite a bit. And I mean, he would be, uh, he'd be pretty interested even from the vision cameras and some of the grading and the advancement in grading. There's, there's quite a bit of direction that podcast could hit if you yep. Yep. I, I would into that one. I, I like having people on here that are smarter than me and, and, um, I be obviously in this case we do. And I think if I got Dr. Dolezal on here, I would, I would be trying to play catch up the whole time. So I may have to caution myself getting over my head.
Jarrod:Let's go. Let's go back to what you said about, you know, and it really doesn't matter what, what we're talking and we're talking about price discovery, we're talking about the cattle industry... as you think about fixing things, it, it does take a lot of perseverance to say,"Hey, we, we want to fix this," because when it's broken or when it's in the time of, you know, high anxiety, which is, you know, what, where we're at right now. I mean, if you just, just honestly, and folks are fired up about it. That's not the time to, that's not the time to fix it. Right? You're, you're gonna make a drastic move that is probably not wise for the, for the entire industry. And that's, that's probably more Jared's perspective than, than a Cargill commercial there. But, but as you think about how do we, like, like we can look back as an industry, we can look back at this and say,"Hey, you know what? I, I want to figure out what a better mare is. Let's spend the next several years figuring out what that looks."
Matt:right.
Jarrod:And I, and the components of that, and, and again, you've hit on another podcast is this whole sustainability piece. There, there is more coming with sustainability. I think a component of it comes in with, you know, the work Callahan Grund and some of the Cattle Trace folks are doing. I mean, you, you think about the mechanisms that we're getting introduced to and the advancement in technology of what we see. There's actually a path where you could start to say, Hey, I'm gonna link this back. And, and I've now got a mechanism that I can track a calf at each stop along the way. I know where it birthed, I know who had it as a backgrounder, I know who had it as a feeder, and I know the packer that had it because of the mechanism. And, and if we utilize cattle traces example here, I mean, Cattle Trace creates that opportunity for us. So is there a mechanism where each step along the way, you know, can get, can get paid? I mean, going to a retailer, a retailer would love to have that story. Oh, So, what does that start to look like? And again, that's, you know, it's stuff that, you know, I probably think about a lot sitting in a seat where I get to see both sides of this, you know, more than,"Hey, this is a, this is, you know, something Cargill's trying to put together." I, I don't have that quite figured out yet, but, um, but I do think this whole carbon, if we jump streams here for a minute, And think about sustainability in carbon. I, as I learn more and I am by far not an expert at this, I mean, there's, I am early on in learning to figure out this whole carbon deal. But as you think about carbon, there's so many dollars being traded or folks that are selling carbon, you know, to say, Hey, I, I can get X number of dollars off this by, by doing a different, Agriculture no-till, whatever, whatever you wanna look at from mechanism standpoint, I'm probably in the camp and the thought process that, that carbon credit should actually stay with the product that you're producing. And again, Cattle Trace is a mechanism of that, right? So I think as a producer, we gotta think about how do we produce carbon, you know, reduced carbon beef and how do we prove that? And. And those steps, understanding those steps along the way is absolutely a critical component to that. Now you get a consumer is a consumer willing to pay more a customer, dang sure is my customers because they have made commitments saying, they're gonna do this. And Cargill's made commitments saying we're gonna do it. Right. So there's a mechanism to say, Hey, how do I get that value back up?
Matt:It's, it's amazing to me that this whole carbon market thing and, and we won't have time for that tangent, but this whole carbon market blows me away. That the way it initially was set up was so that those who emit the most carbon into the atmosphere, weren't asked to change their ways as much as just pay somebody else to offset their way of doing business. And, um, that one is just, that's hard for me to stomach. And I think what you're talking about makes it a whole lot easier. I mean, we can do some things that we're already doing. We can improve on some practices that we've been doing and show that not only are the bS, things that are, that are coming about from the beef industry or from. Our consumers about the beef industry, inaccurate, but if we do things right, like we can, we can actually pretty easily, I think be, be net zero, or maybe even sequester some carbon if we, if we improve our practices there.
Jarrod:I definitely agree to that. I, as an industry, the agriculture industry has more of a bright story to but the problem is we are so hesitant to tell the story because we think everybody knows it. Or, you know, we don't, we don't necessarily know the flip side of the argument that well, and, and we're concerned to put ourselves out there, but you know, American agriculture is the real resiliency and the ability that we have to confront things like this, and quite frankly, uh, to show the world how to do it differently is, it's pretty remarkable. And, and again, you mentioned it, it's not a significant change. We are doing so many of the right things right now. You know, you, you know, Shawn Tiffany, when you got into the conversation about, you know, cover crops and you know, how are we, you know, sequestering, carbon. I mean, it's really not that hard. You just gotta, you gotta become knowledgeable and, and educate yourself to it.
Matt:So you talked about the resiliency of, of American ag producer of the American ag producer. Um, how, and, and you and I talked about this last spring at, at that cattle show you were talking about, or that you referenced, how concerned are you put on your packer hat for now? How concerned are you and Cargill with cow numbers decreasing like they are. I mean, I know we just had a, both cattle on feed and a cow inventory report come out last Friday. And, you know, it showed us down close to 30 million and obviously we're not done contracting yet. And I think there's a lot of forces everybody knows there's drought, there's higher open percentages, there's a lot of people that are switching from cow calf to yearling stocker segments. how much concern do you all as a packer processor that needs enough throughput to keep these plants running at at efficient speeds? Um, where do we go from here? And, and what do we have to do to stem the tide?
Jarrod:Yeah. You know, obviously it is a concern. Um, As we look at projections, I mean, what, you know, as a business, we look out, you know, to the future, we spend quite a bit of time actually looking in the future saying, Hey, where do we think things are gonna go? You know, we use a lot of the same data that that's. Open and accessible to everybody else. Uh, we just got a lot more people looking at it. But I mean, you think about cattle Fax and some of the projections that they've got out there. The USDA and I mean, it, it is a concern. I mean, it's, you know, we start going back down, down into those levels of, of that 20 13, 20 14, 2015 timeframe. And obviously that is a, uh, pretty healthy concern for us. So again, as we think about what, what does different look like and, and how do we, how do we get out of the deep valleys that, that we've historically seen in the cattle cycle? We we've gotta understand is there something that actually creates that different opportunity to where we can kinda level those, the steepness of that cycle out? I, again, it's gonna take somebody brighter than me, uh, to help figure out what that looks like. And then you've got, you know, and your reference here a little bit ago, but you know, you've got drought. I mean, there's many other impacts, you know, the, the cow slaughter we're seeing down in Texas in Oklahoma. And, and heck we saw up north last year with all the drought and you see it kind of all over the, the US. Honestly, if you look at a drought monitor and you know, that that is driven in the, by the dynamics of the, of the drought, not necessarily. Hey, I wanna hold my cows. I, I think there's a lot of folks that do wanna hold those cows. They, they see the tide turning, but they just physically don't have the, the feed stuff around them to keep'em. I mean, that's either I have cattle or run through or I don't, and, and that's gonna be a lot of, you know, what's demand look like, But that's, that's how you start to, uh, to get that. I I've gotta either idle a plant or fill a plant. And the cattle availability is just not gonna be there and it doesn't really matter what you look at or who you who's dead or you're looking at. I mean, we spent a lot of time on cattle fax but as you sit there and think about what those numbers are gonna do, That that's the indication. I mean, it goes back to, you know, when, when you said you were smiling here 10 years ago or whatever the number was, um, that's what that starts to look like.
Matt:Given the tightening supply of cattle coming forward and the tightening cowherd or shrinking cowherd, given this whole move towards sustainability by the consumer and, and the retail and food service marketplace. You know, there's a, there's a lot of different dynamics that are on your horizon. Where, where does the packing business go from here? Not just Cargill. Not even maybe just the big four, what are some industry changes you see on the horizon that may take shape if you can talk to anything in that arena?
Jarrod:So I think there's a lot of, you know, if you start looking five to 10 years out, Hey, what, what changes do we have to do? I mean, we talked about labor. I talked about that's one of my largest Neme. So, what can we do different from a labor standpoint? You know, we've got an entire group kinda dedicated to how do I differentiate my labor and, and what, what does that really mean? How do I make sure I'm attracting talent, um, in keeping folks on the plant, but, but there's a whole nother mechanism to that that we liken or at least what, what we're liking in it too, is kind of a factory of the future. Like what. What does more automation look like? You think about, you know, the pork industry or you think about even the, the chicken industry, there's a lot more automation in those types of industries because the, the product size, the consistency, I mean, you just don't have the variability, that we see on a beef carcass, which is made automation extremely tough. Today, though we're seeing more and more vision technology improve. And that actually allows for us to understand what. You know, understand that carcass more to where when you're making those saw cuts it, it's a lot more intelligent, um, with what it's looking at, just specifically from that vision. So I, so I actually do have quite a few, high hopes and in quite a few ideas around what that future state can look like, uh, from an automation standpoint, you know, from a box standpoint, we've automated our distribution centers years ago. And that helped immensely, right? I mean, that was probably one of our highest. Places, you know, you're throwing an 80 pound box all day long. Those were some of the highest injuries and back injuries. And so from a safety standpoint, that was a huge shift. I, I think there's similar opportunities in some of this other work that we're doing that gets pretty exciting. The, the second side of it that I would tie into that, that I think is a differentiator for us. And in, you know, where this goes in the industry or, or how this gets picked up, I'm not. But from a Cargill standpoint, it's utilizing AI and, uh, you know, what kind of technology can I use like that to help maximize, you know, from a yield standpoint to help maximize, safety and, some of those employee, functions that, that, computer augmented can actually help us. And it's kinda hard to get your head wrapped around that a little bit, but, um, but it's pretty exciting what that space can do. So we're, we're actually playing with that in a couple different plants and, and, uh, and it's pretty, uh, it's pretty amazing to watch the efficiency gain that you can pick up that way. But the other thing that's probably more exciting for our industry, we've always had a tough time in, in one of these large plants of physically tracing a carcass, through, I can kind of do it by time and say, Hey, this group of boxes came from this group of cattle, but. Getting down to that one carcass, um, you know, particularly in plants, our sizes was a little bit of a difficult, situation. So, you know, through AI, I, we we'll actually be able to do that through, through augmented vision and, and, AI technology.
Matt:So I think everybody that's listening to this podcast, uh, knows that there are at least two terms that AI describe. And the one we're talking about right now would be artificial intelligence, not insemination.
Jarrod:good call. Good call.
Matt:I know at my place, AI is, is, um, the first thing is gonna be the thing we do in the spring and the fall with cows. But, as we talk about robots and. Upgrading these plants to that type of technology. I would say it's safe to say that stuff ain't cheap. And, um, I'm gonna guess, I know in times of that cattle cycle that we keep referencing when the cow calf producer is making good money, I mean, I look back and see how many, 2013. 14 and 15 model pickups are out on these ranches and bale beds and cake feeders and tractors. That's when the production side of the beef business, reinvested in their plant property and equipment. That's when they put a lot of those dollars into things that they probably needed to replace 10, 15 years before. I'm gonna guess... I'm hoping that you all as good a businessman, as I'm told you are, and I trust that you are these huge profits that we're hearing about are probably not just going into Jarrod Gillig's paycheck. I would hope that a lot of these investments are being made and making that plant more E. Addressing some of these issues in terms of how do we have a more dependable line workers here, um, and available line workers, even if they have to be automated technologies, I assume that's where some of those are being invested. Am I correct? Yeah. There, you know, we're, we're pretty fortunate. I mean, from a Cargill standpoint, you know, obviously a family owned business has been around since 1865. I. The vision of the family is, is a long lens, right? I mean, we, we don't have to, or we're not, we're not focused on, Hey, what's, uh, the short term, how do you look at a short term win? And what that, what that allows us to do is invest back into our organization and, uh, and the family has done a remarkable job. You know, allowing us access to capital and, uh, in pushing these type of projects. Yeah. You're, you're exactly right. Dabbling in any of this automation stuff you think about, you know, even from a food safety standpoint, not, not getting into our expenses, but the growth and the cost that we've seen from a food safety standpoint across my career is, uh, is just absolutely astronomical. You start tackling that on, you know, and thinking about the acceleration of costs, as you think about robotics and automation, the dollars we spent on, on, food safety while critical is gonna pale in comparison to what we're we're gonna have to do in these plants, to bring'em forward from an automation standpoint. So, yeah, without a doubt, Matt we're, uh, I, at least from a Cargill standpoint, I'm extremely fortunate that the reinvestment division, the family has, you know, with the long lens, of where we're headed and, and how we continue to reinvest these plants. So that's a key component of making sure that, that Cargill and that I'm sure that your competitors are looking at the same types of, of investments. That's how you all see as one step in, in the way to maintain relevance going forward. now let's switch back over to the cowboy hat and tell me how you see beef producers. Um, think of your family back home. Think of, you know, whomever in this beef cattle industry, how do beef producers remain relevant going into the next decade or two?
Jarrod:Yeah, I first off that's a great question. We, and, and you'd mentioned this on, uh, one of your other podcasts or I think it was the Sean Tiffany podcast. It's we are selling beef. However, we look at it, you know, a lot of us say we're selling cows, we're selling steers, but ultimately we're selling beef. So what signal are we getting from those end consumers and how do we, as an industry drive that and meet that demand. I mean, again, I referenced earlier the, the percent prime, which I think is just an astronomical change that we've seen in our industry across the last 20 years. That was a signal that was, that was folks saying, Hey, I, I want beef, but I want a consistent product. I, I want something that, uh, every time I go and I have have a steak that it, you know, this is eating experience I desire. So, so we listen to that signal and that's why, the, the work of the American farmers and ranchers actually brought that to fruition, right, with the genetics and the quality cattle they're producing. So as you think of that same thing, we we've gotta listen to what that consumer, you know, we talked a little bit about carbon. We talked about, you know, what does that sustainability look like? How do we, how do we make sure we're maximizing, you know, the cattle we're producing? And, and I do think there's a, there is a traceability mechanism to this that, I, I think we've gotta be aware what that looks like. Going long term. And, uh, and how we're, how we're setting ourselves up as an industry, to be able to handle, you know, some outbreak. I mean, we, obviously, we just went through, you know, from a COVID standpoint, if, if you think of something like that, you know, hitting the beef industry, pretty significant, I mean, foot in mouth, you got all kinds of examples. You'd use. Yeah. How, how do we set that up? I, I think as an industry, we gotta think like that. The other thing is the average cowherd size in America is what 40? What is it? 44, 40, 40 some head. I think it's still close. Yes. And how do we, how do we engage those smaller producers? Cuz a lot of the conversations are with larger producers, right? But how do we, how do we pro how do we really tackle and get into some of our smaller producers? Cause they too are part of that, that beef business and they, uh, those components and, and those conversations need to be occurring all the way through. They're just not producing calves, they're producing beef. And, uh, you know, we've made some great strides, you know, BIF. I know you talked a little bit about spending time there and, and you think, again, of, of what we've seen from an improvement standpoint, I just think there's more parts of this process that we gotta continue to look at and, and, and look at improvement for.
Matt:It's a multifaceted approach. No doubt. The one that, that we're talking about on this series of podcasts is the marketing side of things. And, nobody has to listen to more than one or two of these podcasts before they figure out my opinion. And in my opinion, is that in an effort back there in the mid nineties and early two thousands in an effort to incentivize the production of better beef that we could charge more for and sell more through our retail and food service channels, we created these formulas and grids. We created a more trickle down effect that rewards the ones that meet expectations of the consumer and discounts or pays base to the ones that don't. When I was at the Angus association, I used to quote, um, I believe it was Hormel foods had this Foods a wall at a plant somewhere. Honestly, I don't remember where I found it, but their line was"what's premium today is commodity tomorrow."
Jarrod:And
Matt:I, I often think about that quote and we've done that. We have gone from three or 4% prime grading, cattle being a home run to now just kind of, Hmm. It's not bad. We've gone from, I mean, we sat there at 17% CAB acceptance rate on black hided cattle for years, and now we're seeing 30 and 40 and 50 being the norm. And sometimes a hundred percent CA B in prime on some of these really high quality cattle. What used to be considered a premium has become a commodity today. And I think that might be--coupled with some other global dynamics that are affecting this marketplace-- but part of the, part of the issue is we created a system to try to make a few more choice and prime cattle and C B and, and other branded programs, and we made a lot more of them. And so now how do we either reward or discount the ones that don't fit that norm? And, and that's a hard transition to make, but I think that's part of the issue. It's up to us and, and Charly Cummings that I just talked with last week on the podcast, mentioned it and he kinda sheepishly said it, but his question was,"am I getting out traded?" Am I doing a poor job as a producer, selling these cattle, selling these yearlings, selling these fat cattle to a, to a packer? Am I getting out traded? And I think that's a question that we have to, as producer segments, we have to ask ourselves, has the world changed enough? Has the beef industry changed enough that we need to figure out--part of our sustainability, part of our relevance as we go into the future-- is, is contingent on how we sell our product. And if that's fed cattle and we don't do a good job of getting the price that we need, how do we create a better mouse trap? And I think that's up to us. The other thing, and we, everybody wants to blame AMAs, alternative marketing agreements or arrangements...grids, formulas, contracts, captive supply, whatever you want to throw this into a bucket, but everybody wants to blame the cattle market wo today on AMAs and, and maybe they are the driver, but I think there may be something more broad. Sean, Tiffany mentioned a book and I'm trying to get through it on audible, cuz I don't read well anymore, but the title of this book was the end of the world is just the beginning and it's been recently released, and man it is thick and it is deep and it is dry for a guy that doesn't just love economics. But one of the things that it drives home with me, and I'm only a third of the way through it, but, these global issues, these things that are moving socioeconomic, political, you know, all of these different issues are really, really complex and complicated. And they're the product of something that is a whole lot more broad than just what we see in our everyday day to day life. And part of it is that we as a world, but especially here in the United States, we have become so specialized in what it is that we do. We're focused on making this widget and this widget only, and we outsource everything else. And we've seen that in the beef industry through the decades. Yep. We, we do a great job of doing one or two things. Whether it be calving out cows or marketing weaned calves or background in high stress caves out of certain regions of the country or feeding high, high quality carcass grading genetics at this feed yard and feeding red meat yield on a totally different type of ration at that feed yard, we've become really specialized. And as we've done that, we've still kind of clung to this old standardized negotiated cash trade as being the base. Well, we may have outgrown that and I think it's up to us to admit that and look at where we are today. Not where we were in 1995. And, and, and address this marketing issue from logistics and current, ways of marketing and, and even feeding cattle, uh, because I think it's different today. And I think that's one of those, one of those issues that, that specialization, not just of the way we produce cattle and beef, but the way you all have to meet the needs of Walmart and Kroger, target and Amazon, every, everybody who is selling beef in a totally different environment than they were 30 years ago. And so that specialization, I think may have as much to do with this quote unquote broken beef market, in my opinion, as what the AMAs do, maybe. Yeah. I, there's a question in there somewhere. I hope you can figure it out because I'm not even sure after that long rambling tirade, but, uh,
Jarrod:no, it's maybe it's a state it's. I, I think it's, as you, as you sit there and think about the, the mechanisms we have today and how we're trading cattle, I mean, it goes back to, what I said earlier about, you know, there's new technology. Is, is there a mechanism? Is there a way that we can pay rather than just pay the last person that owned that animal? How do, how do we look up and actually recognize the entire value chain? You know, I, I think those are the kind of things that we gotta figure out how to dig into. And again, it's gonna take somebody brighter than me, you know, to figure out what that can look like. But I do know, to your point, I mean, look at all the changes we've made, look at all the, the, the things that have occurred. Um, you know, I, I think it's definitely worth the conversation. I, I, um, I would tell you, I, you know, and I said this a second ago, or here several minutes ago by now probably, but you know, how, how folks wanna sell their cattle is how we're gonna buy'em. And I, I, I do not believe it's probably a great plan to say,"Hey, you know, you may wanna sell on an AMA. You may have cattle that get recognized that away, and I'm gonna force you to, to do it on a cash trade." Um, you know, that, that not part of that person's me marketing plan is my guess. And, so that's probably what I struggle with as you, as you start thinking of some of the solutions that are floating around there, but, but is there something different that we can do? I mean, let's, that's what we gotta figure out how to talk about. And you know, it's not one segment, right? It's not a, uh, and we gotta talk about it when it's good, my times or good, you know, from a producer's standpoint, you know, which, which oddly enough, Is there a mechanism where we can settle out that, that 10 year and I mean, you know, we, we play a, um, you know, from a leadership standpoint, we go through a process and, and um, many years ago we went through this deal and it's, it's a game. And, uh, we sent our leadership team through it and it it's win all you can. And, uh, the game is actually set up to where it looks like in order to win the game, you physically need to win all you can. But the rules within the game actually allow the entire all teams to win all they can. And I think that's part of the, uh, that's part of the conversation, but then that's starts changing your cattle curve, your cattle cycle. And, you know, is there a mechanism we can all do that. And, and to your point, it's not what we've got today. What we've got today has probably served us, you know? Well, as, uh, as an industry and, and you think about what it's done for us, it's, it's gotten us some great ground from a consumer standpoint, but yeah, I mean, what, what the future looks like, I think is, uh, we, we've gotta take into account some of these technologies that are ahead of us and, uh, and think how we can look at this, any.
Matt:When all you can is what that game was called. It is. And so it sounds like the actual solution and the strategy to achieve that is to win all we can.
Jarrod:Yeah. That's, uh, that's
Matt:exactly right. And it hardly ever happens. I mean, you look at these historical highs and lows of that cattle cycle and one segment. One segment at least is gonna be making a bunch and one segment is gonna be losing a bunch. And, um, that's the challenging part.
Jarrod:Yeah. Yeah. I'll even go a step further. And you, and you said it a second ago, you know, the gentleman you had on the podcast last was, you know, is he being out traded hell that that's not me. I mean, that's. Could be a neighbor, it could be anybody. Right. Right, right. And, and it's the same mechanism there, there is right or wrong, you know, from an industry standpoint, we, we truly, Hey, did I beat my neighbor in the cabs I sold yesterday at sale bar? Is that really the mechanism that we should have if they're all at the same quality? I mean, the first argument is, are they all the same quality and how do we make sure we, uh, what's that look like? but, but I, I do think the value, I mean, we, we got to think of the value different, and then quite frankly, we gotta get the consumer. We gotta keep the consumer engaged, you know, from a beef standpoint and that demand side. So I think's gotta be possible. Right?
Matt:Yeah, I, I do, but it is gonna take communication. It's gonna take some, Some willingness to change and to look at things from someone else's point of view, but I think the benefits so outweigh anything that we're dealing with currently that it's, it's, it's gotta be addressed and have quoted him before, but John Stika I think was the first one I heard say that"the source of new money into the beef industry is that consumer dollar, that's the only source without a doubt of new money." Yep. And, and as long as we're all focused on that, even if that's not our immediate customer, as long as we figure out a way to get that consumer dollar back through the entire chain, I think we do win all we can. So, uh, Jared, I appreciate you being on here today. This was, this was one I was really looking forward to, I probably didn't push you as hard as what some people wanted me to. And I probably was too rough on you, for some people's tastes, but honestly, this, this mindset of the packer being an evil person that, um, is, is trying to run us outta business. I, I hope that folks, after hearing this conversation understand that while we do have some, some ground to cover and some areas that we do need to give and take, in terms of keeping us all afloat. I, I hope that it's pretty obvious that, um, you need us just as much as we need you to survive in the.
Jarrod:Yeah, without a doubt. I, and you know, I, as I said earlier, the, the opportunity to have a conversation I think is huge. So, so thanks for that. I, you know, one of, one of the things and kinda lengthen this out here for you here for a quick second, but, as we get an opportunity, probably my favorite thing to do is to bring producers, you know, whether it was when I was a GM in the plant and I'd get an opportunity to bring a producer group. Or, uh, you know, even, even here recently, I mean, we brought, the Kansas farm bureau, beef beef group had a, you know, they had, Hey, they want to have a conversation. So they, they actually came in here to the, our corporate office here in Wichita. And even here, it's not quite like a beef tour, but walking through and showing. So I've got a second floor that's basically dedicated to the beef business or a significant portion of it, kind of a quarter of that floor. And, um, and to sit there and think. The amount of folks that I have living and breathing, you know, buying cattle, I've got, you know, the whole procurement arm, I've got our trim sales group. I've got our scheduling team that's actually, you know, the, the link between the boxes we've got sold and, and, how I'm gonna process those cattle coming through the plan. I've got, you know, a pricing group that's sitting there and, and they're getting prices from all across the, the nation and, and the world, quite frankly, then I've got, some of these key account managers that are looking at what, what are their customers wanting? And, and what's that demand look like. And, you know, coming in after a holiday, how much demand are we got coming back? And just the amount of data and information we have coming back out of us, the opportunity to learn about each segment, I think is absolutely critical. Again, whether that's being going through one of these plants and just understanding that it, it genuinely is a large city. And, you know, I, I get questions or have had a recent question. We had a, at a downtime event there in Dodge city, Kansas. I get a phone call from, from a friend out west. And, and he is like, Hey, what are you? What are you doing? You're not, you're not present in the trade or you're got, you know, you didn't buy many cattle or X, Y, Z. Right. I, I lost a transformer in, in Dodge city, Kansas. I was down for a day and a half. And literally you can see that right. It's not a factor redundancy amount of redundant equipment I have in these facilities to avoid events like that is absolutely huge. So, you know, anytime you get an opportunity to create an education and, and at least have a conversation, you know, I'm sure game for it, and appreciate the opportunity. So thanks for, thanks for having that two-way conversation. And I, I do think from a podcast standpoint, what you're doing, I think as a society, we gotta have more of these type of conversations and it doesn't have to be as polarizing as it appears. So
Matt:thanks, man. Thank you. You bet. You bet. Well, that's, that's one of the main goals, if not the main goal of it. And, I enjoy that type of discussion and I know you do as well, and I hope that the listeners will in addition. So thanks again, Jared. Appreciate your time. Yeah. And we'll look forward to, continuing the dialogue and if there's any ever, anything else you need, don't hesitate to give us a call. Sounds
Jarrod:good. Thank you. All right. Thanks Jarrod.
Matt:Thanks for joining us for practically ranching, brought to you by Dalebanks Angus. If you enjoyed the podcast, heck even if you didn't... help us improve by leaving a comment with your review wherever you heard us. And if you want to listen again, click subscribe and catch us next week. God bless, and we look forward to visiting again soon.