Twenty-one cow-calf producers met to discuss the concept of forming a marketing cooperative that would vertically integrate the beef industry for its members. They wanted to build a production/marketing system that would enable them to produce high-quality beef and own it all the way through value-added processing. With that goal in mind, 150 producers, representing 80,000 head of cattle and a group of cattle feeders with more than 250,000 head of cattle, made a commitment to finance and develop a business plan.

U.S. Premium Beef was officially formed and began the process of developing a partnership with an existing beef processor. At the same time, meetings were conducted to recruit beef producers from across the United States who wanted to buy into this new beef company. The interest among producers was incredible. Producers from coast-to-coast and border-to-border requested information on becoming USPB members. They realized that together, they could accomplish much more than they could individually.

USPB announced it had signed a letter of intent to form a partnership with Farmland Industries to purchase up to 50 percent of Farmland National Beef Packing Company (FNB). FNB was the nation's fourth largest beef processing company and an international leader in the value-added arena.

USPB began its stock offering, which enabled the company to complete the purchase of an interest in FNB during Thanksgiving week in 1997. The following week, on December 1, 1997, USPB began operations - buying more than 10,000 head of cattle from its shareholders on an individual animal basis based on the company's progressive pricing grid.

During its first year of operations, member-producers marketed an average of 8,100 head of cattle per week through USPB. Still in its infancy, the company paid producers an average of $8.63 per head premium over the cash market during that first year of operations. However, the top 25 percent of the USPB cattle earned premiums of more than $27 per head. In total, USPB bought more than 401,000 head of cattle from its shareholders and paid them more than $3.5 million in premiums for higher quality cattle during that first year.

USPB became a majority owner of National Beef Packing Company (NBP). USPB, along with two minority investors, Beef Products, Inc., and members of NBP's management group, purchased Farmland Industries' interest in Farmland National Beef and renamed the company National Beef Packing Company.

Shareholders approved USPB restructuring from a cooperative into a limited liability company (LLC), which better positions USPB to compete in a very dynamic industry. Under the LLC structure USPB members, as well as producers who lease units to deliver cattle, have the same opportunity to market their cattle through the company's value-based marketing system as when the company was operating under the cooperative structure. The LLC structure created Class A and Class B units, allowing both beef producers who wanted to guarantee market access to deliver their cattle and other non-producer investors to own USPB units.

USPB members and its minority owner partners sold a majority interest in NBP to Leucadia National Corporation (LUK). USPB retained a 15% ownership interest in NBP. LUK was a very successful company that wanted to make a long-term investment in a successful food business.

The owners of National Beef entered into a membership interest purchase agreement with NBM US Holdings (NBM), an indirect subsidiary of Marfrig Global Foods S.A. under which NBM acquired 51% of the outstanding ownership interests in National Beef. The operations and management of National Beef remained unchanged. USPB’s ownership interest in NBP remains at 15%.

Jefferies Financial Group Inc., sells remaining 31% interest in National Beef to Marfrig Global Foods (Marfrig). National Beef’s ownership structure includes Marfrig, USPB at 15%, and two minority owners.

Producers from 38 states have marketed their cattle through USPB, and more than 1,400 feedlots have sent cattle to NBP's processing plants in Liberal and Dodge City, Kansas, and Tama, Iowa. During a typical week, cattle come to NBP's plants from feedlots in seven states. USPB works with NBP to put high quality value-added products - produced by its members and associates - into domestic and international markets. Its goal is to dominate the branded beef business by producing and marketing beef products designed with consumers in mind. Opportunities exist for new producers to become involved with USPB. Please contact us if you need additional information on how your beef operation can become involved with USPB.