Over two decades ago, quality-minded ranchers asked a question. How can we build a marketing system
enabling us to produce high-quality beef and retain ownership from the ranch to retail?
BEEF PRODUCERS WITH A VISION
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.
MOMENTUM BUILDS, MEMBERSHIP RALLIES
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
A PARTNERSHIP BEGINS
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.
KEY MILESTONES ACHIEVED
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.
THE FIRST YEAR
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.
RESTRUCTURING FOR THE FUTURE
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.
NBP TAKES ON A NEW PARTNER
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%.
CHANGE IN OWNERSHIP STRUCTURE
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