Keys to Success:
Producer Ownership and Commitment

As you may remember, Mountain States Lamb Cooperative (MSLC) follows the same producer owned business model used by US Premium Beef (USPB).  While USBP has experienced a number challenges, it has proven to be a resounding success and provided the membership with a very generous return on their investment.

 Steve Hunt, CEO, wrote to members in the USPB Update, dated 11.12.10, “We continue to focus on our core objectives including guaranteed market access for our unitholders, value-based marketing with our grids and ownership in processing,” Hunt said.  “Our producer ownership and commitment remains a key ingredient to our company’s continued success.  The superior quality cattle delivered by USPB producers enables our company to generate more value from the cattle we harvest giving us a distinct advantage over our competition.”  At MSLC, we believe Producer Ownership and Commitment have been key to our success also. 

Producer  Ownership has paid off.  Your investment in MSLC purchased Mountain States Rosen (MSR), which markets approximately 25% of the nation’s lamb supply and 10% of the nation’s veal supply.  That ownership has provided you market access during times when the finished lambs of others stood in the feedlot long after they were market ready.  Lamb producers also agree that MSLC has brought much needed transparency and price stability to the industry.

Following our purchase of the remainder of the company two years ago, we were able to put an outstanding management team in place at MSR.  Dr. Stiffler CEO, David Gage, VP Sales, and their talented team have navigated MSR through a difficult recession, as well as the recent unprecedented market conditions in our industry. Your meat company has proved over the past two years to be adaptable, innovative, and customer oriented.  These are just a few of the benefits of owning an efficient, well-managed organization of this size.  Not only has your meat company survived, it has thrived, and your initial investment of $20/share has grown to a current book value of over $35 per share.

The MSLC Producer Commitment has been outstanding and key to our success.  Even though the competition has, and continues to, target MSLC lambs, our membership has remained committed to their Co-op and meat company.  Having an annual delivery commitment of 240,000 head of quality, market- ready lambs has tremendous value.  Independent appraisals have estimated the economic value of that commitment as high as $75 per share.  Think about the leverage this gives us within the industry and in the marketplace!

Your Cooperative has worked hard for you, marketing nearly 2 million lambs over the past 8 years.  MSLC has developed programs such as “All-Natural,” negotiated better kill costs & pelt credits, provided extensive carcass quality information, and kept you informed via the newsletter.  For the most part your $1/hd marketing fee covers the operating costs to provide these services. 

MSLC has put dollars back in your pocket with competitive prices, quality premiums, “natural” premiums, and cash patronage distributions, while servicing and paying down our debt at a rate of about $5.00 per lamb marketed per year. 

MSLC is not a profit center; it is a service center for you.  MSR is YOUR profit center.  The profit it realizes is used to service debt, for capital improvements, or is distributed to you via patronage based on lambs delivered to the company. 

With the recent consolidation in the industry, the role of our cooperative is more important than ever.  Transparency, a competitive environment, and marketing options are critical to the profitability and continued survival of the American Sheep Industry.  As producer-owners, we want to continue to be leaders in the industry, taking control of our future and looking out for our own best interests.  By staying committed to that goal, we will never allow ourselves to be forced into the position of being price takers.