Tri-County ranchers have a beef with market closures

As seen in Pacific Coast Business Times

By Betsy Crowfoot 

Domestic sales of beef and cattle have withstood the aftermath of the December 2003 discovery of Mad Cow Disease within the U.S. border, but area cattle ranchers are still awaiting the re-opening of lucrative overseas markets – a closure which has driven prices down nearly 15 percent.

All told, recovery from the detection of Bovine Spongiform Encephalopathy (BSE) in a Washington state cow has been slow but, “not nearly as bad as what we might have anticipated,” said Roger Miller, a north San Luis Obispo County rancher who runs about 600 beef cows out of his Parkfield ranch.

Evidence of BSE was discovered in a cow harvested December 9, 2003, via government testing programs enacted in 1990. The U.S. has had a “triple firewall strategy” to prevent the spread of BSE according to Ben Higgins, Executive Director of the California Cattlemen’s Association, since the consumption of beef with BSE was linked to cases of Creutzfeldt-Jacob disease in Great Britain – a finding which turned British ranchers into paupers and outcasts.

Domestic restrictions began in 1989 and within a year the U.S. had begun a strict testing policy of any animal showing symptoms of neurological disorder. “We were the first country to have this in place, without actually having the disease within our borders,” Higgins said, noting that, “hundreds of thousands of samples have been taken and there has been just this one positive case.”

Higgins was quick to reveal the diseased cow had been born in Canada, and prior to 1997 restrictions prohibiting the feeding of ruminant animals (those with a four-chambered stomach: cattle, sheep, goats, buffalo, deer and elk) with proteins derived from other mammals (i.e. meat byproducts and bone meal). BSE is spread through contaminated feed, particularly that made with brain, spinal cord and other neural tissue.

Despite these measures, in December 2003, “we saw countries representing 95 to 100 percent of our beef export market shut down overnight. It had significant impact,” said Higgins. The U.S. exports $3-billion in beef and cattle annually; $170-million from California. Beef is one of State’s top ten agricultural exports and within the Tri-County area, nearly 4.4-million acres are grazed by roughly 165,000 head of cattle annually.

“There was some effect, right after it was discovered,” said Miller, who also serves as president of the San Luis Obispo chapter of the California Cattlemen’s Association. The discovery of BSE chopped 20 to 25 cents a pound off the price of cattle ready for harvest. Still, Miller credited industry-wide education programs with keeping consumer confidence high, saying, “It’s not nearly as bad as the European or Canadian market.” 

And he noted that prior to December’s Mad Cow Disease scare, the price of beef had been at record levels. “It was higher than it had been in a long time,” said Miller. The discovery of BSE, “knocked the market down some, but it’s still better than what we were used to for quite a few years.”

But Higgins pointed out that cattle ranching is a business where profit margins are typically, “slim to none.”

“This is just one more issue causing strain on the rancher’s bottom line,” said Higgins, adding that the lack of available grazing land is one of the primary issues affecting ranchers. “Competition for grazing leases can be cut-throat.

“The large tracts of land necessary to run a viable cattle operation are being bought up by private individuals or environmental groups that limit their viability for use for cattle.”

Recently California Department of Fish and Game acquired 13,000 acres of San Luis Obispo County property, Miller said, and is eyeing 13,000 more. “This limits the amount of grazing land … and whenever a State Agency purchases land it takes that property off the tax rolls and the county loses revenue. It is one of the worse things that hurts us, county-wide.”

“These are much greater issues for most of these guys, than BSE,” noted Higgins – issues which may drive ranchers out of the region.

Compounding these factors is the anticipation of a dry season, according to Richard Nock, another Tri-County rancher, who said, “We are looking into the barrel of a drought.”  Many regional ranchers are cow-calf operators, he noted, selling the calves to farms in the Midwest and elsewhere. If drought conditions persist, local ranches will be forced to move the cows sooner – reaping a much lower per-pound price for the younger, smaller cattle.

Although rainfall is out of anyone’s hands, some relief is in sight.

On March 3 the U.S. Meat Export Federation (USMEF) announced Mexico would start to allow imports of  boneless beef products from animals of less than 30 months of age, as a first step in new agreements with the U.S. 

Philip Seng, USMEF president and CEO, said, “The initial agreement allowing boneless beef covers an estimated 75 to 80 percent of what the U.S. exports to Mexico.”  While this represented a small margin for area ranchers, it offered a promise of things to come.

“The bulk of our exports go to Japan, South Korea and the Pacific Rim,” – roughly 10 to 15 percent of California’s beef production, according to Higgins. The reopening of the Mexican border has provided “optimism about the critically important Asian market.”

For Tri-county ranchers, those borders cannot open too soon. 

“We want to be selling our calves in May, June and July,” said Miller, “and I hope it will all have blown over by then.”

Corporations tighten belts for lean and mean meetings and conferences

As seen in Pacific Coast Business Times

By Betsy Crowfoot

After a capricious two years, conference and business meeting facilities are seeing an increase in business. But don’t be misled: this industry has experienced a dramatic change. Lead times are shorter, stays are briefer, and a general “belt-tightening” has taken place.

“These trends are the most noticeable things about 2003 that we did not see in prior years,” said Ed Galsterer, Director of Marketing at the Four Seasons Resort (Biltmore) Santa Barbara. “There is a general belt-tightening going on. There are fewer attendees, the length of stay is reduced from five days to three, there are not as many spouse programs.”

Galsterer attributed the “weakened economy and the war” to soft sales until recently. “We came out of the gate slower than anticipated in early 2003. But the third and fourth quarter have been excellent.”

A new spa with pool and fitness center helped the 213-room property’s leisure sales make up the shortfall in group business, Galsterer said. “And all that pent-up business has really came on strong in the months of September, October and November,” drawing on 15,000 sq. feet of meeting space.

Still, Galsterer indicated, “Lead time is very short. Which tells us it is still a wary situation. So they’re not giving us the advance notice that was typical of the whole resort industry. We have to react a lot quicker; it requires a lot of quick work on behalf of our catering and banquet teams.”

Beth Olson, Director of Sales and Marketing at Fess Parker Doubletree Resort in Santa Barbara, agreed. “Meetings that used to book two years out, now book one month, even one day. Lead time and planning has been shortened. People don’t decide until their quarterly reports come out.”

 “A lot of fluff has gone out,” Olson continued. “There is still some fun, like beach parties. And the guests are more sophisticated with their food; they want a restaurant quality event.” Nearly 50-percent of Fess Parker’s business is in corporate group sales, tapping 23,000 sq. ft. of meeting space, 360 guest rooms and three restaurants.

“But what used to be a national meeting is now smaller more frequent regional meetings,” Olson said. “And we’ve seen our customers raise the bar with regard to educational content. Now, there has to be a return on investment.”

Sycamore Mineral Spring Resort in San Luis Obispo saw a surge in travel shortly after the terrorist attacks of 2001. “It mostly came from the fact that people didn’t want to fly,” said Gabriel Rivas, Head of Group Sales for the century-old resort, with meeting space for 100 and 74 guest rooms. 

But by December 2001, “People who were able to alter their plans just stopped traveling. It has been pretty slow,” said Rivas, “lower than we’ve seen in the years before September 11.”

Rivas also attributed the decline to the California budget crunch, noting, “A lot of regional groups were tied in to the State budget, and that has been a big blow to us.” 

Partly as a result of this, and new ownership, the Resort recently beefed up its’ health and wellness facilities. “We have a new yoga dome and retreat center; we are shifting the focus to pull in new people,” Rivas said.

Mandalay Beach Resort has been able to weather peaks and valleys by building good will, while banking on a prime location.

“Immediately after September 11 our corporate office (Hilton) worked with customers to forego penalties on the groups we did lose immediately, and encouraged them to come back,” said Susan Koehler, Director of Sales and Marketing.

“They were appreciative of the stance we took and all but one rebooked by the end of a year.”

Koehler said Mandalay Beach Resort also benefits from an “offshore experience without the air travel.” The beachfront property has 248 two-room suites and continental breakfast. “Many attendees bring their families. Tying together business and pleasure is a growing trend, and as a result we have a high percentage of materialization at conferences here.”

“There has been a little bit of change, there are other modes of communication,” Koehler said. “But it’s still important to bring people together to network and disseminate information successfully.”

Even the smaller venues are gearing up for what they hope will be an upswing in business as they enter the holiday season and fourth quarter. Sage and Onion recently added a separate boardroom dining facility to their upscale Santa Barbara restaurant.

“I’ve increasingly seen a demand for this from our area businesses,” said proprietor Steven Giles. His “Table For Twelve” seats 12 to 20 in a subdued 360 sq. ft. private room, suitable for breakfast meetings, sales presentations or client parties. “In lieu of meeting out-of-town, they’ll have their meeting at their facility, but top it off with a special dinner here.”

And the potential rebound holds so much promise, the city of Grover Beach has reincarnated a task force assigned to lure a major hotel or conference center to Pismo Beach.

The idea, originally conceived in the early 1980s, had been, “a very agonizingly slow process,” said Ronald Anderson, Grover Beach City Manager. But recently the City adopted 17 goals and at the top of the list was the conference center, Anderson said. “Our goal is to facilitate it to the fullest extent of the city’s ability and accomplish this as soon as possible.”

As a member of the San Luis Obispo County Visitor and Conference Bureau, Anderson has been monitoring travel industry trends. “When we analyzed the post-September 11 situation and looked at what happened to San Francisco and Los Angeles, who rely on visitors flying in, we held our own.”

Adding a facility of 150 or more guest rooms and roughly 80,000 sq. ft. of meeting and conference space, would increase tourism, jobs and tax revenue, he said.

 “There are a number of state-wide and regional conferences that don’t even consider this part of the Central Coast, because there is not sufficient meeting space. We could easily be in that rotation,” said Anderson. “Where other areas may not be as attractive weather wise, we have that and other attractions: Hearst Castle, the beach, Wine country. And we could be very competitive.”

In fact, most properties indicated their confidence in the Tri-Counties’ strong regional market, rich in industry, that does not rely on customers who fly in.

“We really don’t anticipate a dramatic decrease in occupancy,” said Four Seasons’ Galsterer, “because we still have the country’s number two market base only 90 miles down the road.”