Good News!

Jeff Pastoor, Senior Cattle Consultant, Land O’Lakes

I might as well admit it - one of the reasons I work in the cattle business is that I’m an optimist by nature. After what we’ve gone through in the last year feeding cattle, one has to look for good news to keep going. While I was at the NCBA convention in Charlotte in February, I thought there was a lot of good news to be found.

Demand - Wayne Purcell, an Ag Economist from Virginia Tech and the leading researcher on beef supply & demand, reported that for the first time in 20 years the demand for beef has stopped it’s slide downward. As the beef industry offers more products that meet the consumers demand for quality, consistency and convenience than consumers will be willing to pay more for all cuts of beef and better profits will be generated for every segment in the beef industry.

New Products – Convenience beef products that use less valuable cuts from the carcass were showcased at this years convention. I can personally vouch for these new products; they are tender, delicious and quick to fix. Two companies that were on a panel discussion were No-Name Steaks and Excel. No-Name Steaks have seen sales increase 300% in the past year by focusing on convenience & consistency. Both No-Name & Excel have done customer surveys and they have found that 60-80% of the customers are repeat buyers. They have also found that the majority of their customers are using these new beef products to replace poultry, seafood, frozen entrees, or lower value ground beef in their diets. Three cheers for the checkoff!

Retailers – We’ve been quick to brand the retailers as a greedy bunch, but we clearly have friends in this sector as well. Two upscale retailers, Fred Meyers Stores from the Northwest and Harris Teeter Stores from the Southeast reported on the importance of quality beef to their stores operation. Fred Meyers stores calculate that every $1 spent in the meat department generates $5 of sales in the rest of the store. Beef is still 50% of the volume through their meat counters and they now have a 6’x6’ display area in each store devoted to convenience meat products. Harris Teeter Stores have seen beef grow as a percentage of total sales in their stores since they’ve started handling high quality branded products. They have also seen an increase in the sale of fine wines since the quality of their beef products has improved. To these retailers, beef quality translates into more total sales.

NCBA – Many have wondered whether the merger of NCA and the Beef Board has been beneficial to producers. I believe it has given us a better focus on the fact that we are all in the meat business, not just the cattle business. It was also reported that an independent audit has shown annual savings of $700,000 a year through the merger (in other words, dues and checkoff dollars are going farther than they did before). We were also reminded that the by-laws state that 80% of the NCBA board members be cow/calf or feedlot producers.

Government – Secretary of Agriculture Dan Glickman reported on three key areas. The USDA would be pursuing authority for mandatory price reporting to improve the price discovery process. The USDA will be releasing guidelines on irradiation to improve food safety. And the USDA will continue to fight for free and fair trade by opening European markets to US beef, and by investigating Canadian marketing practices that appear to give Canadian producers an unfair advantage.

Imports/Exports - I also learned some things to keep this tricky issue in perspective. We lost $3-4/cwt last year due to increased beef production in the United States. US beef production was up by 856 million pounds while the increase in Canadian beef processed in the US was 275 thousand pounds. This means that for every 1 pound of additional Canadian beef there was 3,100 pounds of additional beef from US producers, mainly from the overfeeding of cattle. In the past 20 years, imports have stayed almost flat while exports have grown over 200%.

February, 1999