Get a Grip!

February 8, 2014 04:33 AM

Our industry is no different than any other in a free-market economy

Jared Wareham

Jared Wareham   Flying H Genetics Lowry City, Mo.

By Jared Wareham

I’m blessed to work full time in the beef industry. This allows me to talk with cattlemen all over the country. Through these experiences, I’ve noticed we all tend to share common questions, regardless of where our heads hit the pillow at night.

One of the most common frustrations is the enigma that is our modern beef industry. The contemporary cattlemen is often wondering why cattle, which were once worth top dollar, are now considered to be just above average and why prices fluctuate more now than in past decades?

Basic economics. I hear these questions regularly, and I understand the frustration. Fortunately, exposure to many levels and facets of this industry has helped remove some of the "mud" from my windshield and provide some clarity.

Take a step back to see that our indus­try is no different than any other in a free-market economy. It is driven by supply and demand fun­da­mentals, along with the use of tactful maneuvering and strategic planning to create extra value—marketing. That word is the single most impor­tant element that you must grasp to understand this industry.

Marketing practices are done to build extra value into a product. To under­stand why prices can vary or why a product is no longer worth a premium, one must look at our industry through marketing colored glasses.

Consider diamonds—they are rare and therefore valuable. Jewelry manufacturers have successfully controlled the quality diamond supply so prices stay at a premium. Sometimes, to achieve this marketing goal, older products are devalued to make room for a slightly better product that now assumes the mantle of rare and highly valuable. Now, let’s relate those ideas to our industry.

We know beef quality has improved each decade. Therefore, we see where beef that used to be "top shelf" is now run of the mill. If we know beef quality has improved each decade, do we also know the reasons why the packing industry continues to say the product isn’t good enough? It is simple: marketing. Just like the diamond industry, packers need to create the perception that quality beef is as rare now as ever to continue to build extra value into high-end meat products.

Another example. The pork industry said that pork loins needed to be a specific size to fit the box. Once pork producers genetically shifted the quality of their pigs to fit those specs, the size of the box changed again, yet the premiums at the top stayed intact. This marketing strategy helps protect their premium because it is harder to hit a constantly moving target.

Some producers might not like this philosophy. Packers are not being dishonest or operating illegally; they are simply using available tools to help build profit. Craft your own marketing strategy to achieve similar goals when selling your calves, bred heifers, cows, stockers, etc. A well-designed strategy can help you leverage a greater share of the profits.

Marketing can be a difficult concept, which is why many cattlemen choose not to use it and fail to reap the benefits. Don’t fall into the rut of cursing others for perfecting the use of a tool that is available for all. Give them their due for throwing a curve­ball by you, choke up on the bat and hit the next one out of the park!

Jared Wareham devotes much of his time to bull development, marketing and strategic planning for Flying H Genetics, which markets 450 bulls annually from two ranch locations in Arapahoe, Neb., and Lowry City, Mo. Wareham and his wife, Jill, have three young daughters and reside on the Missouri ranch. Contact Jared:



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