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New Generation: Dynamic Expansion on the Way

15:50PM Dec 06, 2014

jared_warehamBy Jared Wareham

Wow! This is one heck of a time to be in the beef business. Supply and demand fundamentals are finally on our side, feed is cheap and both trends look to last for a while.

As we ride this incredible wave of good times, we must keep an eye below the surface for signs of changing riptides that might impact our business. That’s not a call to panic, just a reminder of the collaboration that quietly happens behind the scenes of industry. Record prices in all industry segments keep them cloaked in obscurity, yet they often move forward with unyielding force.

The current dynamics shaping our industry remind me of the “dot com” bubble of the late 1990s. A slew of new dot com startups emerged, jumping to grab a share of new markets. The majority of those startups flamed out before even heating up. Those that survived, however, have cemented themselves in the U.S. economy.

We may soon witness a boom-or-bust period of new startups and strategic partnerships in the beef industry. The landscape is ripe with opportunity for entrepreneurs willing to take the leap.

One area to monitor is the continued development of certified beef programs. Many of the new certified and verified beef programs taking shape are more dynamic than their predecessors. These new generation models utilize cooperative networks to link premium value beef genetics from the ranch all the way to the consumer. They will follow the blueprint laid before them by Certified Angus Beef LLC (CAB), started
decades ago by the American Angus Association.

The folks at CAB have cultivated a tremendously successful program that serves as the standard by which all other programs are measured. CAB’s resume is so powerful it can carry an entire breed association on its back. Make no mistake, the impact of more than 100 employees at CAB has created a brand so influential that consumers consistently recognize it by name and identify it as a brand representing quality. Those who breed and market Angus or Angus-hybrid genetics must realize that decades of brand building by CAB is why Angus remains the dominant beef breed in the U.S. The success of this brand-certified program has clearly opened the door for attempted replication by others.

Our industry might finally realize the long-forecasted price divide between premium beef products and
commodity quality beef. Extremely tight beef supplies will keep prices high and this separation at bay for a while, but supplies will eventually grow and allow the premium/commodity price spread to develop.
Beef that can be sold into certified or verified markets will take advantage of built-in quality grade values and still demand a premium. The remaining cattle may slip into a commodity pricing system never before seen.

As the wave of high prices surges headlong, keep an eye to the future and the undercurrents that are in perpetual motion in our industry. Prepare for the reality that producing average-quality beef cattle will likely fetch below-average prices in the future. It’s also another reason to research and build relationships with genetic suppliers who have the foresight and ability to be involved in the next industry boom. They will be your best source for premium-generating bulls and help you maximize the value from their certified genetics.

Jared Wareham devotes much of his time to cattle breeding, bull development, marketing and strategic planning. He is part of a three-person team, which includes his wife Jill, that markets 300 bulls annually. They reside near the bull development facility with their three young daughters Mikah, Rhett and Sawyer. Contact Jared: