Strategies For A Stronger Industry

August 25, 2015 09:16 AM
Strategies For A Stronger Industry

U.S. ranchers are experiencing one of the most profitable periods in history. Cattle and beef prices were driven to record highs the past year by a perfect storm of tight supplies, falling grain prices and improved grazing conditions throughout the Central Plains. A dramatic price rally in 2014 produced what many call a “once-in-a-lifetime” opportunity, with record-high prices established for every class of cattle and calves.

Such rapid price escalation also drove retail beef prices into uncharted territory, a trend that has continued this year. The all-fresh retail beef price in June reached $6.11 per pound, a level that raises growing concern about consumer demand, especially in the face of growing pork and poultry supplies that carry an attractive price point.

Recent data, however, show consumer beef demand remains robust despite recent retail price gains. During the first quarter of 2015, the beef demand index was 92.57, a 15% gain over the previous year. Second quarter beef demand index was 90.16, a 7% increase over the same period in 2014. Strong demand in the face of higher prices, analysts say, indicates beef remains a favorite protein source.

Demand pressures are building, however, with lower retail pork and poultry prices. Analysts see a red flag in the fact retail beef prices were a record 1.65 times higher than retail pork prices in June.

Given beef’s current economic climate, the timing of recommendations from the Beef Industry Long Range Plan Task Force may prove fortuitous. The group of 16 industry stakeholders agreed the single most important strategic objective the industry should pursue is increasing beef demand. The task force identified a specific objective to “increase the wholesale beef demand index by 2% annually over the next five years.”
Reaching that objective, the task force says, will require resources be committed in four core strategies:

  • Drive growth in beef exports, a strategy that focuses on gaining access to key markets and promoting the attributes of U.S. beef to foreign consumers.
  • Protect and enhance the business and political climate for beef.
  • Grow consumer trust in beef and beef production, including a critical focus on antibiotic stewardship, the implementation of a certification/verification program and continued investment in beef safety initiatives.
  • Promote and strengthen beef’s value proposition, a strategy to revolutionize beef marketing and merchandising.

The Beef Industry Long Range Plan, designed to guide the industry from 2016-2020, comes at a critical juncture for your business. Expansion of the nation’s cow herd over the next few years will put more beef in the pipeline, reducing the current retail price pressure. External pressures on our industry, however, will continue to mount. Providing consumers with a tasty, wholesome product will not be sufficient to grow demand at the rate we desire. Producers will be asked to implement even more production practices that show active engagement toward reducing environmental pressures, improving animal welfare and further ensuring the safety and wholesomeness of beef.

Your support of the goals and objectives for the Beef Industry Long Range Plan will help—as task force co-chairman John Butler says—“the U.S. beef industry to responsibly produce the most trusted and preferred protein in the world.”

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Spell Check

Kearney, NE
9/9/2015 08:07 PM

  "promoting the attributes of U.S. beef to foreign consumers",... Take a moment and let that "point" sink in. To increase exports, we need to promote American beef as better than beef from elsewhere,... However, we aren't supposed to differentiate our beef domestically from that of Canada or Mexico. In other words; COOL when it comes to exports, both not when it comes to our American consumers. Unbelievable.


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