The Good News: AAA and the Angus Business

11:10AM Apr 16, 2014
Angus Heifers Feed
( Wyatt Bechtel )

Since the economic downturn, Angus has enjoyed unparalleled growth.
By: Eric Grant, director of public relations & communications, American Angus Association

There’s a lot of good news for producers raising Angus cattle.

Since the 2008 economic downturn, average prices for registered Angus bulls sold at auction and reported to the American Angus Association® have risen sharply from $3,031 per head in Fiscal Year (FY) 2008 to $4,957 per head so far in FY 2014. That’s nearly $2,000 per head in added value, or a 64% increase in price, for breeders of registered Angus bulls.

Gross revenue is also up significantly: Sales of registered Angus cattle generated more than $265 million in FY 2013, compared to just shy of $210 million in FY 2008. That’s a 26% increase, or more than $55 million in additional revenue for producers of registered Angus cattle.

That value-added gap appears to be widening even more in FY 2014.

Fiscal-year-to-date revenue (October 2013 through March 2014) generated by registered Angus cattle sold at auctions has increased substantially compared to the same time period a year ago: $244.6 million in FY 2014 versus $192.5 million in FY 2013 – a 27% increase.

That equates to more than $52 million in additional revenue for the first half of FY 2014 – or more than $2 million in additional revenue per week for Angus breeders so far this fiscal year.

This analysis does not include private-treaty sales.

"All of these things are a sign that Angus breeders are working hard to capitalize on their breeding programs’ advantages as U.S. cow herd expansion begins, and that the breed’s long-time investment in genetic evaluation, research and promotion are now paying big-time dividends," says Bryce Schumann, Association chief executive officer.

A true demand picture
Multiple surveys show the Angus breed is also expanding marketshare. And more commercial producers – following a 40-year trend toward crossbreeding – are now choosing straightbred Angus breeding programs as a way of improving productivity and quality.

A 2014 survey by Western Livestock Journal shows 78.5% of readers use Angus bulls. That’s up from 71.5% in 2011.

According to a recent survey of 839 producers by BEEF Magazine, the makeup of the nation’s cow herd continues to move toward high-percentage or straightbred British genetics.

The survey showed the percentage of producers classifying their herds as high-percentage or straightbred British increased from 47.4% in 2010 to 51.3% in 2014.

Nearly 67% of respondents reported the last bull they purchased was Angus, and nearly 87% said they do not plan to shift the genetic makeup of their cow herd in the next five years.

Of those who do plan to change genetics, 51% say they plan to increase the percentage of British genetics.

An article in Beef Today shows bull usage in 2013 was recorded as 40.2% Angus only, followed by "multiple breeds including Angus" at 29.2% and "multiple breeds but no Angus" at 7.2%.

Demand for registered Angus genetics is being driven in large part by growth in the Certified Angus Beef (CAB) program.

The brand has now enjoyed seven consecutive years of record sales, and indications point to a continued record-setting pace this year.

Since 2008, when restaurant business plummeted as a result of the economic downturn, sales of CAB brand product have increased by 36%, from 634 million pounds in FY 2008, to 865 million pounds in FY 2013.

More cattle are also being certified for the program.

In FY 2008, more than 14.2 million head were identified and 2.5 million head (17.6%) were certified for CAB. In FY 2013, CAB had a record overall acceptance rate of 24.2%, with 14.2 million head identified and 3.4 million head certified. That represents a 37% increase in cattle certified for the program.

Best of all, the $47 million in CAB premiums paid in 2013 was more than double the $23 million paid in 2010.

According to an analysis by Kansas State University, CAB demand has grown by nearly 80% since 2005, an indication that quality matters when it comes to consumer buying decisions – and that the breed’s consumer focus is working.

A strong position
The Association and its subsidiaries enjoy one of strongest financial positions in agriculture.

In FY 2008, the Association reported $31.7 million in consolidated assets. In FY 2013, the Association had $44.3 million in consolidated assets – a 40% increase.

Consolidated revenue for the Association and its subsidiaries is up 24% since FY 2008.
The financial growth for the Association and its subsidiaries is also continuing at a steady pace this year.

In the most recent monthly financial report (issued at the end of February 2014), the Association and all subsidiaries reported positive bottom lines and a consolidated net income of $5.7 million for this fiscal year, to date.

Angus Foundation assets have increased by 35% since 2008, from $5.4 million in FY 2008 to $7.2 million in FY 2013. The Foundation also set a record in FY 2013, with $2.3 million in revenue.

Angus Productions Inc. (API), in spite of a drop in revenue beginning in FY 2008 – an economic reality faced by most print publications since the advent of digital media – increased revenue from $6.5 million in FY 2012 to $6.9 million in FY 2013 – a 5% increase. API revenue in FY 2008 was $9.5 million.

Angus Genetics Inc. (AGI) has grown from more than $194,000 in FY 2008 to $5.1 million in FY 2013.

CAB revenue has grown from $13.6 million in FY 2008 to a record-setting level of $20.2 million in FY 2013, an increase of 48%.

Moving ahead
The Association and its members continue to focus on strategic opportunities for the Angus breed:

  • Leading the way are advancements in genetic technology and evaluation. Genomic testing through AGI is growing substantially. In December 2013, AGI surpassed 50,000 animals tested with high-density trait tests – a record in the beef industry. Testing volume by Association members has made possible the development of the GeneMax™ family of tests for commercial producers.
  • The 2014 Angus Means Business National Convention and Trade Show in Kansas City, Mo., next November marks a significant departure from the past and promises to expand the scope of the Angus community and position the breed for the future.
  • The unification of the Association’s public relations department and API will result in an expanding universe of media platforms for Angus breeders to promote their breeding programs – everything from TV, Internet, radio, video, sale books, brochures and fliers to widely respected print publications.
  • Angus breeders also have more technology at their fingertips than ever before.
    • More than 20,000 producers now use the Angus Mobile app on their smartphones and tablets, allowing them to access their registered herd inventories while working in the field.
    • AAA Login, which is available to both commercial and registered users of Angus cattle, now claims more than 125 menu items, with several new options recently added, including the ability to submit birth weights and calving ease records along with registrations; GeneMax Advantage results; a calving calendar; and sale data information.

"No one is taking our position for granted," Schumann says. "We are focusing on the future, and building programs and services that continue to add value to Angus cattle."