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Where is the Beef Industry Headed? A group of Texas producers, feeders, academics and researchers discuss the future of the industry. By David Bowser The Texas beef industry has four major challenges facing it, according to producers, feeders, academics and researchers who met for a beef summit in Fort Worth, Texas. The industry needs a support system that maximizes the intrinsic value of the product, according to Matt Brockman of the Independent Cattlemen's Association. The industry also needs an education effort on delivery of information to a targeted audience and an advocate system that prioritizes issues. The industry also needs to do a better job of organizing itself. Jeff Diles, a seedstock producer from Utopia, Tex., said he just needs to know where he should go with his operation. At one time there seemed to be a targeted animal, he said, but now with changes in marketing and processing, there are different targets for different needs. While white cloth restaurants still say they need Prime ribeyes of a given size, prepared foods now hitting supermarkets tend to be Select. The deciding factors on pricing slaughter animals appears to be moving from quality grade to yield grade, and even the price signals sent in today's market are varied. "Selling on average price sends the wrong signal," said Rob Brown, a rancher from Throckmorton, Tex. "That's an incentive to put below average animals in the feedlot and bring up the average." "The biggest change today is differentiation," said Dr. Bill Mies of Texas A&M University. Low net return on beef production is a symptom rather than a problem, according to this group. Net returns, they said, will take care of themselves if the industry deals with other problems such as inconsistency and value-based marketing. But value is not a fixed target, said Neal Odom, manager of McLean Feedyard. It's a moving target. In order to fix a target, the producer first has to fulfill a need, although Odom admits there is a need to narrow diversity. Odom said that as a feedlot manager, he faces the diversity problem with almost every shipment of cattle that comes in. Brown, however, was critical of the grading system, saying it make no allowance for tenderness. Mies said that with the new case ready products that have been developed by the beef industry, it is the Select grades of beef that are preferred and those cuts are injected during processing to make them tender. The target is shifting from narrowing the inconsistencies in quality grades to yield grades. "In the past quality grade has been important," Mies said. "Now, it's yield grade. They're going to want leanness, red meat yield. There's going to be more demand for cut size." IBP is providing case ready meat for Wal-Mart with a double-the-money back guarantee. IBP, the nation's largest beef packer, expects a rejection rate of one in 56,000. Mies said he sees more premiums and discounts as marketing shifts from averages to value-based. "The sweet spot is in the upper end of Yield Grade Two," Mies says. All agreed that the industry is changing and will continue to change. The most important issues in the future will be education and technology. |
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