BLACK INK -- CHANGING WITH THE ENVIRONMENT

by: Nicole Lane Erceg

I have a teal dinosaur that sits on my desk. It's an unusual office ornament, but he serves a valuable purpose. When plans change, when the unexpected pops up, when I'm tempted to say “we've always done it this way,” he's my reminder of what happens when we fail to adapt. We go extinct.

It may not feel like it, but the beef production landscape is always changing. The consumer-driven move toward higher quality started slowly, but grew faster and faster until today it's one of the megatrends within the beef community. This year marks a conjunction of the largest U.S. fed beef supply and highest quality in modern history, with record numbers grading Choice and Prime.

As beef kept getting better, more in line with what consumers want—both here and abroad—the taste for beef has grown. Since 1998, U.S. consumer spending for this protein increased seven percent, more than the combined total for pork and chicken in those 20 years. Building demand has been critical, but equally important is shifting the makeup of our supply to meet that evolving taste.

Both genetic selection and management choices at the ranch led us to the high ground on which we stand today. In this environment where demand has nearly kept up with supply, it's easy to get complacent and look away from carcass quality. We can feel good about how far we've come, since quality is the best it's ever been, and narrow our focus to maternal or growth.

That's one way to respond.

One seedstock producer I met recently plans to adapt differently—doubling down to produce a greater share of premium beef, still taking his cues from the consumer.

“Imagine if every pound of beef we produced graded high Choice or better? People would be gobbling it up!” he told me.

And they would happily pay more, which is why he and others who head that way are rewarded. Today, ranchers who continue changing to elevate beef quality reap the benefits on their bottom line. According to CattleFax, the added value to premium beef has maintained prices at record-wide spreads over Select beef throughout this quality shift. Producers still earn premiums based on those spreads.

This rancher knows great eating experiences keep people coming back for more and he sees value in keeping traits like marbling at the center of his target.

“Some people call them carcass cattle; I just call them good cattle,” he said. “Don't tell me you can't create cattle that do everything and still have marbling.”

The only new money in the beef industry is in consumers' pockets. When they demand more premium quality beef and producers adapt to provide it, those dollars flow back to the ranch. For this cattleman's commercial customer last year, it meant $200 more per head from retaining ownership of calves over what he would have earned if sold at weaning.

This shift is leaving less room for lower grading, commodity beef such as Select. It may not go extinct, but some are calling that target a dinosaur.

Next time in Black Ink® Miranda Reiman will look at marketing's other side. Send comments and questions to nerceg@certifiedangusbeef.com.







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