SHOT YOURSELF IN THE FOOT

Self destruction is not normal. Commerce usually encourages participants to avoid actions that threaten their livelihood. The beef industry is fairly reliable in looking after its own interest. Sometimes those interests are not commonly shared and disparate views emerge among industry members. Animal ID and COOL are two examples. Animal ID is an important strategic effort that is necessary to grow our export markets and protect herd heath. Nothing immediate occurs when we don't compel animal ID, but we suffer financial penalties every day.

COOL is a more egregious misstep.  COOL was a chauvinistic effort to promote American beef and it sounds like something everyone would support. Under this noble aim of promoting American products is a self destructive outcome, borne of misguided advocates supported by politicians who jump at the idea of anything to promote American without ever considering the ramifications. The result has added dollars to production costs and offered no value to consumers. The average American consumer in a recent poll never reads the labels about origin or cares. Consumers care about how much it costs and how it tastes.

Mexican producers have for years found better markets for their cattle in the U.S.. Cross border trade was good for operations on both sides of the border. American registered breeders found good outlets for high quality bulls from Mexican ranchers. U.S. beef operations found a reliable source for stocker cattle. A U.S. born bull bred to a Mexican cow raised a few miles from the border has little to distinguish it from another animal a few miles away on the American side.

The legislation has had a large and long lasting outcome on the Mexican beef structure. Mexican's began immediately building pens for finishing their own cattle in Mexican feedlots. This change created a need for more grain and the source was U.S. corn and milo. It also has created more beef domestically and less need for U.S. imports leaving U.S beef exports to Mexico in a large decline.

U.S. beef processors joined in the effort to sabotage our own industry. They assessed a $40 discount to Mexican cattle in spite of the fact they suffer no discount when selling the generic beef. Mexican ranchers were left with the option of selling into the U.S. with a large discount, to cattle of the same quality in the U.S., or feeding their stock into the Mexican beef trade.

Undoing wrongheaded legislation is a slow process. In the meantime when the U.S, herd is shrinking and we are in need of all the cattle we can use, one of our major sources is drying up.  

PROTECTING MARGINS -- THE BIG SQUEEZE

The beef industry has never been integrated like much of the pork production or all of the chicken raisers. The various sectors compete horizontally with each other and vertically with other segments of the supply chain. The USDA July inventory was a reminder of the decline in the number of cattle in the country and a preview of the struggles to come.

Industry growth happens for a reason. Profit margins are plentiful and rising prices are signaling the need for more product. The industry responds by producing more product. Nothing is more exciting than the hustle and bustle caused by growth.

The beef industry is in decline. Some feeding operations have closed and some beef plants are dark. Both cattle feeding and beef processing are plagued with over capacity. The nation's cattle herd is shrinking and with it will be tough times for all but the breeders. Oversized facilities will be competing with each other to fill their needs. In the process some more closures may be necessary.

The breeder has not been squeezed by over capacity. Breeders have survived the past few years in good shape and will be benefited by the upcoming shortage of cattle. However, expanding the breeding herd is not as easy as adding a few more pens to a feedyard or killing a few more hours in the beef plant. Urban sprawl and alternative cropping options are taking land away from the breeder and reviving the breeding herd is not an easy task. Expansion requires more subtle changes like fertilizer to increase carrying capacities on grassland.

In the meantime, stocker operators, feeders, and processors will be left to scramble and compete for the dwindling supply of cattle. Competing for a fixed supply that is inadequate forces parties to outbid the other in order to fuel the needs of the physical facilities. The net result is smaller to non existent margins for most.

Begin At The End When Thinking Beef

Ask cattle producers what business they’re in, and often they’ll say the cattle business. “But really it’s a business that begins with the American mom,” says Mary Lou Quinlan, CEO of “Just Ask a Woman,” a strategic marketing consulting firm in New York.

“Start to think not just of the steer, but the steak,” she told a group of cattle feeders recently. “You say you’re in the cattle business. She says you’re in the beef business – you’re in the ‘what’s on my plate’ business.”

To make sure beef stays on the plate, Quinlan challenged cattle feeders to become part of the conversation about the safety and healthfulness of conventionally-produced beef. “Conventional beef isn’t being out-sold by organic, it’s being out-told,” she says. “So before a greater number of shoppers get to the point where they’re making purchases out of fear or frustration, they need support so they can become more confident in the beef they’re buying.”

Quinlan suggests cattle producers first consider how they describe who they are and what they do. If you’re not producing natural or organic beef, you probably think of yourself as a “conventional” beef producer. However, Quinlan suggests that “traditional” may resonate better.

“Traditional means a lot of things. Traditional is the emotional high ground. It recalls those family dinners. And it’s also beef that is raised with traditional care – best practices, things that have been learned and hold true from generation to generation.”

Quinlan says three pillars describe who you are and what you do as a beef producer.

The first is trust. “(American moms) know you must take good care of your cattle because your own families depend on it.”

The second is safety and Quinlan says because of USDA inspection and oversight of the beef business, cattle producers have that in spades.

The third, and perhaps most important, is freedom of choice. “Organic isn’t the enemy. The enemy is anyone who takes away her freedom of choice. Her common sense has been assaulted by propaganda in an effort to convert her and control her options, and make her feel guilty,” Quinlan says. American moms resist and resent that, because they feel their ability to choose what’s best for their families is being challenged.

To help cattle feeders become more involved in telling their own story, Quinlan suggested a phrase to use as part of their elevator speech: “We produce beef you can count on, beef you can depend on, that is going to come through for you and your family. Traditional beef, grown with traditional care, grown by America’s cattle farmer families, perfected from farm to market to table.”