Experts bullish on future of beef industry
YAKIMA, Wash. — The outlook for the U.S. beef industry and agriculture in general is bright because growing middle classes in China, India and elsewhere want high-quality products, ranchers were told at a Washington State University Extension Beef Production Conference.
In the 1980s, there weren’t many exports, profits were low, interest rates were high and 12 percent of U.S. ranchers and farmers went out of business, said Randy Blach, CEO of CattleFax, Englewood, Colo.
“There wasn’t a lot of opportunity for people to go into production agriculture. Some of you young producers here can’t relate to that and that’s the most exciting thing about this business now is that there’s all kinds of opportunity,” said Blach, whose company aids producers with management and profitability.
The corner was turned with ethanol increasing demand for corn, now production is catching up with demand, feed costs are coming down, the drought from the Central Plains to Texas is ending and “we’re finally, finally starting to see profitability,” Blach said.
Branded beef and better genetics are giving consumers more choices domestically and abroad and the U.S. can grow back to 32 million head of beef cattle from today’s low of 29 million and still be profitable, he said.
The U.S. leads in meat exports at 15 billion pounds of beef, pork and broiler chickens annually and will exceed 20 billion by 2020, he said. Market access on a level playing field is key and free markets work if governments let them, he said.
China’s middle class of 300 million people will increase to 640 million in seven years, he said.
Larry Corah, vice president of Certified Angus Beef, Wooster, Ohio, said he agreed with Blach’s assessment.
“I’m as optimistic about the future of the beef cattle industry over the next five to 10 years as I’ve ever been in my life. It’s becoming more appealing to young people as producers,” Corah said.
Certified Angus Beef started in 1978 as the first USDA-approved branded beef. It’s now about 900 million pounds per year, 3.5 million cattle, 13 percent of the U.S. beef market and $6 billion globally in annual consumer sales, he said.
Branded beef — beef sold with a company logo — is popular and has grown to about 35 percent of the U.S. beef industry in 35 years because it means quality to consumers, Corah said. Consumers become brand loyal because they get continued quality, he said.
Branded beef probably will exceed 50 percent of the U.S. market in five years, he said. It means greater returns for producers and predictability of quality eating for consumers, he said.
Calves and cattle are worth more if they meet brand standards, and improved genetics helps to do that, he said.
The “buy local” movement plays into the equation and big companies try to meet that by using local producers in a region, he said. The challenge for smaller companies is maintaining supply.
Smaller portions at restaurants and retail sales by servings instead of pounds are popular marketing trends that dovetail with branding, he said.