Beef exports key to market improvement in beef business
March 31, 2017
With producers retaining more heifers and increasing their cattle herds, and domestic beef consumption remaining stable, the beef industry is going to have to seek out export markets to sell the extra beef they produce.
Stephen Koontz, agriculture and resource economist with Colorado State University, told cattle producers during a seminar last week that with more production, cattle prices will stay low unless there is more consumption. He is projecting fat cattle prices to be $1.30-$1.35, and the feeder cattle market at $1.30 to $1.70. Koontz thinks those in the cattle business will see these prices for at least two more years.
"Heifer slaughter has really declined," Koontz said. "We will have herd expansion until no one wants another cow, which I am predicting will be sometime in 2018. Cow slaughter is starting to moderate, which is driving those prices lower," he explains. "If you want to be in the cow business in the next 10 years, the next two years is the time to get into it," he said. "But, do it slowly and take on little to no debt."
Exports add $1 billion to $3 billion in trade to the beef industry. The top export markets for beef are Canada, Japan, Mexico and South Korea, with Japan being the largest market. But, all eyes are on China, which could become a big contender in the future. "Exports are going to drive the cattle market in the coming years," he says. "Our growth in the beef industry will have to come from exports, because the U.S. consumer will not eat any more beef."
GETTING YOUR CATTLE VERIFIED
RaeMarie Knowles with the Ranchers Connecting Ranches program talked with producers about verification opportunities that could earn them more for the beef they produce. Before starting the RCR program, Knowles conducted a lot of verification audits through USDA, which gave her an opportunity to find out what beef producers and feeders liked and didn't like about the process.
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"Verification is important to the beef industry because it gives producers a way to source and age verify their cattle," she said. All these programs have to start at the ranch level, they cannot be back-tracked. After the first bovine spongiform encephalopahty (BSE) incident in the U.S., Japan would only take cattle harvested under 21 months of age, which made source and age verification audits really important. Since then, Japan has increased the age requirement to 30 months, which has decreased the premium for participating in this program from $35 a head to about $2.20, she said.
Other countries also have requirements American producers have to meet if they want to export beef. The European Union requires beef imported into their country be documented as nonhormone treated cattle (NHTC), and Saudi Arabia has set new requirements for beef that it doesn't contain certain proteins, and beef tallow must come from a certified renderer and be blessed.
Knowles told producers that RCR can not only help them satisfy export requirements, but provide traceability to the source, which instills consumer confidence that the cattle were humanely handled and harvested. "It is another way we can tell our story," she said. "It adds transparent credibility to all the things ranchers already do right," she said.
Knowles said ranchers and feedyards can both utilize the services RCR provides. "We can accommodate all sizes of producers, and our program is a national program that covers all 50 states. We have auditors from California to Florida."
The RCR offers several verification programs including RCR Natural, RCR Natural and gently raised, grassfed and feed bunk ready verifications.
EDUCATING CONSUMERS ABOUT BEEF
Greg Bloom with the Colorado Beef Council, told producers that consumers are becoming more and more disconnected from agriculture. "Our job is to connect these consumers to our beef community," he said.
The Colorado Beef Council works with CSU to provide producers with beef quality assurance training, but also with beef promotion and education, beef grants with schools, a beef running team, BBQ University, retail training of meat department workers, and food service and culinary training with chefs.
Bloom shared the importance of export markets to the beef industry. "Other markets are willing to pay more for certain cuts than we are here in the U.S. Cuts like beef lips, tongues, livers, boneless short ribs, short plate, which is beef belly, and chuck short ribs, are in more demand in other countries than they are here," he said. "In fact, we are approaching $280 a head in added value we get out of each carcass in cuts that are exported."
With domestic consumption staying relatively the same year after year, Bloom said it is important to teach millennials that beef isn't bad for them. "Consumer concerns range from hormone use in beef production, feedyard sustainability and humane handling to antibiotics, grass fed animals, and use of resources," he said. "Colorado has a real advantage because we have a large enough population here that we can do a lot of farm to plate tours. It helps consumers better understand how beef is produced and why we do certain things," he said. ❖
— Clark is a freelance livestock journalist from western Nebraska. She can be reached by email at email@example.com.