Change is not ranchers’ favorite topic; but when change comes with potential increases in profitability and the preservation of their lifestyle, they are often willing to give it a try.
During one session at the 2024 Angus Convention in November, panelists discussed how value creation in the beef industry has changed and what the future might hold, focusing on areas like quality and sustainability.
“The wheels of change grind exceedingly slow, but change is coming,” said Nevil Speer, an industry consultant who served on the educational panel. “It’s all about what’s at the end of the road. It’s consumers, and there’s going to be more and more questions.”
It’s not the first time producers have shifted their practices based on consumer demands. Bruce Cobb, executive vice president of production with Certified Angus Beef, said the early 1990s was a critical juncture for beef value and responding to consumer signals.
“We weren’t really connected at all with the consumer and what we were producing,” Cobb said. “We were producing what we wanted to produce as opposed to what the consumer was expecting and demanding.”
In 2024, Cobb said, he feels excited about the opportunities afforded to producers willing to participate in value-based marketing and to talk about the value they have created in their cattle.
“Here’s an opportunity for you to participate in something that can help you economically and also help build your business and build demand,” Cobb said. “When you have models that address cattle care all the way through the supply chain, there’s going to be a different demand for that product. When you have a model that drives quality all the way through the supply chain, there will be a different demand for that. We are no longer in the commodity business in the beef industry.”
Current affairs
One place Speer, along with many cattle producers, looks for signs of change is by watching market prices.
Speer said that from April 2021 through early November 2024 most weeks have seen better prices year over year in the feeder-cattle markets. He said he interprets that to be a sign of genetic progress and other long-term efforts pushing the beef industry in the right direction – that is, in the same direction as consumer demands.
Speer said producers first need to maintain key characteristics of today’s cattle and beef, like palatability, carcass merit and productivity.
In the same vein, Cobb predicted quality trends to continue.
“Whether that pace of change is driven by consumer demand, or it’s driven by profitability or driven by genetic technology, all of those things are working together in concert,” Cobb said.
The group told their audience there will continue to be a demand from consumers to know more about where their food comes from.
“[Sustainability is] not a new word at all, but it’s something that we have really embraced in the last several years at Certified Angus Beef,” Cobb said. “It was something that our customers were asking about, and asking is the key.”
He continued, “When your customers engage with you like ours do and they see what you’re doing relative to sustainability, and they walk away saying, ‘That label that you have – we need it in our store next week,’ those attributes are real.” .
Panelist Leann Saunders, chief operations officer of IMI Global, a division of Where Food Comes From, said supply chains are being built to meet these consumer demands, so it is a growing area in which producers can capitalize.
“As you align with the things that work for you and your operations, then buyers that also believe that and want to sell that at the supply chain, there is added value,” Saunders said.
New opportunities
So what’s next? Speer said he notices conversations changing in the industry around how value is shared. Grid marketing is not the only tool the beef industry has at its disposal for capturing value, and he sees this with a corporate feedyard that works with their customers to create win-win scenarios.
“I don’t remember having that conversation 20 years ago, or even 10 years ago,” Speer said. “That’s where we want to go, because the conversations are more win-win than they used to be; because we can win, and we have the tools.”
Once genetic decisions have been made, “then you also have to work at getting the value, and that means marketing them in the correct venue,” he said. “I think that’s oftentimes where people get very frustrated.”
Although producers can be frustrated by marketing and the time-consuming nature of building those relationships, Speer said buyers are highly motivated to find the right kind of cattle for their value-added supply chains.
“Now the cattle feeder is in a position where he is looking for those higher-quality cattle from commercial cattle producers who historically have sold weight, health, reputation. Now they can sell off of a quality perspective,” Speer said.
Not done yet
While the business environment is a harsh one compared to historical conditions, the market is also ripe, providing premiums for cattle that match consumer demands.
“What we see is more and more of that differentiation in the programs that we have continuing to grow, not lessen, over time,” Saunders said.
Panelists recognized that small producers might be feeling the economic pressure to capture value but struggling to find the marketing channels that are ideal for a smaller calf crop. Their advice was to look for opportunities to collaborate or create those opportunities with others facing the same hurdles. A tool like AngusLink’s Genetic Merit ScorecardSM evaluates the genetic potential of a group of feeder calves, regardless of group size.
“Buyers are beginning to recognize the [Genetic Merit Scorecard], and there’s an appetite for that data,” Cobb said. “[Their appetite] allows a small producer or a group of small producers to market those cattle collectively anywhere across the country to buyers who do have a value on what the genetic merit score is.”
Saunders said she has seen smaller producers succeed in capturing added value on their feeder calves by working with local livestock markets who host special sales for those types of cattle.
“On some of the other programs, there’s a lot of livestock markets now across the United States that will schedule special days to sell verified cattle,” she said. “That enables the smaller headcounts to go in and still receive the value.”
Video markets are still the most popular way to sell cattle with verified claims. Saunders said they often sell cattle as load lots. She has been encouraged with the growth of special sales among livestock markets to more options.
“[The Livestock Marketing Association] has been very supportive of a lot of that effort, trying to get some of the smaller producers and buyers coming in that want those cattle,” she said.
Speer summarized the major challenge presented to cattle producers, with its anecdote being greater collaboration.
“The supply chain part of this whole equation is critical, because we have to coordinate those segments in our industry,” he said. “We really don’t have that luxury like all other industries do, where production is contained within a building or across a complex. Our production is contained across thousands of producers, 50 states, different time zones, and we have to coordinate in order to hit that target for the consumer.”
