My View From The Country

We Are At The Precipice

Looking back at all that's transpired the last three years relative to the beef market, it's obvious global beef trade is teetering on the edge of the cliff. The fundamental question is: Will it survive?

Sure the numbers tell the story -- prior to BSE we enjoyed a surplus in trade that added billions of dollars to the beef industry. According to the data, about $150 of the value of individual fed animals was created through exports. We know most of the global population lives outside the U.S., and that as their standards of living increases, so does their consumption of beef.

We know that high-quality, grain-fed beef is the preferred product, and we have very few legitimate competitors in this market. It is not hard to build the case that future growth and sustainability is reliant on beef exports. It's the reason I'm excited about the future of the beef industry.

However, there are good businessmen openly questioning if it's worth it. If the risk associated with global trade is too high, and whether the additional costs will be offset by corresponding value upgrades? These are legitimate questions. If rules cannot be enforced, what good are the agreements? If a scientific, universal standard isn't applied, and we accept that countries can establish whatever guidelines they deem under the guise of consumer safety, then no market can be counted on.

BSE and trade discussions have dominated conversations, not because there wasn't other meaningful things to talk about, but because trade has become the driving force in the market. The changes not only increased price volatility and market risk, but also created so many layers of complexity that they have become impediments to trade.

Talk to a packer about the hoops they now jump through. If factors such as zero tolerance for bone chips are the new standard, packers must either abandon trade, or totally restructure the way they process cattle. It now takes thousands of dollars and countless man-hours to do something as simple as change a product list. You add the internal debate, as the populist, protectionist and anti-trade agenda takes root, and the future of the global beef market hangs in the balance.

But we seemed to be concentrating on the periphery issues. The justification for this seemingly lack of perspective can probably be attributed to the fact that we haven't felt much pain because tight supplies and exploding demand. And, for most producers, the global market is too far removed to be top of mind. However, to say that the outcome of all of these changes the last three years will dramatically define our future is not.

If we sit by while the safeguards that keep markets open and trade fair are stripped away and, at the same time, the costs and risks of exporting are raised exponentially, then the results will be obvious. Like so many times in life, I think we would like go about our daily work and let others work out the details. But remember, it is the U.S. that has more to gain and the most to lose in the global beef business. As nice as it would be to share the burden, we've been entrusted with the future of this industry. And our actions, or lack thereof, will not only shape the industry's destiny in the short term, but for future generations as well.

Sure, there has probably never been an issue more overblown and misunderstood from a food safety standpoint than BSE. However, all of that doesn't matter. This is the bellwether event that is defining global beef trade. The path the industry has been on the last three years is more than merely perilous, it is potentially disastrous. -- Troy Marshall

What's My View From The Country?

As a fulltime rancher, opinion contribur Troy Marshall brings a unique perspective on how consumer and political trends affect livestock production.

Contributors

Troy Marshall

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock...

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