My View From The Country

What Can Growers Of Delicious Beef Learn From Growers Of Delicious Apples?

Economic efficiency isn’t the whole answer.

I’ll never forget the illustration that Jim Gosey, formerly the University of Nebraska Extension beef specialist, once presented at a meeting long ago. Gosey talked about the apple industry and related how the Delicious variety of apple once dominated that industry in market share. Its growers were committed to maintaining that position and thus listened to what the consumer wanted. They developed the perfect color and shape (perfect for sitting on the teacher’s desk), and gave it that cool crisp sound when it’s split. The Delicious folks even listened to the wholesalers, and bred their apple for a thicker, tougher peel in order to enhance shelf life.

Their efforts were very successful, but they neglected one thing – taste. Consumers didn’t care about the thicker skin, but they did care about the loss of taste. Thus, the odd-shaped, off-color, smaller apples like Gala, Fuji, etc., took over significant market share from the perfectly formed Delicious apple, simply because they taste better.

I think that story serves as a valuable cautionary tale for all of us in the beef industry when we discuss efficiency. Many industries have made tremendous strides in improving efficiency, but some learned the hard way that to neglect the value equation is to lose the game.

In the beef industry, the goal has never been to be the lowest-cost producer, but a low-cost producer of a high-quality product. Even that statement needs clarification, however, because quality must be defined as a product that consumers will willingly purchase at a price that allows producers to be profitable.

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Quality is not intended to mean quality as the industry measures it, but rather quality as the consumer perceives it.  Quality isn’t a simple formula any more than efficiency. There will be multiple targets, and each target will have different factors that drive efficiency.

Certainly, uniformity and consistency will be a key to managing effectively both sides of the value equation. Successful producers will always focus on improving both the cost and benefit side of the ratio.

If consumers, producer resources, producers’ management, and goals were all homogeneous, perhaps we could develop a one-size-fits-all solution. But it isn’t likely. Producers will be rewarded for identifying and exploiting the niches that fit their resources; and that means there will continue to a whole range of optimums.

It’s the endpoint that matters and which ultimately determines the size of our industry – and that is total dollars generated and what it costs to produce the product. It’s the difference between these numbers that will determine the size of the industry and the position it holds in the battle for the center of the plate.

The exciting thing is there will always be multiple ways to get there. If someone says you can achieve it by locking in one, two or even three magical traits, or that their way is the only way, I’d go in the other direction. This industry and the marketplace are evolving, changing and progressing at an incredible pace. The only certainty is that if you are standing still, you will get run over. 

 

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Discuss this Blog Entry 3

Jordan (not verified)
on Mar 14, 2014

Top notch article Troy. I really like the analogy with the apple industry, especially since growing up as a kid I fan was not a fan of red delicious apples at all. I found them too soft and tasteless, and began eating the crisper Fuji apples once I tried them in college. It's very interesting that the delicious apple growers arrived at their product by developing an apple centered around demand driven criteria, all while ultimately neglecting the number one priority: taste.

I think a similar story has played out in the large scale pork industry. They focused too much on criteria centered around leanness, uniformity, and price, and wound up with a product that I and some international chefs I know find to be bland and dry (most Americans deal with this by smothering it in BBQ sauce or by buying cured pork).

I think you're exactly right that producers need to explore the different end products and consumers that exist and find the right fit for their operations. Just to name a few, I think the market is signaling that we need some operations that utilize forages longer, crafting cattle for the growing lean ground beef market, while others will be well served by meeting demand for the high end, high marbling grain fed Choice and Prime markets, while others might find it beneficial to transition part or all of their operations toward filling niche demands like Never Ever 3, beta agonist free, and grass fed. This diversity in operation types will increase the resiliency of the industry as a whole and allow it to withstand the wild fluctuations of input costs, demand, and weather. Cattlemen are some of the smartest guys I know, and I think the industry has a bright future as long as we don't put all of our eggs in one basket.

W.E. (not verified)
on Mar 25, 2014

Great suggestions, Jordan! You are right that our customers are many and various, and that some of them are not able to get what they want at the supermarket at any price, because virtually no American ranchers are focused on their needs. Here's an example we know of: A health food store in our area has been selling grass fed beef from Organic Prairie affiliated ranches in Australia. The owner of the store says she can get Organic Prairie grainfed beef grown in the U. S., but her customers want grassfed beef. Organic Prairie must go all the way to Australia to get a reliable supply of organic grassfed at present. Sounds like a market opportunity to me. By the way, she is selling that ground beef for $12 per pound to folks with health problems.

John R. Dykers, Jr (not verified)
on Mar 14, 2014

Well said both Troy and Jordan.
Don't forget our infrastructure! Having a market nearby or building one. Having an equipment company and repair facilities, your own or for hire. A place to borrow money.
Support our friends in agribusiness.
johndykersmd@dykers.com

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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.

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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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