Tom Brink, Vice President for the world's largest cattle-feeding firm, shares his perspectives on beef industry trends.
As the beef industry enters 2006 and the last half of this decade, what lies ahead? Tom Brink of Five Rivers Ranch Cattle Feeding — the world's largest cattle feeding entity, with 10 feedlots in five states and a one-time capacity of 811,000 head of cattle — has these thoughts.
Foremost is that the Angus breed will continue its popularity, says Brink, who oversees cattle ownership and risk management for Five Rivers Cattle Feeding (FRCF). FRCF was formed last May when ContiBeef made a joint venture with Smithfield Foods.
Brink says Angus' popularity will be driven by the many branded beef programs that now use Angus in their name.
“Packers, Sysco, and even Wal-Mart have an Angus beef brand. Although these are competition for the Certified Angus Beef program, it's extremely favorable because these large entities are heavily vested in the success of Angus beef. That puts the Angus community in a good position going forward,” Brink says. Brink is a former Cattle-Fax research analyst and market research director, and former executive director of the American Gelbvieh Association.
That being said, Brink also predicts another trend will be for more Angus beef to be produced from non-Angus parents — specifically, hybrid Angus bulls on Angus-based cows. One of the driving factors behind this is that no success goes unchallenged.
“The rest of the industry has watched the Angus seedstock industry's success. Other breeds are going to try to cash in on that. It's the ‘If you can't beat them, join them mentality,’” he says.
He says hybrid vigor is prompting this change.
“Hybrid vigor is still very important at the cow-calf level, and you can't get that by crossing Angus on Angus for multiple generations. But structured cross-breeding has been too hard to implement, especially for small producers. The hybrid bull is convenient and brings the muscle that Continental breeds offer to the table,” he explains.
He adds, “People are time-crunched and very convenience-oriented. Products that make their life simpler and still accomplish the same end goals are going to get some demand.”
Thus, he says whether Angus genes get into the commercial sector from a hybrid or purebred source really doesn't matter.
“I think the beef industry wins in either scenario. The whole movement and push toward more Angus genetics is very positive from my standpoint as a cattle feeder, because it will make our industry better and more competitive in the high-quality beef market worldwide,” he says.
Already, the hybrid trend is moving quickly. The American Simmental Association reports 40% of its 2005 registrations were Sim-Angus hybrids. One-third of the Gelbvieh breed's registrations were the hybrid mix of Balancers, and Limousin, Chianina and Maine-Anjou are also seeing fast growth in hybrids.
Brink estimates Angus hybrid registrations in those breeds total about 50,000 head for 2005, and predicts 100,000 head in annual registrations by 2010. He expects both purebred and hybrid cattle will be increasingly sold side by side — from a ratio of about 6:1 to 3:1 in 5-7 years.
“There's no question the numbers of Angus hybrids are going to grow,” he says. “And this could be the second-largest breed behind Angus by five years. That's part of the earthquake aftershock the Angus breed has created by being so successful in building demand for Angus beef.”
From a feedlot perspective, Brink believes the hybrid Angus trend will be beneficial to the industry, particularly on yield grades.
“There have been cutability issues, and overly fat cattle that higher-percentage Angus cattle bring to the industry. Our buyers say the ideal Angus percentage is 50-75%. That's a tremendous endorsement from guys who feed a lot of cattle,” Brink says. “But it's important to recognize they see Angus as a main ingredient in making the ideal feeder steer or heifer. But they don't see Angus as the only ingredient or the total solution.”
Furthermore, Brink says the influence of more Angus genetics on southern cattle — purebred or hybrid — is needed to help improve quality grades.
“The southern end of the feeding belt has a chronic grading problem that costs the industry more than $160 million/year. Angus has the solution to this industry problem, and there's money to be made for everyone,” he says.
Kindra Gordon is a freelance writer and former BEEF managing editor based in Whitewood, SD.
Tom Brink of Five Rivers Ranch Cattle Feeding predicts a few more trends cattle producers will see the next few years.
He expects more differentiation and added value between Angus brands in branded programs. For example, some different specifications already exist for live animal requirements, marbling and natural labels. He says there's also a strong push for brands to have a tagline, a story, or a set of values tied to their product to differentiate it from other programs. “We'll see more of this in the future,” Brink says.
Expect to see a few strong non-Angus brands surface. Brink explains it's common to have a leader in the marketplace with a handful of strong secondary brands positioning themselves as “Angus-other” type products. He calls this “classic marketing” and says, “I don't know who those will be, but they won't take over the Angus world.”
Fewer — if any — opportunities will exist to produce cattle and remain anonymous in the industry, Brink believes.
“With more source-verification requirements there will be less opportunity to sit back and produce something that doesn't offer value further up the chain,” he says. He's also critical of producers who only focus on a single trait.
“Be careful of any single-trait focus. Those cattle don't perform on up the system,” he says.
Brink also forecasts less profit potential on commodity cattle that don't fit any branded program.
“This is already happening today and will be more important in the future,” he says, adding, “There is going to be less room for seedstock and commercial cattle that don't have any Angus influence. That's due to all of the Angus demand pull that is occurring.”
Lastly, Brink says to look for less of a hard-line distinction between the breeds — especially the Continental breeds. He predicts several of the Continental breeds will even be working together in the years ahead.