If things seem under control, you're just not going fast enough, says auto racer Mario Andretti. And that may be the case for some folks in the cattle business.
“We're going to need a little bit of that Andretti spirit in us if we really want to be in the ballgame in the future,” says Tom Field, associate professor of animal sciences at Colorado State University. “All I see ahead is faster speed and tighter turns.”
The next few years will tell if the beef industry uses recent growth as momentum or throws beef demand and the entire industry into reverse.
At least that's what the Beef Industry Planning Group is saying. Formed by the National Cattlemen's Beef Association (NCBA) and the Cattlemen's Beef Board (CBB), the group recently identified a few major trends the industry must address to increase beef demand and enhance the future business climate.
One trend that will either be an ally or adversary — depending on how the beef industry responds — is changing consumer demographics in the U.S.
The planning group notes that Baby Boomers are aging, Generation X is cooking less and the population of Hispanics, Asians and other ethnic groups is growing. Age, disposable income and ethnic background impact taste, preferences and target markets for beef — thereby influencing beef demand.
That's partly why the number of value-added or branded products in the meat case is going to increase, Field says. Since 1998, more than 350 convenience beef products have hit the shelves, according to an NCBA estimate.
Field says the mindset of the future will be product lines rather than “a” product.
“We're not going to be in the business of selling beef. We're going to be in the business of selling uniquely named, identifiable products that have lost this commodity orientation and that meet specific needs in the marketplace,” he says.
The industry must balance the focus on improving eating quality attributes with the needs for acceptable cutability, feedlot performance and productivity at the cow/calf level, Field says. He adds that selection indices and decision aid models will become the standard in the future.
Furthermore, commercial cow/calf enterprises and industry alliances focused on meeting diverse consumer demands will dictate the selection criteria of seedstock producers, Field says.
“For the seedstock industry, staying close to the customer will not be an option but rather a prerequisite,” he says.
Another trend is globalization. Geographic and political boundaries no longer define markets, competitors and business opportunities.
International beef producers will continue to become more competitive, especially Australians, New Zealanders, Brazilians and Argentineans, Field says.
“I would love to tell you that Americans have a corner on knowledge, motivation, work ethic and faith in getting the job done,” Field says. “Unfortunately, I've traveled, and that assumption doesn't hold water.”
High U.S. beef prices and a strong U.S. dollar already have given the competition a leg up on exports, says Phil Seng, president and CEO of the U.S. Meat Export Federation (USMEF). Such is the case in the Japanese market, where, for the first time in six years, the U.S. is losing market share.
“I am concerned about that because our share is going down in a growing market. Australia is increasing, Canada is increasing, and the U.S. is going down,” Seng says.
Once primarily a commodity supplier, Australia's beef industry is now more brand driven and customer specific. They are developing specific programs for the Japanese market and using source verification as a selling point, he explains.
You can argue that the U.S. beef industry is larger and has more cattle on feed than Australia, but what gains back market share is better funding of export programs and a source-verified product, Seng says.
“The more you can explain your product and how it's produced… the more opportunity you have to sell that product,” he says, adding that USMEF needs more dollars to help extol the safety and wholesomeness of the U.S. product.
Source and process verification are instrumental back home, too, given public concerns about animal welfare, food safety, land, water and air. Those concerns are resulting in more regulation and scrutiny of beef production practices.
“Natural resource management and conservation of agricultural lands are keys to the successful continuation of the beef industry,” Field says. “We've got to embrace that movement better than we have in the past.”
Field predicts that environmental concerns will shift cow/calf production onto more marginal lands, particularly in the West. More marginal lands will require animals with different genetics than those on highly productive lands.
Cattlemen may be in the driver's seat, but there's help on the sidelines and in the pits. Whether it's a genetic marker for marbling or a Web site that helps you exchange information, new technology tools may help the beef industry achieve its goals faster and more efficiently. And information is really the key, Field says.
“Those with information will have the opportunity to share in value-added returns,” he says. “Those without information will be resigned to trying to survive in an increasingly limited commodity market.”
Lessons From The Road Behind
Some of the auto industry's past mistakes teach valuable lessons that can be applied to the beef industry, says Tom Field. He's an associate professor of animal sciences at Colorado State University.
In the late 1960s, the U.S. auto industry was alone at the top of its trade, Field explains. But it became comfortable, complacent and arrogant. It didn't recognize changes in the marketplace and failed to look for useful ideas beyond its borders.
By 1980, domestic cars were completely out of touch with consumer needs, and foreign imports nearly brought the industry's giants to their knees, he says.
One take-home for cattlemen is this: Arrogance and inaction make companies and people vulnerable.
“When people get comfortable, they get complacent,” Field says. “The second you think you've got it won is when you're the most vulnerable.”
That's why it's important to take action — even if it's wrong. “Failure you can survive; inaction is terminal,” Field says.
Another lesson is avoiding the “it's not my job” attitude.
“In this age of change, new thinking and speed, each of us has to be cross-trained to take responsibility for the performance, whether we're taking about an individual herd or an organization. It's everybody's job — period,” he says.
The beef industry also can learn from the auto industry's comeback, Field says. To gain back market share, carmakers changed their mindset. They stopped building the cars they wanted to build and started building the cars Americans wanted to drive. That required years of listening closely to customers.
The same approach applies to improving the quality of beef products, Field says. And, listening among the industry's segments must improve.
“There is lots of talking, lots of telling, lots of advocating for certain things. But too infrequently is there real quality listening,” he says.
Improving the quality of any product or service is hard work and requires not just doing things better but also doing them differently and faster.
— Diana Barto
Terrorism And Trade
Over the next six months, the U.S. response to the Sept. 11 terrorist attacks in Washington, D.C., and New York City will impact trade more than anything else, says Phil Seng.
“We haven't seen any major disruptions in any of our exports at this point in time,” says the president and CEO of the U.S. Meat Export Federation.
U.S. beef products are still flowing in all countries that have destinations for it. Though the immediate impact has been minimal, it's hard to say exactly how beef trade will be affected in the near future, he adds.
“The major concern is what is going to happen henceforth,” Seng says. “It's too soon for me to predict… because we don't know the impact of the U.S. response, how far that's going to reach and where that's going to reach.”
It's another added concern to what was already an unsteady trade situation. U.S. beef exports are down in several major markets this year. Uncertainty about the future is likely to compound the situation.
Overall, beef exports are down about 11% for the first six months of 2001, according to USDA. While Mexico is up 13% and the Russian federation is up 76%, exports are down 11% to Japan and 29% to Korea. Hong Kong, China and Taiwan are also down.
Another major concern is the worldwide economy. Even before the attacks, experts were predicting zero economic growth worldwide, and now there may be a worldwide recession. That's quite a different picture economically than last year's 5.5% growth, Seng says.
The good news, experts say, is that after the World Trade Organization meets in November, an additional $600 billion may be added to world trade. That would help the U.S. economy, the world economy and agricultural trade in general, Seng says.
— Diana Barto