BEEF magazine readers appear more optimistic about the longer-term prospects of the U.S. beef industry than the short-term picture, according to a May survey. That's probably not surprising given the industry's move toward the downside of the cattle-price cycle after two years of record calf prices, as well as rising prices for energy.
In conducting its annual state of the industry survey, BEEF editors electronically polled more than 14,000 readers on their thoughts to 13 questions regarding their attitudes about the U.S. beef industry in general, and selected industry issues. A total of 628 completed surveys were returned, for an effective response rate of 4.3%.
The results showed a downward shift in general optimism compared to last year, with only 8.8% of respondents reporting more optimism about the short-term future of the U.S. beef industry, while 38.4% were “less optimistic.”
Regarding the long-term future, 21% reported being more optimistic than in 2005, while 26.9% said they were less optimistic.
In the 2005 survey, reported in the June 2005 issue of BEEF (“Best Of Times, Worst Of Times,” page 16), 33.9% of respondents indicated they were “more optimistic” regarding the future of the U.S. beef industry. Meanwhile, 8.8% said they were less optimistic than the year before.
Of course, in the first quarter of 2005, the industry recorded its best first quarter of cattle prices ever. Despite beef supplies being up 2%, cattle prices grew 8%. At that time, beef demand had grown 25% since 1989.
As economist Harlan Hughes writes on page 13 of this issue, calf prices are projected to trend down into the end of this decade or slightly thereafter. Both feeder-cattle and fed-cattle prices peaked in 2005.
And rising input costs are more top of mind in 2006. In the latest survey, 35.7% of respondents expect their operating expenses to grow more than 10%. Another 37.7% expect a 5-10% increase, while 22% anticipate a 2-5% jump.
In last year's survey, 26.9% of respondents anticipated an increase in operating expenses of more than 10%, while 37.4% expected a 5-10% rise, and 27.6% of respondents foresaw a 2-5% increase.
Still, the U.S. beef industry saw some resolution — albeit temporary at times — to some nagging holdover issues from 2005. For instance, in May 2005, the U.S. Supreme Court upheld the constitutionality of the national beef checkoff to end a long-running intra-industry battle.
And, though it only remained open for a month, U.S. beef gained access to Japan in mid December 2005. The agreement between the two countries departed from international standards in that only boneless, whole-muscle cuts of beef from animals 20 months of age and younger were eligible.
Unfortunately just a month later, Japan re-shuttered its market to U.S. beef when a shipment of veal from a U.S. supplier was found during a Tokyo inspection to contain vertebral column.
That and the March 2006 discovery of a third case of BSE in the U.S., this one in an Alabama crossbred beef cow, served to re-shutter the Japan market. The two incidents also helped delay the anticipated April reopening of the South Korean market to U.S. beef.
But progress in reopening markets previously off-limits to U.S. beef was made in the past year — in Hong Kong, Egypt, Taiwan, Oman, Panama, Thailand, Singapore, Costa Rica and China, among others.
Moving ahead with ID
In addition, USDA made some tentative motions in the direction of a national animal ID system that one day will hopefully allow 48-hour traceback of all U.S. livestock in the event of an animal health emergency. USDA released its “Draft Strategic Plan for the National Animal Identification System” (NAIS), and its “Draft Program Standards” (www.usda.gov/nais) in May 2005.
Meanwhile, in April of this year, the agency released its implementation plan for NAIS, which reaffirmed its timelines and benchmarks. Of course, there's still plenty of “fill in the blanks” about NAIS, with “Who will pay for it and how?” being just two of the important questions producers want answered.
In the 2006 survey, 60% of respondents found USDA's goal to have all livestock premises registered by 2009 as “realistic,” while 25% found it “unrealistic.” And 70% of respondents claimed to be currently individually identifying animals in their operation utilizing a system that didn't include hot-iron brands.
Meanwhile, 48.2% of respondents said they had registered their livestock premises under an official state or tribal livestock ID program, and 51.1% said they had not.
The 2006 survey found reader concern about bioterrorism fairly consistent with the 2005 result. Of respondents to the 2006 survey, 22.3% expressed “more concern” about bioterrorism, while 15.8% expressed less concern. In the 2005 survey, 17.4% of respondents reported “more concern,” while 11.2% said they were “less concerned.”
Click below to view BEEF State of the Industry Survey Results.