What is in this article?:
The beef industry must work together to devise a way to grow the pie and fairly share it, or risk losing market share to competitive proteins.
- See more discussion on industry alliances in our August 2012 issue of BEEF.
Shooting into the circle
Yet, Rupp reckons if you lined up representatives from each sector of the beef, pork and poultry industries and asked them to identify their competition, it’s likely the pork and poultry folks would point to competing proteins, while beef folks would point at one another.
In other words, Rupp says each beef sector has tended to focus on the slice it can carve from the existing pie rather than working to grow the pie so that each slice is more valuable to each sector at every phase of the cycle.
“I think one of the reasons for that is because food service and retailers have been absent from the table when others in the industry talk about it,” Rupp says.
But, that appears to be changing due to short supplies and high, volatile beef prices.
“Assured supply is becoming more important than forward pricing to many of our customers,” Byers says. For one thing, current price volatility makes forward pricing riskier. Secondly, retail and food service customers – and their customers’ expectations for beef – continue to grow with the price.
“Many of them are working on what I call strategic supply relationships,” Byers says. “That bodes well for the industry because it allows us to work more closely together to understand value.”
In fact, Steve Williams, head of cattle procurement for JBS, says they’ve been forward contracting cattle 12-18 months ahead in order to provide customers with a consistent supply of the particular products they want.
“More customers are willing to come to the table and be part of that process,” Rupp says. “I think that will give us as an industry the opportunity to grow the pie because we can start talking about category management, demographic needs, and all of those things that would allow them and the other industry segments to optimize returns.”