How the beef industry might continue to attract consumer spending on beef at retail and restaurants during the current recession was a major concern discussed during the Cattle Industry Annual Convention and NCBA Trade Show held Jan. 28-31 in Phoenix, AZ.
Kansas State University economist James Mintert addressed convention participants to provide insight on factors impacting beef demand. He acknowledged the current downturn in the economy saying, “In 2009 US beef demand will be hurt by the weak US economy, and there’s not much our industry will be able to do to stop it.”
Rather, Mintert said the beef industry should focus on being positioned to take advantage of the US economy when it begins to rebound in 2010 and 2011. He emphasized that the industry must continue to keep beef quality and safety top of mind and also convey beef’s positive health and nutrition messages to consumers.
Additionally, Mintert emphasized that convenience is still important to consumers in their food choices. He encouraged the beef industry to continue developing new, convenient beef products for home and rtaurant consumption.
On the international scene, Phil Seng with the US Meat Export Federation provided an optimistic outlook for beef exports. “If we have luck with Japan and Korea we expect to eclipse 2003 export levels,” he said. Beef exports dropped severely in 2003 after the first BSE case was identified in the US.
Seng also told beef industry members, “Exports are really central to your profitability.” He explained that currently for every pound of beef sold as an export, it’s at a premium of $135/head. As exports increase, he anticipates that will go to $200/head. “In these economic times, that is critical,” said Seng.
Checkoff Changes Suggested
The Cattlemen’s Beef Board (CBB) Executive Committee approved several new recommendations to improve the national mandatory beef checkoff program during their Jan. 29 meeting at the convention. The recommendations will now be forwarded to the Secretary of Agriculture for consideration.
The committee’s recommendations include increasing the checkoff assessment from $1 to $2 per head with producer approval in a referendum. In addition, the CBB would have authority to increase the assessment increments to a maximum of $3 per head with the Secretary of Agriculture’s approval and producer approval by referendum.
Although the sluggish economy is impacting consumer spending, cattle producers may expect better market prices in the not-too-distant future. That was the message market analyst Kevin Good presented during the annual Cattle-Fax Outlook session at the convention. Good says declining cattle numbers and reduced beef production should contribute to a positive long-term price trend.
He commented, “In terms of supply, the signs are extremely bullish.”
He reported that the total beef cow inventory is down 2% (more than 600,000 head), and while it might slow during 2009, it’s still going down. He also noted high levels of commercial cow slaughter and lower levels of replacement heifer retention.
As a result, the associated smaller calf crop and a predicted reduction in feeder-cattle imports means fewer calves and feeder cattle will be available for feedlot placement. Though it will be offset slightly by an expected increase in carcass weights, total beef production is predicted to decline by 450 million pounds (lb.). In 2009, declining U.S. beef production and growth in beef exports is forecast to outweigh a projected increase in beef imports, putting net beef supplies at 26.6 billion lb. — down by 600 million lb.
Production of competing meats is also declining. The forecast calls for 2009 pork production to drop by 2%, while poultry production dips by 2% to 3%.
In the long run, these reduced meat supplies should have a positive effect on cattle prices. In the near term, Good said cattle feeders can expect continued pain, with some relief coming later in the year. He called the profit picture positive for stocker/backgrounder operations, with opportunity for marginal profits in the cow-calf sector.
Given the decreased consumer spending domestically – and the resulting sluggishness to beef sales, the Cattle-Fax team emphasized that the biggest opportunity for US beef and the cattle industry is expanding market access for U.S. beef products. They reported that opening the Japanese market to product less than 30 months of age could add nearly $4/cwt. to the fed market and $10/cwt. to the calf market.
They also reported that country-of-origin labeling could negatively impact trade relations with Mexico and Canada – two of the largest export destinations for U.S. beef. If the U.S were to lose access to Mexico and Canada, it would negatively impact the market by nearly $50-$60/head on all classes of cattle, according to Cattle-Fax data.
- Climate expert Art Douglas delivered his 32nd annual weather outlook to attendees of the “CattleFax Outlook 2009” session in Phoenix. Cold La Nina conditions along the equator will continue to keep the tropical jet stream weaker than normal across the southern tier of states. This will cause a late winter and spring drought to strengthen from California into Texas and the Southeast. Heavy snow pack in the northern Corn Belt will not be favorable for early field work in the upper Midwest.
- NCBA’s newly-formed Young Producers’ Council (YPC) held their first meeting and elected officers during the convention. YPC was created in 2008 to promote youth participation in the beef industry and NCBA, and is open to members ages 18 to 35. Dustin Dean, 32, of Pleasanton, TX, was elected council chairman. Dean holds a PhD and is the Southwest Regional Director of Pfizer Animal Genetics. Steven Yardley, 25, of Yardley Cattle Company in Beaver, UT, was elected Vice Chairman.
- A series of new events designed especially for youth were held during the week including team marketing, quiz bowl, cattle judging and public speaking contests.
- Yon Family Farms of Ridge Spring, SC, was named the national Environmental Stewardship Award Program (ESAP) winner. The family Angus operation was started in 1996 and has worked with NRCS programs to implement conservation practices on their land.
- Kristy Lage of Arthur, NE, is the incoming American National Cattlewomen president. Her focus for the year will be on implementing a “beef fit year.”
- Winners of the National Beef Backer Award, which recognizes chain and independent restaurant operators who excel in menuing and marketing beef, were announced. They are Cattlemens Restaurants (Santa Rosa, CA) in the “Independent” category, Charlie Brown’s Steakhouse (Mountainside, NJ) in the “Chain” category and Merriman’s Restaurants (Kamuela, HA) as the “Innovator of the Year.”
- Terry Stokes, retiring NCBA chief Executive Officer was recognized during the convention for his 13 years of dedication to NCBA. Forest Roberts, 42, began his new position as CEO Jan. 20.Roberts is a Texas native and previously worked in the animal health industry.
- Cattleman Gary Voogt, Marne, MI, assumed the role of NCBA president for the coming year.
More online coverage of the 2009 Cattle Industry Convention in Phoenix, AZ can be found by visiting www.4cattlemen.com and clicking on Newsroom. The coverage is provided courtesy of Angus Productions Inc. (API).