Economic efficiency isn’t the whole answer.
I’ll never forget the illustration that Jim Gosey, formerly the University of Nebraska Extension beef specialist, once presented at a meeting long ago. Gosey talked about the apple industry and related how the Delicious variety of apple once dominated that industry in market share. Its growers were committed to maintaining that position and thus listened to what the consumer wanted. They developed the perfect color and shape (perfect for sitting on the teacher’s desk), and gave it that cool crisp sound when it’s split. The Delicious folks even listened to the wholesalers, and bred their apple for a thicker, tougher peel in order to enhance shelf life.
Their efforts were very successful, but they neglected one thing – taste. Consumers didn’t care about the thicker skin, but they did care about the loss of taste. Thus, the odd-shaped, off-color, smaller apples like Gala, Fuji, etc., took over significant market share from the perfectly formed Delicious apple, simply because they taste better.
I think that story serves as a valuable cautionary tale for all of us in the beef industry when we discuss efficiency. Many industries have made tremendous strides in improving efficiency, but some learned the hard way that to neglect the value equation is to lose the game.
In the beef industry, the goal has never been to be the lowest-cost producer, but a low-cost producer of a high-quality product. Even that statement needs clarification, however, because quality must be defined as a product that consumers will willingly purchase at a price that allows producers to be profitable.
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Quality is not intended to mean quality as the industry measures it, but rather quality as the consumer perceives it. Quality isn’t a simple formula any more than efficiency. There will be multiple targets, and each target will have different factors that drive efficiency.
Certainly, uniformity and consistency will be a key to managing effectively both sides of the value equation. Successful producers will always focus on improving both the cost and benefit side of the ratio.
If consumers, producer resources, producers’ management, and goals were all homogeneous, perhaps we could develop a one-size-fits-all solution. But it isn’t likely. Producers will be rewarded for identifying and exploiting the niches that fit their resources; and that means there will continue to a whole range of optimums.
It’s the endpoint that matters and which ultimately determines the size of our industry – and that is total dollars generated and what it coststo produce the product. It’s the difference between these numbers that will determine the size of the industry and the position it holds in the battle for the center of the plate.
The exciting thing is there will always be multiple ways to get there. If someone says you can achieve it by locking in one, two or even three magical traits, or that their way is the only way, I’d go in the other direction. This industry and the marketplaceare evolving, changing and progressing at an incredible pace. The only certainty is that if you are standing still, you will get run over.
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