More Than Steak and Potatoes

Resonating with today’s beef consumer takes more than taste.

by Morgan Boecker

March 2023

Yesterday’s steak and baked potato is today’s beef brisket from the restaurant downtown. The food scene is changing, driven by a new age of consumers who want more. They seek new flavors and attributes on the packaging, but still expect beef to taste great.

“We can do all the things in the world,” said Danette Amstein, principal at Midan Marketing and sixth-generation rancher. “But ultimately if it’s not going in their cart or it’s not on their order at the restaurant then it doesn’t really matter.”

Consumers today think about food differently. They don’t know how livestock are raised, so they’re concerned about animal welfare, what the animal eats, the environment and so on, Amstein said.

“Our consumer has changed significantly over the years and some of them don’t even think about steak when they think about beef,” she said.

The great thing about our product is its ability to be utilized across the entire carcass to meet these new expectations.

Danette Amstein at Angus Convention 2022

As a sixth-generation rancher, Danette Amstein applies Midan Marketing’s research to share her family’s ranch on social media. “Stop being afraid to show your story.”

Today’s Consumer

Midan Marketing serves as a conduit for sharing with cattlemen what consumers are seeking. Diving into different categories of consumers, they want more than just meat and potatoes and that changes across categories and generations.

Consumers can be split into five categories, but the COVID-19 pandemic influenced how and where people consumed food. According to the Meat Consumer Segmentation 2.1 survey in September 2020, there were 39% convenience chasers, 20% protein progressives, 18% family-first food lovers, 16% aging traditionalists and 8% wellness divas.

Another component of meeting consumer satisfaction are generational differences and the upcoming Gen Zs, which are generally anyone born after 1997.

“They’re (Gen Z) adventurous eaters and they’re going to try anything,” Amstein said. “If they like it, they’ll stick to it. Food is social, so they’re easily influenced by their friends.”

Gen Zs are also the biggest group of online shoppers and are curious about animal welfare and nutrition, too.

Each year the population becomes more multicultural, which translates to more flavors and varieties of food on the plate. That gives the beef supply chain more opportunities to capitalize on beef’s versatility, Amstein said.

How do we get each segment to think about beef? “We need products that fit across all of these,” she said.

Consumer categories, Midan Marketing 2022

It’s up to beef brands to create messaging for beef to meet the needs of each of the five categories of meat consumer. (Data from the Midan Marketing Meat Consumer Segmentation 2.1 Survey, September 2020)

Uncontrollable Factors

Major disruptors have swept through the market, bringing more changes to how consumers shop based on circumstances out of their control.

The COVID-19 pandemic made consumers more comfortable cooking at home. Pre-pandemic, only 50% of people would eat meals at home; in March 2022 that number rose to 82%. From the same Meat Consumer Tracker survey, purchasing meat online went from just 14% before COVID-19 to 47% following.

There is an additional dynamic at play today that the industry has experienced in the past: inflation.

With inflation the highest it’s been in 20 years, 82% of consumers are concerned with higher food prices hitting their wallets, Amstein said.

When the price of goods increases, shoppers change their purchasing habits. In the 2022 Meat Consumer Tracker survey, 56% of consumers said they will seek less expensive protein options, 55% said they will freeze meat/chicken more often, and 40% said they’ll purchase more ground beef.

With these new behaviors during high inflation, the beef industry should focus on sharing unique, less expensive cuts of beef and ways to better utilize leftovers at home, she said.

Looking back at how the industry survived the 2008 recession, Amstein said communicating value is a big deal. Sometimes it’s just the sticker price, but other times it’s everything else—taste, quality, how it’s raised—that beef brings to the table.

CAB meat label for animal care and climate

Translating Values at the Meat Case

Communicating that value is where beef brands can leverage production practices to tell consumers how their beef is raised, so they can feel good about purchasing it for their families. But first, our industry needs to know what quality means to those buying the product.

In the 2022 Beef Attributes Research Study, consumers ranked 28 different claims on packages for quality. The No. 1 choice was USDA Prime, but only 52% of respondents thought it was the highest quality. It was followed by USDA Choice, which is most commonly found at a grocery store, Amstein said. Only 30% of consumers considered Angus beef high quality.

“There is a very direct correlation here between the word ‘Angus’ and generations,” she said. Baby Boomers know the Certified Angus Beef ® brand story, and they think Angus means quality, but that recognition decreases with other generations.

This becomes especially relevant at retail. Walking through the grocery store, 94% of the meat case has some form of beef branding and it has changed how consumers think about brands, she said.

If we’re trying to reach the adventurous Gen Z shoppers, there should be marketing messages that communicate how the versatility of beef meets that need.

In a 2021 Gallup survey, farmers and ranchers earned 57% on the trust scale. “That’s high and we have to hold onto that by communicating what’s happening at the ranch,” she said.

“Because as the world gets tipsy turvy, they want that reassurance that what we are raising for them is what we are eating. That what we are raising is good. We’re not cutting corners and we’re taking good care of the animals,” Amstein said. “The best way we know to do that is to leverage brands.”

To be successful and share a stronger story, we’ll all have to get out of our comfort zone to brand, label and market beef, Amstein said. “It really is all about the message.”

Applying the Research to the Certified Angus Beef ® brand

As aging traditionalists shrink in their share of consumers, a younger generation is growing at the checkout counter. To continue being the leading beef brand, CAB must offer a product that goes beyond taste.

The most direct way to communicate with consumers is through marketing claims. CAB now offers its licensed retailers a marketing label that says “Dedicated to Humane Animal Care and Climate-friendly Practices” to offer a feel-good factor and address customers’ top concerns.

This is only possible with additional information from the beef production sector. That’s why CAB considers accredited programs such as Beef Quality Assurance (BQA) a baseline for cattle care practices and an effective way to standardize animal welfare. Certifications such as BQA can be used to communicate what’s happening at the ranch to care for cattle to generate stronger trust in farmers and ranchers. To learn more, visit CutTheBull.info.

Additionally, CAB created the Working Grasslands Conservation Initiative to support consumers’ environmental concerns. Working with Ducks Unlimited, CAB is collecting data to show how cattle are part of a healthy ecosystem.

While the foundation that CAB was founded hasn’t changed–creating demand for registered Angus cattle–additional information creates value for today’s beef consumer.

Information in this story was presented at Angus University during the 2022 National Angus Convention.

This story was originally published in the March 2023 Angus Journal.

From insights to solutions

Feeding Quality Forum shares perspective on future demands

by Morgan Boecker

September 22, 2021

Years of progress in efficiency and genetics may not be enough to satisfy the demands put on cattle producers moving forward.

That was the message from speakers at the 2021 Feeding Quality Forum, hosted by Certified Angus Beef (CAB) Aug. 24 to 25 in Fort Collins, Colo. They say there’s more demand for beef than ever, new challenges, too.

Sustainability

Sustainable beef production was at the forefront of conversations, with a caveat: emotion and science are on equal footing, noted Kim Stackhouse-Lawson, director of AgNext at Colorado State University (CSU). Data concludes beef can be a sustainable product, but often consumers are faced with a polarizing narrative that challenges their values and emotions towards animals. “Emotion wins every time” when it comes to a food brand, she said.

“The beef industry still has an incredible story to tell from an impact on a product-produced basis,” she shared. “But we’re starting to lose control of that narrative because overall emissions are still increasing.”

Stackhouse-Lawson said livestock’s contribution to total U.S. greenhouse gas emissions (GHG) is only 3.8%. But that’s up 20.7% since 1990.

This evolving landscape of customer expectations directs regulatory changes. It’s why JBS joined other beef processing companies and announced a climate goal to reach global Net Zero GHG emissions by 2040.

“This wasn’t just an idea on a whim of something that we wanted to do,” said Nikki Richardson, head of communications for JBS USA. “I think that the sky is the limit when it comes to identifying ways to have collaborative projects and things in place where we’re benefiting producers and ultimately getting closer to reach our goal.”

The ambitious goal will require working together.

For now, Stackhouse-Lawson said cattlemen should focus on land management and improving efficiencies around performance.

Technology gives producers that opportunity, said Justin Sexten, strategic and product lead for Performance Livestock Analytics, a part of Zoetis.

When managing more than one pen, not one single animal represents the average, yet decisions are made in groups to increase average performance.

From a sustainability perspective, some cattle in a pen may need additional resources. However, in most cases all animals receive the same resources, whether or not they’re needed.

“We have to find a way to manage from an individual perspective,” he said.

Feeding Quality Forum Kim Stackhouse-Lawson

Global Impact

Dan Basse, president at AgResource Company, said China’s bout with African Swine Fever reduced that country’s pig population, and therefore more beef moved into the country. This year’s beef exports to China are at 10-year highs, despite exponentially higher costs to get it there.

Basse said managing feed costs will be difficult for beef producers. Severe drought challenges in the U.S., Russia, Brazil and Argentina have brought a shortage of corn in the world, even though world corn trade is still strong.

“I don’t think corn prices are going back to anything with a sub-five in front of it for the years to come,” Basse said.

On the bright side, beef demand is the highest in more than a decade. More disposable income, thanks to COVID-19 relief, means consumers are eating more beef.

“The long term for cattle looks really quite extraordinary and bullish for the next couple of years,” he said.

Beef Supply

If you’re on the sale side of that equation, more demand means higher prices. To those buying beef, that means it’s getting more difficult to source product.

“The customers think that we have printed menus that are disposable because of COVID,” said Dale Zimmerman, owner of two North Dakota restaurants. “It’s because we don’t know what we’re going to have in the cooler that day.”

Victoria Philips, president of Lombardi Brothers Meats, agreed: “Our biggest issue is definitely the supply.” Her business model is constantly shifting due to inconsistent supplies.

When restauranteurs cannot get their regular product, Philips and her team help them find beef and develop creative ways to apply it on menus. In many cases, price point is no longer the biggest obstacle, she said.

“Our job is to make sure we get the product restaurants need,” she said. “And that can change overnight.”

Clint Walenciak, CAB director of product services, and Daniel Clark, CAB meat scientist, shared data from nearly eight million Angus-type fed cattle to see how increasing hot carcass weights (HCW) affect CAB acceptance.

“We see HCW at 40- to 50-pound swings to 70-pound or greater swings between those seasonal lows to seasonal highs,” Walenciak said, noting 20 pounds is a big adjustment within 12 months.

Black-hided cattle must meet 10 carcass specifications to qualify for the brand. The data revealed a positive trend between HCW and marbling, but also with ribeye size and backfat (the four CAB specifications most missed).

“When average fed cattle HCW gets above 900 pounds, we’re going to start kicking out more and more cattle,” Clark explained. “Below 850 pounds, then the cattle probably just aren’t reaching their genetic potential.”

The pandemic created a backlog of fed cattle where feedyards saw what happens when cattle have more days on feed, and consequently higher HCW. The use of feeding technologies, such as ractopamine, abruptly stopped for cattle with no guaranteed slaughter date.

That came with the unintended consequence of helping researchers answer questions cattle feeders otherwise may never have tested. Just feeding cattle longer can have the same response as feeding beta agonists for lean gain the last month of the feeding period.

Brad Johnson, meat scientist at Texas Tech University, shared survey results that ractopamine usage is not back to pre-pandemic levels and is not expected to return. In a future market with stricter requests, he warned not to give up on technology yet.

“I’m not just talking about implants,” Johnson said. “All technology, data management and maybe some natural feed additives that can improve marbling and reduce GHG emissions.”

The future will be about finding good relationships, sound science and sharing a story that resonates, said Keith Belk, CSU head of animal science department.

“You can’t do a good job of addressing industry issues with research or educating the next generation of students unless you have good partners to work with,” Belk said.

For more event coverage, visit FeedingQualityForum.com.

Where premiums are earned

Understanding beef carcass value

by Kylee Kohls

March 29, 2021

A Choice carcass is worth more than Select, but if cattlemen are looking to add value across the entire carcass, only one brand does that.

Cattlemen joining a March webinar hosted by the Certified Angus Beef ^® (CAB^®) brand learned about that and more while discovering the sources of premiums they earn for their best cattle.

For decades, those who aim to raise high-quality cattle have kept an eye on the Choice/Select spread. The CAB/Choice spread? That’s next level.

“The purpose of the brand is to add value to Angus cattle,” said Paul Dykstra CAB assistant director of supply management and analysis. “The $17.57-per-hundredweight (cwt.) premium over Choice is absolutely at the heart and soul of our very purpose and our mission statement.”

Diana Clark, CAB meat scientist, co-hosted the webinar where the duo walked through market benchmarks, brand specifications and the value it adds across the entire carcass.

Last year, it all added up to a CAB wholesale premium value of $154.61 per head above Choice and more than $246 above Select.

The 2020 beef supply

Dykstra said 15.5 million Angus-type and eligible cattle were evaluated at licensed packing facilities in 2020, with 35.9% certified to carry the brand’s logo.

“That’s been the success story of the industry,” he said. “In the last 20 years or so, the amount of improvement in cattle accepted into the Certified Angus Beef brand, and really the carcass merit that has driven that trend in those eligible cattle.”

With more than 35 licensed partners in North America, CAB penetrates more than 85% of the fed-cattle packing base, Dykstra said. Overall, 58% of fed cattle and 69% of beef type cattle were eligible based on hide color in 2020.

Beneath a black hide

Cattle with a predominantly black hide are then marked with blue ink on the hock of the hanging carcass at the packing plant. Later, chilled carcasses are evaluated to see if they can meet 10 science-based specifications and go into beef boxes that carry the CAB brand logo.

“The goal behind these specifications is to provide high-quality beef in a consistent manner for all our customers,” Clark said.

Standing beside a hanging side of beef with the primal cuts outlined in tape, Clark provided in-depth explanations on why each specification matters and how it’s measured for the most consistent quality.

She engaged virtual guests from the CAB Culinary Center and added colorful examples such as the calpain enzyme acting like Pac-Man on the quest to break down toughness dots so beef gains tenderness while aging.

Weight matters

Looking at the CAB/Choice spread, Dykstra noted the simple formula: Weight x Value Spread = $154.61 per head above Choice on the 2020 average carcass weight of 880 pounds (lb.).

The wholesale value advantage incentivizes packers to pay what have been generally increasing premiums for carcasses that meet the brand’s specifications. Last year, cattle feeders got roughly $45 per head on average for a CAB qualifier over the cash price for the week.

Breaking that CAB/Choice spread down by primal cut, he explained how CAB provides a 7.4% premium over Choice.

“When it comes to value distribution, weight matters,” he said. “But where are we driving the most value?” Details provided answers.

The loin is only third-heaviest primal cut at 21.3% or 187 lb. in 2020 average weight, but it brings the most value to the carcass, offering a $65.99/head CAB brand premium over Choice.

The round carries 22.3% of the weight and adds a $14.95/head CAB premium while the rib contributes a $29.81/head premium from 11.4% of the carcass weight.

“For a brisket, the Certified Angus Beef premium actually adds $10.35/cwt. to the spread over Choice,” Dykstra said. “We sure wish the brisket weighed more with that premium. But with 44 lb. and 5% of total carcass value, it still contributes almost $5 per head on the cutout.”

Adding value across the carcass, CAB provides premiums to the chuck and plate primals, compared to the Choice grade, which adds nothing.

The chuck carries the most weight in the carcass at 29.6% (260 lb.), offering a $30.73/head CAB premium over Choice or Select, he said. Coming in at only 7.1% of the carcass weight (62 lb.), the plate earns $7.31 of the $154.61 total CAB premium.

Rounding out the carcass, Dykstra noted the flank, lightest primal at 30 lb. or 3.4% of the carcass, still adds $1.43/cwt. to the total average CAB premium carcass value.

As quality continues to trend up and more cattle qualify for the brand, the CAB/Choice spread may gain ground on the old Choice/Select metric as an industry standard. Along the way, the brand will keep working with all partners from pasture to plate, adding value to every cut and premiums for Angus cattlemen.

To watch more of any of the recent webinars hosted by the CAB Cattleman Connection team, visit cabcattle.com/webinars.

Playing to win: Grid marketing opens door to premiums

by Morgan Boecker

February 10, 2020

Learning to play chess in later life isn’t easy, but it’s not impossible.

Grid marketing finished cattle is similar. It’s not intuitive, but it’s a learnable risk management tool.

“Maintaining ownership through the cattle feeding period and selling on the rail is an opportunity to recapture the input costs and hopefully improve our bottom line,” said Paul Dykstra, Certified Angus Beef^® (CAB^®) assistant director of supply management and analysis. “The key is to align genetics, management and performance with the seasonal trends.”

At a January webinar, he said producers can target cow herd genetics toward the factors driving value in the supply chain. Backfat and marbling have differing value implications at the packing plant and can be selected in different directions in the herd.

Prime beef production is at record high, while Select beef share is declining (Figure 1)–consumers are paying to keep high-quality beef on the table.

Grid marketing 101

Profit on the grid depends on beating industry averages for quality and yield grades.

Fed cattle sell by formula, contract or spot-market bids. Live or carcass weight-based pricing formats are often dependent on region.

Grid marketing sets a starting price according to a carcass-value base, then figures premiums and discounts to each carcass. Overall yield, or dressing percentage, converts live to carcass price.

“The average dressing percentage of 63.5% is pretty standard for the industry,” Dykstra said, but grids may vary and the number is affected by mud, gut fill, external fat, muscling, gender and age.

A below average dressing percentage may be overcome by having better-than-average carcass premiums.

Cattle with the most fat usually have the least muscle and red-meat yield. “That combination works against us,” Dyskstra said.

Packers pay the most for the rare combination of Prime quality and YG 1, and they greatly discount carcasses falling at the opposite end of the grading table (Figure 2).

Cattle sold on the grid compete with the average percent Choice at the packing plant. Cattle are graded individually, but packers look at entire load average to determine if any cattle earn a premium.

The current U.S. average of near 70% Choice, with regional differences, means packers only pay the Choice premium for the share of cattle in the whole lot that exceed the plant average, Dykstra explained.

“Whether it’s 40 head or 150 head, the percentage of those cattle grading Choice matters,” he said.

The Choice/Select spread points to supply and demand for high-quality carcasses and determines the premium.

An average of 70% Choice leaves potential premiums on 30% of the load. If the Choice/Select spread is $10 per hundredweight (cwt.), multiply 10 by 30% to get $3/cwt premium for every Choice carcass in the load.

Typically spring and fall are ideal for capturing the most quality premiums, Dykstra said, but CAB carcass trends are impacted by seasonality to a lesser degree.

Even though 36% of all eligible black-hided cattle reached CAB last year, packers have paid higher premiums for the brand lately compared to when supplies were historically low.

“When we can sell more product and still keep a premium up there for cattle, that’s a great thing,” he said.

Yield grade still matters

Yield grade is the other part of the equation.

Cattle reach their endpoint faster today than 20 years ago, increasing the average YG 4s to 12% last year with cases of 20% to 40%. The pandemic added to that as cattle feeders and packers worked through the backlog and cattle spent more time on feed.

While grids may incentivize YG 1 (recent average $5.43/cwt. premium), YG 2 is a reasonable target to maintain high grading carcasses, Dykstra said. YG 3 is par.

Yield Grade 4s and 5s now incur smaller discounts than in the early 2000s, he said, “evidence that packers have become more accustomed to a little extra fat thickness to achieve a desired quality grade.

“The premium for YG 2s averaged $2.42/cwt. last year,” Dykstra added. “We should have as many YG 2s as we can possibly get, keeping in mind that YG 1s with acceptable finish are difficult to achieve.”

Bring the data home

Dykstra posed the questions: How do commercial cattlemen pursue their share? What numbers need to be achieved to perform well and earn more money in grid marketing?

Start by evaluating traits in your cow herd and bull battery.

Backfat thickness indicates days on feed and total body fatness, while marbling affects quality grade–also the primary driver for carcasses qualifying for CAB. Backfat, hot carcass weight and ribeye area are other measures used to determine YG and CAB eligibility, Dykstra said.

The many moving pieces in grid marketing make it a bit of a chess game, but learning to play opens more opportunity for big wins.

Flavor’s secret ingredient

Many factors create a good eating experience, but delivery is key

by Abbie Burnett

October 5, 2020

A thunderstorm rolls in above the parched Great Plains with all the usual effects, but no rain. Disappointment, like a tender steak without flavor.

Just as it takes certain factors to produce a great rainfall, so it goes with flavor. To quell a drought, you need rain. To satisfy consumers, you need flavor. Hint: it’s in the marbling.

Texas Tech University meat scientist Jerrad Legako spoke to that point during the American Society of Animal Science conference earlier this year.

“No question, flavor is at least equivalent to tenderness in importance to the overall eating experience, if not a little more,” he said. That’s partly due to improved beef tenderness since the late 1980s.

But what is flavor, and how do we experience it?

It’s a complex combination, said Legako.

More than taste on the tongue, flavor takes in perceptions of texture and mouth feel. It’s “olfaction,” as the scientist evokes the world of smell, and chemical reactions on the tongue that perceive spiciness. Ambiance and prior experiences complete the impression.

All of these affect perceptions of flavor, but Legako’s team looks for a nuanced key to the best beef-eating experiences.

“With the sensitivity of the olfaction system, volatile compounds are incredibly important for our perceptions of flavor,” he said.

Volatile because they evaporate at room temperature, the organic compounds start as sugars, amino acids, lipids and thiamines, breaking down in beef’s aging, storage and cooking processes.

All but the fats are water soluble and provide basic tastes like sweet, sour, salty and bitter.

Then cookery enters with its Maillard reaction that reduces sugars and proteins to the volatile compounds like aldehydes we enjoy as a robust flavor profile. It’s how such flavors as nutty, roasted, garlicky, whiskey and honey get into browned foods like dumplings, cookies, biscuits, marshmallows—and steaks, of course.

“With time and temperature, you can kind of start to think about this as a chemistry equation,” Legako said. “You’re driving that reaction at different rates just depending on exposure time and the level of heat.”

Lipids, the top contributor, produce flavor through oxidation, he said, citing Australian studies: “Fat is the delivery system.” Among beef cuts with varying fat levels, those with the most would always deliver more of the same volatile compounds.

To be clear, the flavor components fat delivers come not from the fat but from the effects of cookery on amino acids and sugars, Legako said.

“Yet they’re dissolving in that fat, retained in that high-fat sample and being delivered,” he said, “an increased sensory response or a more intense beef flavor through the greater delivery of those volatile compounds.”

Basically, fat serves as a reservoir to deliver flavor.

Legako and team tested this reaction across different cookery types, higher degrees of doneness and different grades of beef. The consistent find? The higher the grade, the better the flavor, increasing linearly from Standard to Prime.

“This is at least some support for marbling content in a way influencing volatile compound delivery,” Legako said.

For a good thunderstorm, you need moisture, instability and a lifting mechanism. For good flavor, you need aging and heat, but it takes ample marbling to really deliver. That starts on the ranch.

Opportunity for beef progress continues

Record number join virtual Certified Angus Beef^® conference

by Crystal Meier

September 29, 2020

To those raising beef, this year’s opportunities might look similar to the past. But for those in the business of selling the protein? The horizon looks quite different.

More than 1,100 people from 27 countries gathered online for the Certified Angus Beef ^® (CAB^®) Annual Conference last week, a record attendance for the event, to explore the possibilities.

Ranchers, meat packers, distributors, grocers and restaurateurs together in a virtual room made the supply chain feel smaller, each seeking go-to-market strategies to deliver high-quality beef to consumers.

“As we look at the COVID-19 impact, it hasn’t necessarily changed consumer demand for quality beef,” said John Stika, CAB president. “It just changed dramatically where and how they look to access it.”

Even with a pandemic recession about, the brand will end 2020 with more than a billion pounds sold.

“You have to be amazed, when you think of what we’ve gone through, that demand would stay this strong,” said Randy Blach, CEO of CattleFax. “And we’ve done it basically with one hand tied behind our backs.”

When public health ordinances shifted diners from foodservice to retail, it created one positive unintended consequence: consumers got more comfortable in the kitchen.

This creates retail opportunity, said Chris Dubois, senior vice president of protein for data analysis firm IRI. He encouraged marketers to marry tools with sales to keep beef at the top of the grocery list. CAB offers Roast Perfect, an app that shares how-tos, recipes and cooking inspiration.

Dubois said online food sales grew 50% to 60% this year, while meat e-commerce doubled.

“The retailers, processors and packers who get e-commerce right are going to have more success than those who ignore the trend,” he said. “This is where you’re really going to see the separation in the next three years.”

International business is slowly gaining momentum again, after an optimistic start to 2020.

“We feel like the fundamental demand for U.S. beef has remained quite strong in our key markets,” said Joe Schuele, vice president of communications for the U.S. Meat Export Federation. “For the global meat trade, especially high-end products to reach full potential, we need to return to normal economic activity.”

The brand continues to grow relationships, and highlighted personalized marketing tools such as French and Japanese versions of its logo and a new website for Spanish-speaking consumers, CertifiedAngusBeef.lat.

The CAB Prime brand extension offers another growth opportunity.

“Is there enough high-quality Prime in the marketplace to build a business around?” Blach asked. “The resounding answer is yes.”

Prime beef production used make up only 2% to 3% of beef, but now makes up nearly 10% of the annual supply from fed cattle, or 2.6 million Prime carcasses.

In the past two decades, beef’s market share of consumer spending also grew. It makes up nearly half of the dollars spent on proteins compared to 40% in 1999.

Building on that momentum, CAB launched its consumer loyalty program in February. Steakholder Rewards^™ invites customers to interact with the brand and earn rewards for beef purchases.

While the foodservice division works harder than ever to sell much less, CAB facilitated discussions on keeping quality while cutting costs, offering up ideas such as live training, menu ideation and using value-added products.

“When I look at what the people are doing to drive their businesses forward during difficult times, whether cattlemen or restaurateurs, it’s really exciting,” Stika says. “And we’re just glad to be alongside them, helping to drive momentum.”

Remaining relevant in an ever-changing marketplace requires adaptation. Attendees learned about updates to the brand specifications and sustainability initiatives. CAB honored five cattle businesses for their commitment to quality, including the first-ever sustainability award, and they celebrate success in each segment of the business.

“This brand was started to create value for everyone that produces and touches it through the production and merchandising chain,” Stika said. “As I look at where we’re at today, I think we’ve been able to re-center on the things that are important to ensuring value moving forward for our partners.”

Add value to calves

At least $100 per head awaits efforts to rise above commodity average

by Brianna Gwirtz

September 28, 2020

“Value” in feeder calf marketing is a relative term. All calves have some.

The trick is to capture your share, said Paul Dykstra at the recent virtual 2020 Feeding Quality Forum.

The Certified Angus Beef^® (CAB^®) brand’s assistant director for supply management and analysis summarized the key concept.

“Think about where my customer makes the most money,” he said, noting that customer changes through the supply chain from feeder, to packer to consumer. “If we can pursue that endpoint, I think we’re off to a great start in our marketing program.”

Feedyard managers agree on general traits of desirable calves: They stay healthy, convert feed efficiently and hang a high-quality carcass.

So how do producers ensure their calves are desirable? After genetics, management decisions play a big part. Whether to wean before selling is one of the biggest.

“The feedyards I consulted with are definitely less excited about feeding a freshly-weaned calf than they’ve ever been,” Dykstra said. “Certainly owning those calves through the weaning period has some risks—but our customers are telling us the weaned calf that’s ready to go on feed is the preferred product.”

CattleFax data for 2019 showed a $98-per-head average price boost for calves weaned 45 days or longer, compared to unweaned. Those extra days take feed resources, he said, but also add weight to the calf crop at sale time.

“I’m not going to suggest that this kind of management works for everyone, but this is the reality of the numbers,” Dykstra said.

A calf’s potential for premium grades also drives demand. Now that 82% of fed cattle grade Choice or Prime, and as quality keeps rising, so do packer and consumer expectations.

That’s why the likelihood of quality-focused premiums, such as those for the CAB brand, can still add dollars to your check. CAB acceptance rates have doubled in the last decade to more than 35% for Angus-type fed cattle, with rewards only growing.

“We’ve seen increases in the Certified Angus Beef premium paid on grids by packers to feedyards for qualifying carcasses,” Dykstra said. “More supply has not necessarily meant fewer dollars.”

Value starts with genetics.

“In an up market, the best cattle do exceptionally well. In a down market, the best cattle might keep our head above water and above a break-even,” he said. “So let’s look at genetics from a risk-management perspective.”

Enrolling calves in value-added programs is a proven way to do just that, with examples like AngusLink, documented health or naturally raised—all designed to verify decisions made on the ranch.

“We want to get involved in the items that bring back a premium”, Dykstra said, calling such programs “pretty essential.”

Build a resume for your calves and send it on to feeders or share on social media to use modern day marketing tools, he suggested. The internet is a cost-effective and often free way to personalize marketing with photos and information. Feeding and carcass data, Beef Quality Assurance certification and details on genetics can set calves apart.

Even with everything else in place, it’s important to consider seasonal price movements.

“There are times of the year that are best not to sell, and times of the year that reward us the most,” Dykstra said. Historical price patterns show significant increases for fed steers in the April-to-May timeframe. “If we make decisions that target that a little bit better, perhaps we manage cattle during a different season.”

Finally, Dykstra urged building personal contacts and relationships.

“When we’ve got several thousand cattle for sale on a given day, it’s really hard to stand out,” he said. It helps when relationships result in buyers who know the management and bred-in attributes. “I always appreciate when I get personal contact from people, and I think your customer base may also appreciate that kind of contact.”

Feeding Quality Forum sponsors include Diamond V, Feed-Lot Magazine, Micronutrients, Zoetis and AngusLink. For more information or to watch full presentations, visit www.FeedingQualityForum.com.

Rebound

Beef comes back from series of unfortunate events

by Morgan Marley

September 22, 2020

Shocks to the beef industry were all part of 2020’s “unprecedented” theme, but how the market responded was less surprising. There was nothing for it but to make new plans and keep going said a RaboResearch analyst.

Dustin Aherin, animal protein vice president and analyst for Rabo AgriFinance, a RaboBank subsidiary, addressed those ideas at the virtual 2020 Feeding Quality Forum.

Cattle, labor, physical capital and technology make up the beef production equation, he said. When any of those fall out of balance, it’s communicated through prices.

The 2019 Tyson packing plant fire and COVID-19 both threw the equation off, but with different effects. Where the Holcomb, Kan., fire caused some destruction at one plant, the coronavirus pandemic brought changes in human health, plant adaptions and new technology across the entire supply chain.

“Looking at what happened here in 2020 with an extreme increase in fed cattle supplies and given the backlog,” Aherin said, “the collapse in prices really wasn’t unexpected.”

The what and why

The escalating disasters highlighted the tightening capacity at packing plants, especially in the last five years. When there aren’t enough resources to turn cattle into beef, “it’s tough to put a high value on those animals,” Aherin said.

That’s what happened, but why requires a deeper understanding of the financial environment.

The pandemic created a “risk-off environment,” he said, causing investors to pull cash out of the market and put it into assets perceived as safer.

“In such a high-risk environment,” Aherin said, “it’s really difficult to motivate buying in the live cattle futures side of the market.”

Studies show small changes in beef tonnage result in large price changes, he said. The temporary plant shutdowns, labor challenges and the rapid shift from foodservice to retail caused major changes in beef availability.

“As painful as it was for cattle producers,” Aherin said the prices and magnitude of changes were in line with research models.

Leaving the gate open

What comes next? When so many decisions in 2020 were reactions to repeated rib punches, it’s hard to catch your breath long enough to make plans.

But agriculture often deals with heavy blows. Aherin recalled the global financial crisis of 2008 took seven quarters for foodservice recovery. After a COVID-19 vaccine helps tame the pandemic next year, “we’re expecting closer to eight to 10 quarters,” he said, “and the trend of change will continue” in foodservice.

“We need to be proactive and willing to adapt,” he said. “Consumer preferences, supply chain practices, food safety, quality and convenience are going to be even more important than ever.”

Opportunities are wide open for the beef industry, but it’s going to take buy-in and support from cattlemen to create a resilient, diverse and flexible supply chain.

How do we let technology disrupt established procedures to increase efficiencies, particularly at existing packing plants? Aherin asked.

“The big talk is to have more robotic fabrication and cutting,” he said. “But there’s more near-term potential in data collection and monitoring.”

Improvements in those areas across all production sectors will help identify the best genetics and practices, he said.

Traceability is another benefit. Disease outbreaks not only threaten people but as African Swine Fever has illustrated, also pose high risks to livestock and the food supply.

“We have to be able to track, trace and control any sort of disease outbreak before it becomes a major inhibitor to the marketplace,” Aherin said.

As consumers grow more curious about food production, source and environmental impact, it may pay to enhance documentation. Throughout the pandemic, branded beef led sales. That’s still rooted in quality but more management attributes are emerging. Producers may not have to change much, just add verification to meet consumer demand and gain market access.

Aherin foresees a future where “a product doesn’t have access to food companies, distributors, restaurants and retailers if they don’t meet the standards that those businesses have set for their supply chains.”

“We have to be really focused on the consumer and ready to innovate and be creative,” Aherin said. Because when history is making jumps and bounds, “we don’t want to be caught flatfooted.”

Watch Aherin’s FQF presentation and find more event coverage here.

A scours change?

Plan to prevent, prepare to treat calf scours

by Morgan Marley Boecker

September 2020

New oil and filter? Check. Tires rotated? Done. Air filters? Good to go. For every 5,000 miles you drive, these are the questions to answer.

Regular oil changes are a prevention strategy to maintain your vehicle’s health.

Adequate nutrition to make colostrum? Clean calving environment? Scours vaccine?

Just like regular maintenance on your vehicle, prevention is the best way to ward off scours in your cow-calf herd.

But sometimes the best treatment plans fail, with lasting effects on calf performance. That’s why Mark Alley, senior technical service veterinarian at Zoetis, says ranchers should try to get ahead of the problem.

Prevention before treatment

Proactive maintenance for a cow herd differs from that for a truck of course, but a local veterinarian knows how to prevent scours based on local pathogens.

“Having that valid client-patient relationship is the key to success for the industry,” Alley says.

Ensure cows will have good colostrum quality by closely monitoring body condition and nutrition in the third trimester. Colostrum begins to form six to eight weeks before calving, which is the suggested advance time for most calf scour vaccines.

A clean environment reduces scouring, and the Zoetis veterinarian points to the Sandhills Calving System as one that moves pregnant cows to fresh pasture while leaving newly calved pairs behind. That minimizes the chance for disease transmission from older calves.

Accurate recordkeeping helps, too, he says, noting Beef Quality Assurance (BQA) guidelines for recording ID, age, symptoms, diagnosis, treatment drug and outcome.

Knowing what was done to treat problems in the past “can result in strategies to hopefully prevent the same thing from happening in the future,” Alley says.

When strategies fail

Just like you buy car insurance for the unavoidable fender bender, work with your veterinarian to create a thorough treatment plan when calves scour.

“Usually more than one bacteria or virus may be present in those animals,” Alley says, and age provides clues.

E. coli is closely associated with calves less than five days old, while rota- and coronavirus are more typical in 7- to 10-day-old calves. After three weeks, coccidia bacteria is the more common culprit.

Even with the right diagnosis, scouring calves can die, usually because of dehydration, Alley says.

“When calves have diarrhea, they’re losing a lot of electrolytes,” he says. “First on the agenda for treatment should be correcting both fluid deficits and electrolyte losses, especially for potassium and sodium.”

Dehydration can be estimated by tenting skin at the neck and counting the seconds until its return to normal. Less than 2 seconds is normal, but 2 to 6 seconds indicates 8% dehydration. Alley says you can calculate the need for electrolytes by taking that percentage times a calf’s weight in kilograms. A 99-pound calf is about 45 kg, so it would need about 3.6 liters (almost a gallon) of electrolytes to recover.

Dehydration combined with electrolyte losses often causes metabolic acidosis. A calf’s natural reaction to recover is to breathe faster, which could play to producer instincts to reach for an antibiotic for pneumonia. Resist that urge, he says, because simply keeping them hydrated and well fed is the best course of recovery in scouring calves. Work with your veterinarian to determine when and if an antibiotic is needed.

“If treated appropriately, scours usually will get worse before it’s better, but not providing electrolytes may be the most detrimental thing we could do,” Alley says. That and taking those calves off the dam.

“Without the right nutrition, the villi in the gut will not be able to regenerate,” he explains. “And those calves don’t have enough body fat to actually survive what’s going on.”

A calf’s eyes and ears won’t lie about how it’s feeling.

“Bright and alert calves, even if they still have clinical signs, are probably on the right track,” Alley says, “regardless of what’s going on under the tail.”

Today affects tomorrow

From gestation through the feedyard, variables along the way set calves up for success or failure in reaching their genetic potential for efficiency, gain and carcass quality.

“If we have those animals that become diseased at any point prior to weaning, we’re losing pounds,” Alley says, pointing to Montana data. Calves there that had scours and survived through weaning were 20 pounds lighter than those that were never sick.

Just as we all pay for car insurance but hope we never need it, cattlemen should have a plan to prevent but also treat scouring calves. It pays to be prepared.

Alley’s presentation at this year’s Cattle Industry Convention in San Antonio provided the basis for this article.

Originally published in the Angus Journal.

Hindsight for the future

Randy Blach’s positive outlook for the industry

by Abbie Burnett

September 17, 2020

The blessing and curse of perspective is not having it until a moment passes. Looking back on the last 40 years shows us more than we can see here and now.

“I think we really have to have an appreciation for where we’ve come from,” said Randy Blach, CattleFax CEO, at this year’s virtual Feeding Quality Forum. “It’s not been a straight line.”

Cattle inventory topped 132 million head in 1975, but it wasn’t until 2000 that the fed-cattle harvest reached its record 30.2 million, and that was with a long decline to 10 million fewer beef cows.

In the 1980s, 12% of U.S. farmers and ranchers went out of business, and the “war on fat” in the ’90s nearly eradicated a poorly informed cattle industry, Blach said. Between 1998 and 2000, almost 40% of carcasses graded Select.

“If you go back to the quality audits at that time period, one out of four steaks was a disappointment,” he said. “No wonder consumers were walking away from our product. They didn’t like it.”

While a new focus on quality emerged in the early 2000s, genetics, growing drought and mistakes of the past kept up pressure to liquidate. From 2000 to 2015, annual fed harvest numbers declined by 7 million head to close some packing plants and limit harvest capacity going forward.

The seeds of that early move to boost quality finally sprouted after the drought, blooming with record-high Choice and Prime grades.

“We’ve just taken out the long-term downtrend in numbers,” Blach said. “I believe the reason we’ve done that is because we’re an industry that is now focused on doing the right thing, producing the highest quality product that we can, and meeting the changing demands of our consumers.”

As the U.S. herd decreased, productivity per head greatly increased and finally added premium quality. The market analyst looks for some liquidation due to drought in the near term but overall numbers should only ebb and flow instead of crash and rise. Stabilization has come to the industry.

The retail sector provides a case study, Blach said. From 1980 to 1998, beef demand was cut by more than half, but since then it’s risen by 14 points to 61 on 1980’s baseline of 100. There’s room for more, but much value has already been added.

“That growth from the demand low has been worth anywhere from $225 t about $280 a head,” he said.

Demand is well established for today’s higher quality beef, but without an increase in the bottleneck of harvest capacity, Blach sees herd numbers flattening.

With the current balance in supply and demand, “we increase harvest capacity or we decrease the number of animals that are moving through the system,” he said. “This will be a situation that ebbs and flows and will start to balance back over the course of the next several years.”

On the global stage, the U.S. is the top beef and poultry producer, and third in pork, dominating meat trade overall. The reason?

“Because the lion’s share is a high-quality fed-beef product so we have more yield per animal,” he shared.

In 1990, beef exports were a very small percentage of U.S. production, whereas today it’s 19 billion pounds or 18% of total meat exports.

Blach sees that growing to as much as 150 billion pounds of beef exported by 2040, or 50 billion more than this year.

That sunny projection comes with challenging considerations.

“Are we prepared to continue to make the strides, some of the same hard decisions we made 15 to 20 years ago, focused on quality? Are we going to be willing to do that as we move forward where we can increase our global market share and presence? To have a traceable product? Be source-verified?” he asked.

Instead of $350 per head, Blach said beef exports could be worth close to $500 per head by 2030.

“We’ve seen these premiums stay strong all the way through here because more and more consumers, once they taste the good stuff, they want to stay with it, don’t they? So this has been a quality movement,” he said. “Now the opportunity is to layer some of those other attributes onto this to move the value equation moving forward as we move forward into this next decade.”

Real-time perspective isn’t really a thing, but the progress in the latter half of the last 40 years says a lot about where the beef business is headed.

Find recordings from the event here.

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