What to do about beef demand?
by: Gene Johnson
These are not the best of times for the cattle business. Markets have trended downward, even as the herd shrinks to fewer numbers. Costs of inputs are up across the board.
Perhaps most damaging of all is that demand for beef appears to be in decline, heavily exacerbated by the lingering recession of the general economy. To address this issue, a special session was held at the Cattle Industry Convention today for a look into the future. Several industry leaders served as panelists to share their views on what it will take to turn things around. They agreed on one thing: demand for beef is at the root of the problem, and it's the one area where collaboration is possible, and necessary.
Dave DeLaney of the King Ranch in Texas told producers there are four things that will always pay off in the future: innovation, hard work, continuing education, and entrepreneurship.
"At our ranch, the specific strategy for the cow-calf enterprise is to be in the top 25% of ranches on profitability every year," he said. "We intend to accomplish that by concentrating on weaning percentages and reducing cow costs. I'd also encourage producers to identify the genes that can improve profitability and breed for them. And especially avoid too much dept and depreciation. There are economies of scale in the cattle business, so look for ways to grow, maybe by leasing if that is how you can do it."
James Herring of Friona Industries, a large commercial feedlot, gave a checklist for continued success. First, value all parts of your business and know that everyone in the cattle business wins by making their customer's lives better. Second, manage volatility. He said that in 2008, when corn went from $2 a bushel to near $8, and cattle prices plummeted, the profit volatility in his feedlot had a range of $737 per head from high to low.
Molly McAdams of the grocery chain H-E-B said one of the keys to cattle success is to know your business demographics. For instance, in Hispanic neighborhoods, the meat case will look a lot different than other places. "And in a recession, our beef product is not the best positioned for cash-strapped customers," she said. "Collaboration is what we must do to win back beef demand. The internal battles we have are destructive. In the beef industry, we have a common enemy, and it is declining demand for our product. That's what we need to bond together to defeat."
source: http://www.agriculture.com
by: Gene Johnson
These are not the best of times for the cattle business. Markets have trended downward, even as the herd shrinks to fewer numbers. Costs of inputs are up across the board.
Perhaps most damaging of all is that demand for beef appears to be in decline, heavily exacerbated by the lingering recession of the general economy. To address this issue, a special session was held at the Cattle Industry Convention today for a look into the future. Several industry leaders served as panelists to share their views on what it will take to turn things around. They agreed on one thing: demand for beef is at the root of the problem, and it's the one area where collaboration is possible, and necessary.
Dave DeLaney of the King Ranch in Texas told producers there are four things that will always pay off in the future: innovation, hard work, continuing education, and entrepreneurship.
"At our ranch, the specific strategy for the cow-calf enterprise is to be in the top 25% of ranches on profitability every year," he said. "We intend to accomplish that by concentrating on weaning percentages and reducing cow costs. I'd also encourage producers to identify the genes that can improve profitability and breed for them. And especially avoid too much dept and depreciation. There are economies of scale in the cattle business, so look for ways to grow, maybe by leasing if that is how you can do it."
James Herring of Friona Industries, a large commercial feedlot, gave a checklist for continued success. First, value all parts of your business and know that everyone in the cattle business wins by making their customer's lives better. Second, manage volatility. He said that in 2008, when corn went from $2 a bushel to near $8, and cattle prices plummeted, the profit volatility in his feedlot had a range of $737 per head from high to low.
Molly McAdams of the grocery chain H-E-B said one of the keys to cattle success is to know your business demographics. For instance, in Hispanic neighborhoods, the meat case will look a lot different than other places. "And in a recession, our beef product is not the best positioned for cash-strapped customers," she said. "Collaboration is what we must do to win back beef demand. The internal battles we have are destructive. In the beef industry, we have a common enemy, and it is declining demand for our product. That's what we need to bond together to defeat."
source: http://www.agriculture.com
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