What a difference a few rainstorms make. Even in areas that haven’t grown a green blade of grass in three years or more, cattlemen are smiling and optimism is high. Talk is beginning to surface of heifer retention and herd rebuilding and it becomes louder with each passing rainstorm.
When that happens, says Terry Barr, senior director of industry research with the Knowledge Exchange Division of CoBank, cattlemen will have some work ahead of them.
As cattle numbers have fallen, pork and poultry producers have eagerly stepped in to claim not only their share of the retail meat case, but a growing share of the consumer stomach. “If you look at the industry, there are these crosscurrents,” Barr says. Both cattle and beef prices are record-high due to an extremely low cattle inventory. “So we know beef production will fall 4-5% next year.”
The good news is, despite those high prices, consumer demand for beef is holding fairly well, he says. But beef’s competitors are chipping away, and they’re successful. Pork has made significant gains in the marketplace.
“Clearly they rode the back of lower beef supplies and clearly they took market share,” Barr says. “The beef industry is going to have to turn that around when the opportunity presents itself. But you’ve got to have product if you’re going to sell it.”
And it will, eventually. When that happens, Barr is confident beef will be able to reclaim the domestic market share it has lost to pork and poultry. But the beef industry can’t stop there.
“There’s no sense kidding ourselves. The demand growth in this country is not going to be big enough, fast enough, to generate growth (in the beef industry). It’s going to have to come from the export market.”
Recent moves by China, in Barr’s mind, are good signs for future trade. “I think they’re a legitimate opportunity (for the U.S. beef industry). I think it’s unrealistic to believe that they’ll become massive beef consumers. That’s not in their nature. But that’s a significantly large population, so you don’t need all of them to consume beef. You just need 10% of them and that would be equivalent to the U.S. population.”
Clearly, the Chinese are becoming more open to trade. “Over the last decade, you’ve seen a shift in their definition of self-sufficiency,” Barr says. “It used to be we’d say China wants to be 95% self-sufficient in everything. I think what we’ve seen is their definition of self-sufficiency would now incorporate a global supply chain if it’s reliable.”
That’s why Chinese entities have invested in U.S. animal agriculture, he says. While they may be looking for technology, they’re also looking to ensure a reliable supply. The Chinese realize they can’t supply their needs exclusively from within their own borders.
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Opening the Chinese market won’t happen in a day, but it will happen. And while establishing a global supply chain will have to occur by the major packers, Barr says individual cow-calf operators and feeders have an important role.
“Cow-calf producers are going to discover that the Chinas of the world are going to want to know a lot more about where their stuff is coming from. They’re going to be very concerned about food safety. So it’s not going to be just the JBS and Tyson level, it’s going to be ‘where’s that feedlot, where did these cattle come from, where’s that ranch?’ So if you can build a global supply chain that assures them of that, then I think you can grow a market.”
If the U.S. beef industry is willing to work to make the changes and adjustments necessary to meet the export market demands, Barr is optimistic. “Globally, there’s this notion of consuming a U.S. diet. And clearly beef holds a strategic position in the U.S. diet. That perception is still worth something in the global marketplace. I think it offers real opportunity going forward.”
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