October 29, 2020
At the end of September, Industry At A Glance highlighted the ongoing solid premium for Prime in the wholesale market. That surge was surprising, given the sharp slowdown in food service volume in the past six months due to COVID. The column noted, “…the premium for Prime has been defying gravity – the moving average now stands above $30 and has been positively diverging from other categories in recent weeks.”
That’s even more surprising given the production trends. That is, the fed steer/heifer mix has been producing more Prime product than ever – hovering around an astounding 10.5% of total production. This week’s graph provides a long-run view of quality grade trends dating back to 2000.
Within that illustration, several key trends are important for the beef industry:
Coming out of the low water mark for beef demand in 1998, the beef industry struggled to raise the percentage of Choice and Prime within the slaughter mix for another 10 years.
However, that all changed in 2008 – the percentage of cattle grading Choice began to surge – undoubtedly, one of the most important components contributing to beef’s surprising strength in the middle of the financial crisis.
Meanwhile, production of Prime product began to significantly grow in 2015.
During the past several years, the percentage of Choice within the slaughter mix has seemingly plateaued, but the percentage of Prime has nearly doubled over the past three years.
And it’s the final aspect that’s really enabled the beef industry to maintain some continuity through COVID-19 – and also allowed many consumers to experience the very top end of beef quality they may not have had opportunity to enjoy otherwise.
Whatever the outcome, it’s clear the beef industry has made great strides in terms of quality grade and that’s paid great dividends through the most challenging times. Ultimately, the self-reinforcing loop of higher premiums and more volume underscore the importance that a consumer-oriented focus is the ultimate path to success.
Nevil Speer is based in Bowling Green, Ky. and serves as director of industry relations for Where Food Comes From (WFCF). The views and opinions expressed herein do not necessarily reflect those of WFCF or its shareholders. He can be reached at [email protected]. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.
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