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Today’s Beef Consumers Pose A Quality Challenge For Beef Producers

beef quality demands from consumers

A conundrum with a pocket full of cash. That’s one way to describe today’s consumer. They want what they want and, in many cases, have the affluence to pay for it. And when looking at how they define value vs. how the beef industry traditionally has defined it, they appear to have taken baseball sage Yogi Berra’s advice: “When you come to a fork in the road, take it.”

“As we’ve defined value in the meat industry for a long time, it’s been on U.S. Quality Grades,” says John Stika, Certified Angus Beef® (CAB) president. “For us, it’s been on marbling,” he says. “Quality grades have historically been how value differences have been defined. It’s typically how things have been priced in the meat case or on the menu.”

And in many respects, that traditional definition of value is still valid for consumers and cattlemen alike. The top drivers in meat-purchasing behavior and meat consumption still remain taste and the overall dining experience, he says, and will likely continue to be for a long time.

CAB’s sales figures are strong evidence of that. Over the past seven years, the program has experienced record sales growth, while the U.S. economy has been in the worst shape since the Great Depression.

The lesson, Stika says, is it’s not just price. It’s price in relation to value.

But the consumer is changing, and a portion of them define value differently now than they used to – they want more from their beef than just a great eating experience. That’s where, for many in the beef industry, the road begins to fork.

 

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“The consumer is giving us a lot of signals,” Stika says, “and factors about quality and value today go beyond the traditional. They start to include a lot of extrinsic clues about what consumers are looking for: food safety, wholesomeness, convenience, humanely raised, natural, grass-fed, organic, local, socially responsible, free-range. All these things that move away from inherent characteristics of protein and become process attributes of how we raise and produce these products.”

To understand why recognizing and being able to react to this is important, Stika says a walk through the industry’s recent history is instructive.

“If you go back and look at the last time as an industry that we put the consumer in the back seat rather than alongside us, we saw a two-decade decline in beef market share,” he says. “What that tells us is, even for a program rooted in the traditional definition of quality and value, we better put our arm around that consumer and find out how we stay relevant to them moving forward.”

Many consumers are still comfortable with buying traditionally produced beef. But a growing percentage of consumers are looking for something more. In fact, CAB introduced a Natural program in 2004, in response to license partners who felt they were losing sales.

“For us, out of 865 million lbs. (total annual sales of CAB product), the Natural program represents about 7 million lbs.,” Stika says. So it’s not large. “But it’s a very strong message to those consumers who might go elsewhere, looking for a product that’s important to them.”

It’s also a lesson in one of the fundamental principles of marketing, and that’s product differentiation. Stika says the trend by consumers to demand not just beef’s traditional and inherent quality and value, but those extrinsic values too, will only grow stronger.

Stika says he’s a traditional production agriculture person. CAB had its Natural label in place for two years before he could read the label and not giggle, he says. “And over 15 years at CAB on the consumer side, my opinions probably haven’t changed a lot, but my perspective has,” he says. “I have greater appreciation for where consumers are coming from and what they’re trying to tell us through the signals they’re sending us.”

Thus, the beef industry can make a choice, he says. “We don’t have to supply them with what they want, or with what they’re asking for, or give them more information, or make some changes to the way we produce beef today. We don’t have to. We just have to go find another customer. The idea that they will buy protein regardless is something that we have found is not a very safe assumption.”

 

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Should Animal Rights Activists Be Held Accountable For Abuse Videos?

A popular tactic of animal rights extremist groups is to send a member undercover to obtain temporary employment in a livestock operation. Once on board, they can gain the trust of coworkers, move freely about the operation, and surreptitiously shoot footage of any animal abuse they might be able to depict. This surveillance often takes place over weeks while the activist collects footage, which is packaged and then released to the media. Of course, during this time of collection and production of the items for the big press splash, any animal abuse that actually might be occurring continues.

Anyone who has ever used a camera or video recorder knows that even a slight change in lighting can make a serene scene look drab and threatening. Likewise, workers having a bad day and losing their patience on a livestock operation can be depicted as being involved in routine and habitual abuse when seen on a YouTube video. I am, of course, not referring to a systematic abuse of animals. And I can’t emphasize enough the responsibility of owners and managers to properly train their staff and stress to them that no abuse of animals will be tolerated whatsoever.

 

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BEEF Contributing Editor Troy Marshall addressed this issue recently with a piece entitled, “What Do We Do About The .01 Percent Of Producers Who Actually Abuse Animals?” He says: “While there is probably no way to ever identify or stop these rare occurrences from happening, education and surveillance are important. These 0.1% outlier incidents are something we will have to deal with, but with education and cultural pressure from within, hopefully the frequency will continue to decline."

I would never stand behind someone who actually abuses their animals, and I know such individuals are the exception in our industry, not the rule. But I have to admit that I am skeptical of video footage obtained by an activist under false pretenses. These are agenda-driven folks who purposely lie to get on the grounds of an animal agricultural business with the sole intention of finding something they can portray as incriminating. And there is evidence that some situations have been orchestrated.

There’s an animal abuse investigation currently underway on the Quanah Cattle Company in Weld County, CO, that presents a conundrum for folks like me who love working with animals. According to a press release from Sheriff John B. Cooke’s office, “On Nov. 12, the Weld County Sheriff’s Office was presented with a video that showed alleged animal abuses at the Quanah Cattle Company located in rural Weld County near Kersey. In review of the video provided, an animal abuse investigation was opened and three suspects who were shown in the video were contacted, interviewed and issued summons for Animal Cruelty (class 1 misdemeanor).

“Through continuing investigation, the person who filmed the animal abuse was also contacted and interviewed by Sheriff’s detectives. It was learned that Taylor Radig was associated with an animal rights organization identified as Compassion Over Killing and referred to herself as a contractor for said organization. Radig filmed the alleged animal abuses at Quanah Cattle Company where she worked as a temporary employee from mid July through September of 2013. During her employment at Quanah, Radig compiled many hours of animal abuse footage that was collected on an ‘as needed basis.’ The video footage was eventually provided to law enforcement by representatives of Compassion Over Killing approximately two months after Radig’s employment ended with Quanah Cattle Company.

“Colorado Revised Statutes 18-9-201 and 18-9-202 outline the definitions and descriptions of the crime of Animal Cruelty. Radig’s failure to report the alleged abuse of the animals in a timely manner adheres to the definition of acting with negligence and substantiates the charge Animal Cruelty. Through the ongoing investigation, Radig was cited for Animal Cruelty (class 1 misdemeanor) due to her believed participation in the cattle abuse incidents reported to the Weld County Sheriff’s Office. Additional investigation is anticipated.”

Reportedly, the video shows workers pulling young dairy calves, some still with wet navels, by their ears, lifting them by their tails and dragging and throwing them off trucks. Apparently this is a legitimate abuse case, and cattle organizations, ag groups and state agencies in Colorado have responded by condemning the abuse and calling for investigation and enforcement of the laws that were broken.

This young woman who recorded the actions apparently was trying to do the right thing in protecting animals. However, if she had informed authorities or management immediately about the abuse she reportedly witnessed rather than working over months to collect a body of sensational visuals, couldn’t she have attained the same thing? What do you think about this case? Leave your thoughts in the comments section below.

 

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Have BEEF “Your Way” – Paper Or Electronic

It was a half-century ago that BEEF magazine was launched to Corn Belt farmer-feeders. It was unique for its time – one of the first vertical publications aimed at a narrow audience of beef producers. There have been a lot of changes since then – a national reach to all production sectors, a website, electronic newsletters, more interactivity with readers. The newest wrinkle is our digital edition, which will put the latest issue literally at your fingertips with just a few keystrokes. In fact, get a jump on the postman by viewing the upcoming December issue online today.

We’re not scrapping the print edition that you receive in your mail box each month; we’re just adding more convenience for BEEF readers with a digital version. No more digging through a stack of issues to find a particular article, it will be available with just a few keystrokes.

The content and layout is the same in both versions, with the digital edition offering everything but the feel of paper. With the digital issue, readers can still page through the content just like a print issue, or jump to a story after consulting the issue’s table of contents.

But because the digital issue doesn’t require a printing press or a postman to get it into your hands, the digital version puts information at your fingertips more quickly. Plus, in the digital edition, you can click on internal links within the story for more information, and on the ads to learn more about the advertised offerings.

Each month’s edition will now be archived on beefmagazine.com. If you go there now, you’ll find the digital versions of the September through December issues in the center column of the home page under “Resources.” Just click on “BEEF Digital Editions.” In addition, you can find a link to the digital issue in the right rail of every BEEF electronic newsletter you receive.

Once you’ve pulled up the issue you want, you can read it online (zoom in and out on the page for better readability), print the issue, or send it to a friend. In addition, a search function allows you to search for words and phrases in that issue or previous issues.

Some readers will like the change because of the timeliness and portability of the information. We like it because its instantaneous delivery makes it possible to get important news and information to you more quickly. So, whether it’s in print or digital form, now you can have it your way!

 

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A Nurse Cow Can Help Settle Stocker Calves

Todd Churchill doesn't like being Bud Williams to newly arrived stocker cattle.

Williams taught thousands of people - either directly or indirectly through his family and disciples - to get newly arrived calves up and walk them around and teach them to trust their human caretaker and teach them where the feed and water are.

Churchill, who is president and co-owner of Thousand Hills Cattle Company, says Williams was a great mentor and actually gave him this idea for settling stocker calves.

"I am just pushing the envelope even further than Bud did," Churchill says. "Walking the stress off calves absolutely works and it is exactly the right thing to do when receiving calves. However, I watched the way cows provide 'babysitters' for the calves while they go off and graze, and how calm and relaxed those calves are all day without mom, as long as the babysitter cow is close by. That gave me the idea that maybe I could make Bud's method even simpler by using a nurse cow instead of myself to walk them around."

To read more about this handling method, click here.

 

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Branded Product Provides Omega-3 Boosted Beef

Lakin Feedyeard Omega 3 beef

Here’s a marketing conundrum for you – how do you sell the health benefit of a new beef product to consumers who know everything and nothing at the same time?

That’s the challenge facing the GreatO Beef brand. Based on a proprietary feed ingredient and cattle research with Kansas State University, GreatO Beef is working to find its niche in a competitive and cluttered retail meat case. And it plans to make a place for itself using two strong consumer trends – the desire to live a healthier lifestyle, and the taste, convenience and affordability of ground beef.

“Our vision is to create healthier animals, healthier people and a healthier world,” says Todd Hansen, president of NBO3 Technologies, parent company of GreatO Beef brand. He’s doing that with a beef product that contains omega 3 fatty acids.

In humans, omega 3s are touted to contribute to cardiovascular health and help with diabetes, brain function, inflammation and pain, among other claims. A 4-oz. ground beef patty made from an 80-20 mix of Great O Beef contains around 200 mg of omega 3 fatty acid, says Steve Landgraf, manager of Lakin Feedyard at Lakin, KS. While the FDA hasn’t established a minimum RDA for omega 3 fatty acids, fish oil tablets commonly contain 300 mg of omega 3s, according to the University of Maryland Medical Center.

The trouble is, Landgraf says, people often don’t understand omega 3s and have been told they’re available only from cold-water fish like salmon or in pill form. That means GreatO Beef has a long and steep road to travel to convince consumers to try its ground beef. While Landgraf doesn’t discount that challenge, he says Great O Beef has a distinct advantage – “It doesn’t taste like fish.”

Feed ingredient

Landgraf, who supplies the cattle for the GreatO Beef brand, says the process starts with a proprietary flax-based feed ingredient developed by NBO3 Technologies. NBO3 stands for Naturally Better Omega 3.

The research initially looked at flaxseed as a health benefit for high-stress animals. While the initial research showed an animal health benefit, NBO3’s main focus was looking at possible benefits to carcass traits. That’s where NBO3 discovered that flaxseed provides a significant boost in omega 3 levels in both the outside fat and marbling. Since then, research has shown improvements in breeding efficiency, milk production and other production traits.

From the perspectives of both human and animal health, the discoveries are important. Omega 3 is an essential fatty acid necessary for proper body function, but it isn’t produced by the body. It must be ingested.

While the research found a variety of health and production benefits for beef cattle, NBO3 Technologies is just beginning to explore the possibilities in the feedyard and meat case, Landgraf says.

In the feedyard, “We’ve seen a little better gain, a little better yield,” he says. “But I can’t say right now how many pounds of gain, things like that. We know there are benefits, but can’t put numbers on paper yet. We’re still testing the protocol to see what works and what doesn’t.”

But that doesn’t mean they don’t have solid numbers behind the feed ingredient. Outside of the documented effect of boosting the level of omega 3 fatty acids in the fat, its greatest benefit for cattle, to date at least, has been in dairy cows.

For the past several years, dairies have been using the proprietary flax-based feed ingredient. “That cow is running real hard,” Landgraf says. “She’s putting out a whole bunch of milk, and that’s a stress. By putting the omegas in (the feed), it’s helped quite a bit on the amount of milk dairies are getting, and the rebreeding efficiency. And it’s helped on the life of the cow; she lasts more cycles.”

As NBO3 Technologies launches GreatO Beef, that relationship with the dairies ensures a supply of feeder cattle well suited for the branded program. For several reasons, the group has targeted ground beef as its roll-out product. As the omega 3 fatty acids are deposited in the fat, it allows the company to provide a product that delivers a consistent level of omega 3 to customers. And in a ground beef market, dairy steers are nearly ideal.

Supply chain challenge

“Both the advantage and the disadvantage of our product is that the entire animal is changed,” Hansen says. “It creates supply chain planning challenges as we go forward.”

The greatest challenge is what to do with the higher-value steaks. But that’s a problem both Hansen and Landgraf say is solvable. Hansen has a background in marketing and merchandising; prior to joining NBO3, he was with Koch Industries and Hormel Foods. Landgraf was both a fed cattle buyer and a meat salesman for IBP (now Tyson) and National prior to joining Lakin Feedyard.

 

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GreatO ground beef has been test-marketed in several retail stores, and early results are encouraging, Hansen says. While their target market is health-oriented consumers, their research shows the product has appeal across a wide range of consumer demographics.

That means their challenge going forward is primarily consumer education, helping people understand they can get an added health benefit from a product they know and love already. To Hansen’s mind, pricing will have a lot to do with how quickly and to what extent consumers will try the product.

Much of their beta testing thus far has been to determine how much of a premium the product can carry, and how best to reach consumers with point-of-purchase information. The product is priced below natural and organic, yet promises to deliver a health benefit that consumers understand. That’s a combination they hope will entice consumers to try the product.

While the sweet spot in pricing is a moving target, the health benefits are the bedrock upon which they can grow the product, Hansen says. They’re not shooting for the “natural” market in their production practices, but their production practices change the beef’s nutritional profile. Thus, they’re marketing the product as “naturally better.”

Initially, they plan a Midwest rollout, and Hansen is guardedly optimistic. “It depends on consumers’ willingness to pay for a real product benefit,” he says. But they have ambitious targets for growth. “We started with the Midwest, but we certainly see it growing across the U.S. and export.”

Landgraf agrees. “Maybe the first time, consumers will try it because they want to be healthy,” he says. “Then the second and third, they buy it because they like it.”

 

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Industry At A Glance: Value Differences Between Sick Vs. Healthy Cattle

cost comparison of healthy cattle vs sick cattle

Last week’s Industry At A Glance discussed cattle morbidity and associated treatment costs. The discussion further noted that indirect costs have also increased proportionally. Lastly, the incorporated data indicate that respiratory disease and pneumonia continue to be the largest and most costly challenge to managing new arrivals at the feedyard.

That perspective is especially evident in some older data sourced from Texas A&M’s Ranch to Rail program. It’s some of the industry’s most comprehensive data clearly detailing individual animal differences between cattle that remain healthy through the feeding period vs. those that require treatment. The average difference depicted above is in excess of $90/head. Sick cattle have lower returns because of diminished gain, decreased efficiency, increased cost and poor grading performance.

cost comparison of healthy cattle vs. sick cattle

The graph above illustrates, though, the importance of the market on the difference between sick and healthy cattle. The market during the Ranch-to-Rail results depicted above (1993-2001) averaged about $66. Fast forward to 2013, and today’s market is nearly double that. It’s not unreasonable then to assume the difference between cattle that remain healthy and those requiring treatment might encroach $200/head.

What’s your assessment of the value differences between sick and healthy cattle in the current business environment? Where would you peg the dollar amount? Leave your thoughts below.

 

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Debunking UGG® Boots And Their “UGGly” Reputation

As cattle producers, I believe it’s important to band together when a segment of the livestock industry is under attack. A few weeks ago, I came across an article that appeared on Yahoo! entitled, “UGGs® and Their ‘UGGly’ Reputation.” Written by Zac Johnson, the piece described the “horrors” of how the popular UGG boots are made.

The article has since been removed because of the false information presented, but reading through the comments section, it is clear there are some misconceptions among the public regarding animal hides.

In his article, Johnson describes how sheep are skinned alive to make the expensive, trendy boot that many people wear during the winter months. The boots were made popular when Pamela Anderson wore them during her role on the show, “Baywatch.”

In 2007, Pamela Anderson apparently finally realized that her UGG boots were made of sheepskin. You may recognize Anderson as a spokesperson for PETA, one of those celebrity gals who pose naked to campaign against wearing fur. Anyway, she posted this statement on her website: "I thought they [sheep] were shaved kindly? People like to tell me all the time that I started that trend – yikes! Well, let's start a new one – do NOT buy Uggs! Buy Stella McCartney or juicy boots."

 

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According to Wikipedia, “In February 2008, the Princeton Animal Welfare Society staged a campus protest against the fur industry, particularly attacking the UGG boot industry.

"Students lay in the newly fallen snow on the Frist Campus Center's North Front Lawn, feigning death, wearing coats covered with fake blood and sporting signs that read, 'What if you were killed for your coat?'"

It is important for shoppers to understand that sheepskin is the same as any other kind of leather. It is a by-product of processing sheep for human consumption. The animal is not skinned alive in the process, and sheep are not killed for their skins. Every inch of the animal is used for meat and by-products that can enrich human lives.

It is interesting to note, however, that the rise in popularity of UGG boots has been the driving force in recent shortages of sheepskins, with a resulting 80% rise in sheepskin prices between 2010 and 2012.

Please help spread the word that UGG boots are made humanely procured by respectfully harvesting the sheep, and using the animal hide as a by-product to make boots and other sheepskin and wool-based items.

What do you think about this controversy? What’s the best way to respond to erroneous information posted online? Have you ever tried to correct such misinformation Leave your thoughts in the comments section.

 

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Cut Pinkeye With Oxygen Therapy

Bob Bard thinks he may have figured how to use oxygen therapy on pinkeye in cattle. Bard, who is a North Texas optometrist and beef producer, says when his cattle have developed pinkeye in recent years he's been spraying ozonated, distilled water into the infected eye several times over a day or two. He says usually the eye clears right up.

Oxygen therapy is not unusual for a variety of maladies, including eye problems, but it’s not well known or well accepted across the medical community. It is sometimes used in hyperbaric conditions, meaning the patient is put in a pressurized chamber with higher-than-normal oxygen content. Or the oxygen may be delivered straight into the airways for breathing, thereby increasing oxygen content in the blood.

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Beef Exports Continue Higher

beef export prices

U.S. beef exports continue to run ahead of last year’s record pace, according to September statistics released by the U.S. Meat Export Federation (USMEF) this week.

Beef exports were 5% higher in September (1% higher for the year), fueled by a 37% volume increase to Japan, 65% increase to Mexico, and 102% increase to Hong Kong.

“On the beef side, the industry aggressively pursued the opportunities available for U.S. product when market access was expanded in Japan and Hong Kong, and we are seeing exciting growth in both those markets,” says Philip Seng, USMEF president and CEO.

All told, the U.S. exported 94,698 metric tons of beef in September valued at $505.5 million. That accounted for 13% of total beef production and 11% of muscle cuts (vs. 13% and 10%, respectively, last September).

The export value per head of fed slaughter in September was $249.00, up from $227.65 a year ago.

At the same time, it’s worth keeping in mind that more pork is staying in the U.S.
 

 

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Despite a boost in pork exports to the China/Hong Kong region and strong sales to the ASEAN region, September pork exports were 5% less in value in September and 9% less in volume. For the year, both the volume and value of pork exports are 5% less.

“We are continuing to face challenges from strong competition in Japan that is driving down our market share (for pork), and access issues with Russia continue to hamper our industry, both in pork and beef,” Seng explains.

In fact, the decline in pork exports to just Japan and Russia amounts to nearly all of the reduction in pork export volume this year, and more than the total decline in export value.

 

 

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2014 Should Reflect Current Market Strength

2014 cattle price outlook

Prices for calves and feeder cattle this last quarter of 2013 reflect what producers can expect next year, says Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in his weekly market comments.

“Feeder cattle prices have strengthened this fall to the highest levels of the year. Heavy feeder prices are at record levels and, while calf prices have not quite exceeded the spring 2012 record price levels, they surely will in the spring of 2013, barring something unforeseen,” Peel says.
 
Cattle supply relative to demand, coupled with declining feed costs, explain plenty of the counter-seasonal price rally.

 

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“Feeder supplies are no doubt tightening this fall with a smaller 2013 calf crop, fewer feeder cattle imports in 2013 and accelerating replacement heifer demand this fall,” Peel explains. “The 2014 calf crop will be as small, or smaller, than this year; feeder imports are likely to remain low; and replacement heifer demand will remain very strong as long as forage conditions are favorable.”

“Because of drought impacts on available feed sources, relatively few heifers were likely to have been retained from the 2012 calf crop; more will be retained from the 2013 and subsequent calf crops unless drought again becomes a concern,” say analysts with USDA’s Economic Research Service in the November Livestock, Dairy and Poultry Outlook. “Heifers retained from the 2012 crop would have been bred this past summer and will calve during 2014. Most of those calves will grow as stockers into 2015, will likely be placed on feed sometime after the first quarter of 2015, and will begin going to slaughter in the last half of 2015. However, they will likely not add much to total beef supplies due to the relatively small size of the calf crop from which they came.”

According to Peel, cattle slaughter is 1.7% lower for the year, compared to the same time a year ago, but it is down an average of 3.6% in the last four weeks. Likewise, beef production is down 1.1% year-to-date, but declined an average of 2.9% in the last four weeks.

For 2014, Peel says cattle slaughter is expected to decrease roughly 7% year-over-year. Expectations are for beef production to be 6.5% less.

“Choice boxed beef prices have averaged above $200/cwt. for the last four weeks and fed cattle prices have averaged above $130/cwt. for the same period,” Peel says. “Both of these prices could average at or above these levels for the entire year of 2014, with spring peaks of $215/cwt. or higher for Choice boxed beef, and fed cattle prices approaching $140/cwt. for a spring top. All eyes will be on the demand side as the supply side of these markets will certainly support even higher prices than these if demand is sufficient.”

 

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