Agricultural News
Premium Beef Branding Programs Keep Demand High Despite Economy
Wed, 23 May 2012 13:57:56 CDT
The price differential between choice and select grades of beef has often been used as an indicator of quality beef demand. Oklahoma State University ag economist Derrell Peel says we have used that spread to broadly indicate demand for quality in a product that is almost infinitely variable.
He says that broad categorical indicator is not as useful as it once was and with the rise of premium branding programs like the Certified Angus Beef label, those market signals are being further altered.
"What we've seen, over time, is evolution toward more branded products and various other ways to differentiate that market. And, in the long run, I think those become more important relative to the choice-select spread. So it's arguably true that the choice-select spread is less indicative or less representative of that. I think that many of these product markets are working at a narrower, more defined set of specs than just the choice-select difference. That we see in the market."
With cattle prices being so high, and cattle numbers nationwide going down, the question is asked if it pays to look toward quality beef production?
"There's always a need to pursue quality at some level in the market," Peel says. "We produce a lot of different products and so it's not about one kind of cattle or whatever. It's always going to be about a mix of products and that top-end market is very important and will always be there. And I think it continues to grow at any rate. So, definitely, I think quality is worth pursuing."
And recent studies are showing that premium beef programs fare well in tough economic times.
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