Price Not Only Factor Influencing Beef PurchasesWed, 13 May 2015 19:03:07 CDT
High cattle and beef prices provide quite a case study for the entire industry. The beef industry has learned a lot about consumers over the last decade. Certified Angus Beef ® brand president John Stika said with higher beef prices, they thought consumers would respond by choosing to always lower their quality standards, by just focusing on price.
"As an overall beef industry, we’ve learned a lot," Stika said. "Consumers don’t just buy on price alone. They buy on price in relation to value. As you look at that, it’s really created a lot of opportunity that U.S. cattlemen have really taken advantage of as we’ve ramped up the quality of product that we produce for consumers over the last decades."
Beef grading has reached record high levels at the same time when cattle inventories hit rock bottom. That might dilute the signals, but they’re still there, Stika says.
"In a market where supplies are really tight, even the poor cattle are worth more than they probably should be," Stika said. "What’s important is that many producers are in it for the long haul, and even today in a tight supply market where maybe the differential in price maybe isn’t as much as we’d like to see there is still a difference in the premium being paid for higher quality cattle."
Capitalizing on consumer demand starts at the ranch level.
"A decision to use carcass-oriented and quality-oriented genetics are as important today as ever before and the economic signals to make that decision have never been louder," he said. "Whether you’re directly tied to an outlet for beef or you’re located in the most rural part of the U.S. raising cattle and so forth, you can tie right into this growing demand for quality beef, or the quality beef movement as we like to call it, simply by making a conscious decision to target your genetics and management to a quality endpoint."
Many cattlemen do not retain ownership through finishing, but quality bonuses don’t discriminate by marketing method.
"When you look at the prices being paid for known cattle, sired for instance by registered Angus bulls, that are carcass and quality focused, that financial return to that producer who sells at weaning has never been stronger than it is today," Stika said.
This video news is provided by CAB and the American Angus Association.
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