Agricultural News
Industry's Reaction to Technology and Consumer Demands Causing Rapid Change in Beef Business
Tue, 25 Oct 2016 11:03:18 CDT
We are used to slow change in the cattle business. But after decades at that pace, a rapid transition has set in.
"Part of that is from technology," said Pete Anderson, research director for Midwest PMS, "as we add technology to any industry it tends to happen faster. Part of it is communication directly from consumers. Where we now understand to a much greater extent what consumers want and what they won't accept and we're reacting to that and part of it is speed of the way everything is happening in the globe these days."
The markets have seen increasingly wild price swings.
"The price volatility of fed cattle over the last few years has exceeded what supply and demand differences would have predicted," Anderson said. "So, we know there are other forces at work. Some of that is more investment in agriculture commodities than used to be. And some of that money is sort of transient. There is money coming in and out of agricultural commodities that didn't used to pay attention to them and its some pretty big amounts. That creates volatility."
The unpredictable moves and the rise of social factors in the market make risk management more critical today.
"We need to put in front of consumers exactly what they ask for and so as consumers dictate more of one branded program or one type of specification or another, we need to meet that," Anderson said. "But we also need to make sure we can do it in a way that is profitable and economically sustainable."
Consumers pay premiums for what they want. They get behind social media platforms and rally for causes that they believe in, sometimes regardless of practicality.
"So, if we can educate consumers and sustain the use of production enhancing technologies that makes us much more cost competitive compared to other industries," Anderson said. "If we lose access to those technologies, or voluntarily give up the use of those technologies, we'll be less cost competitive and we could suffer relative to other proteins."
The world's growing population will continue to need high-quality beef, economically produced. But the world needs to know more about how it is produced.
To watch a video featuring Pete Anderson, research director for Midwest PMS, talk about the shift from steady to rapid change in the North American beef business, click the PLAY BOX below.
Source - Certified Angus Beef
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