Despite Facing an Increasing Supply, Premiums for High-Quality Beef Continue to Rise Reports CABTue, 01 Aug 2017 15:18:29 CDT
As cattle prices fell dramatically since 2014, premiums began making up a much more of the total animal value.
“The impact of the quality premiums have gotten far more significant,” said Mark McCully, Certified Angus Beef vice president of production. “They are a bigger percent of the total animal value today, so the cattlemen need to be paying attention to that as we move into some of these different price levels, of the important level that those quality premiums have in the marketplace.”
To watch a video clip featuring Mark McCully, Certified Angus Beef LLC (CAB) vice president of production, talking about why premiums for high-quality beef are on the rise, even in the face of a greater supply, click or tap the PLAYBOX in the window below.
Even as 70% of the nation’s fed cattle grade Choice, McCully says the incentive to produce it remains strong.
“So, I don’t think cattlemen need to be concerned that there’s going to be too much of a good thing out in the marketplace,” McCully said. “We’ve not seen any slowing in the spreads between the commodity product; in fact, they are continuing to separate.”
The Choice-Select spread hit record highs in recent months, along with the premiums for reaching the Certified Angus Beef brand.
“Cattlemen need to be aware that really this increase we’ve seen in the quality level of the herd is a great thing as it relates to consumer demand. But at the same time as we look at all grids and premiums are typically paid on some sort of your cattle’s value relative to plant averages,” he continued. “So, as plant averages have gone up it’s important for cattlemen to be keeping up with that pace because what were premium cattle 5-10 years ago may today just be average cattle. And so being able to make sure that they are aware of where the trend is and keeping their herd in line to make sure they are able to garner those premiums on the top end.”
Being profitable at the ranch level, means taking into consideration all the maternal and end-product traits when making genetic and management decisions.
“They’ve got to have a functional herd first,” McCully concluded. “And it’s about making sure they are keeping in mind all of the important traits around keeping that mother cow to where she gets bred and is a good mother and raises a good heavy calf every year. But it’s keeping quality in that equation as well because keeping in mind the genetic decisions that we are going to be making are going to be with us for a long time. Those females we’re putting back into the herd we’re hoping they are going to be with us 12-14 years down the road, and the impact. So never taking our eye off of that consumer and keeping a level of focus on quality as part of a management strategy for a commercial cow calf producer.”
Continuing to give beef-consumers the product they want fuels demand, McCully says.
Source - Certified Angus Beef
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