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Producer opportunity: CAB growth limited only by supply
In a tough year for both product marketing and cattle production, the Certified Angus Beef brand maintained its five-year record of sales exceeding half a billion pounds. Growth came in areas of demand rather than supply, as the brand's influence spread to a record 12,580 licensees.
The market never looked better for producers who are turning toward the brand's quality target. "We sold out of high-quality Angus cattle, a shortage that went against long-established trends," said Jim Riemann, Certified Angus Beef LLC (CAB) president.
That made for a difficult market on the product side, Riemann explained. Still, the brand's influence expanded because of a focus on the basics. "We faced challenges we never dreamed of," he said, pointing to bovine spongiform encephalopathy (BSE), the closing of international borders, high beef prices for consumers and a shortage of cattle qualifying for the brand.
"In light of these issues, the keys to successful branding have held true and contributed to success for our brand partners," Riemann said. "It's about product, people and integrity."
The number of identified cattle slipped for the first time, down 6 percent to 11.9 million head. However, that was not as big a decline as the 10 percent in overall fed-cattle supplies. Angus influence in the U.S. cattle herd continued to grow, exceeding 52 percent of the cattle processed. The lower identified number for CAB carcass evaluation, however, was compounded by a record low 15.6 percent annual CAB acceptance rate. That led to a lower supply of 1.86 million head available for the brand.
Meanwhile, overall beef demand was reported growing at the rate of 10 percent in 2004--something had to give. That helps explain why CAB carcass utilization reached a near-term high of 272 lb. per head, led by a 13.5 percent increase in the sale of grinds, to 60.6 million pounds. This greater efficiency helps generate higher premiums for producers.
Record high cattle prices and premiums rewarded those who kept their focus and aimed at the CAB brand target. In calendar year 2003, licensed packers paid a record $50.01 million in grid premiums for CAB acceptance. On the calf side, the long-term CAB study "Here's the Premium" revealed a six-year continuing upswing in the Angus advantage in price over non-Angus calves (see charts 2 and 3).
"Producers have more incentive and ability to hit the CAB target than ever before," said CAB vice president Larry Corah. "We have known for a long time that profitable cattle must grow, gain and grade. However, new information on thousands of calves from the Iowa Tri-County Steer Carcass Futurity points out the tremendous importance of health in achieving this."
Among the findings: Postweaning disease can account for $200/head in lost revenue. Cattle in the Iowa futurity that produced CAB carcasses were 33 percent less likely to require treatment than other cattle. They also recorded 4 percent higher average daily gain with fewer days on feed, and exhibited calmer dispositions, Corah reported.
"Working with our Feedlot Licensing Program (FLP) partner yards in 18 states, producers can get on top of these management issues," he said. "And there is no need to guess which balanced genetics to use. The American Angus Association sire evaluation database allows for unprecedented precision."
FLP yards enrolled more than 220,000 cattle in the last year, nearing the 700,000 cumulative mark over the feedlot program's five-year span. A record 175,000 harvested added to a carcass information resource now exceeding 509,000 data points, a resource that verifies Iowa data analysis on the Angus advantage.
The licensed network of feedlots allows for process verification, and an opportunity for the brand to build on working relationships with producers to expand and meet niche consumer preferences. The CAB Natural line debuted last spring through an agreement with BC Natural Foods and its two leading brands, B3R Country Meats in Childress, Texas, and Coleman Natural Meats in Denver, Colo.
The National Angus Carcass Challenge (NACC) leads more cattle to the FLP by rewarding producers in a friendly competition to find the highest quality cattle. The first winners were recognized last January at the National Western Stock Show in Denver, Colo. CAB and five other sponsors bolstered the 2004 NACC with more than $30,000 and a new John Deere Gator for the winners to be named this January in Denver. Enrollments of 40 calves sired by registered Angus bulls and fed in CAB licensed feedlots tripled to surpass the 5,000-head goal by midyear. Entries continued to grow as the fiscal year ended and a seventh sponsor signed on to ensure a still brighter 2005 NACC.
Date: 11/24/04
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