Beef sold in supermarkets under brand names will require consistent quality cattle from producers. Consistency is mandatory to build brand loyalty with consumers, said a beef economist with the University of Missouri.
Rapid structural changes are taking place in the cattle business, driven by the need for consistency, said Vern Pierce, economist with the MU beef focus team.
His comments were part of a series of talks by Commercial Agriculture members at a "Cattlemen's College" on opening day, Dec. 13, of the Missouri Cattlemen's Convention at Tan-Tar-A Resort, Osage Beach. The relationship between carcass quality and profitability was the day's theme.
A lack of consistency helped lead a long-term trend in lower beef demand, Pierce said. A customer returning to the same meat case after buying a great steak had a two out of three chance of picking up a steak of lower quality the next time.
"Begin now to identify the partners you can work with to deliver the type of cattle that will be needed," Pierce advised cattle producers. Look for people who have the right attitude and who can change to deliver what is needed.
"There will be financial incentives for meeting the demand," Pierce said. "Identify the part you can play."
The commodity beef business failed to provide adequate communications, or price signals. That failed market chain is being replaced by new systems. Rapidly changing consumer demand drives all. Consumers spend 47% of their food dollar on meals eaten outside the home. At home, more food is prepared in minutes, instead of hours. Grocery stores are fighting to retain a share of the food dollar by selling convenience.
The retail food industry, a $515 billion business, has changed already. Wal-Mart Stores, Inc. just became the largest food retailer, while the top four supermarkets provide one-third of total sales in this country.
"Retailers are sending market signals back through the food chain," Pierce said. "There will be price incentives, or discounts, for animals that don't meet their standards."
"It's time to go back to basics and make sure you market the types of cattle that will be in demand," Pierce said. "Learn what is happening to your market."
Alliances of producers who can produce the same quality will give even smaller beef farms a place in the system. In addition to alliances with producers, there will be alliances up and down the marketing chain, Pierce said.
The supermarket need not buy the packer, the feedlot or the farm to get the product they want, Pierce said. "Buying is not the kind of alliance we are talking about.
"Alliances will be formed not necessarily with the farmers producing the best cattle now, but with farmers who have the right attitude. It will take an attitude willing to accept change."
Farmers will need alliances with veterinarians, lenders, livestock markets and input suppliers who also have the right attitude, Pierce said. In the past, cow-calf producers received no price signals based on the final consumer acceptability of their product. "Beef producers didn't know how their product tasted. That will change as cattle are traced through the chain from farm to dinner plate."
That tracking system is already in place in Europe, Pierce said.