U.S. Beef Industry Has Measured Up To Every Challenge

The men and women who make up the U.S. beef industry are a resilient bunch. In my 27 years of writing about the industry, they’ve had just about every challenge thrown at them. Yet they’ve met each one with calm determination and a focus on making the industry even stronger.

Easily the biggest challenge of the 1980s and early 1990s was the erosion in beef demand. The industry was producing more beef each year, but selling it at lower prices. The way in which industry leaders addressed the demand issue in the 1990s, and the way the industry reconfigured itself into a consumer- rather than a production-driven business, is its greatest success story of the past 50 years.

It’s easy to look back on that time and say that change was inevitable. Maybe, but the changes involved ferocious battles over everything from cattle feeders’ marketing arrangements with packers, to so-called packers’ “captive supply,” to legal challenges to the beef checkoff program.

These three issues alone consumed the industry at times, much as the battle over country of origin labeling (COOL) has in recent years. COOL, of course, remains unresolved and will drag on into 2015.

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A residual issue from the first two topics I mentioned will also have to be resolved. That is, whether the industry should do anything about a diminishing cash market for live cattle.

The industry was still grappling with demand issues when E. coli O157:H7 struck the industry in the form of 1993’s Jack-in-the-Box tragedy in the Pacific Northwest. The bug provoked huge beef recalls, and closed plants and companies. It also turned consumers off eating beef.

Recalls and the added cost in terms of a decline in boneless beef prices immediately after a recall cost the industry $1.6 billion in lost demand in the 10 years from 1993 to 2003. The pathogen cost the beef industry as much as $2.7 billion overall in the decade.

Yet the industry still couldn’t catch a break. No sooner was it declaring a partial victory over E. coli, citing reduced pathogen levels, when USDA announced the first U.S. case of BSE on Dec. 23, 2003. As I wrote in my December 2013 BEEF column, the subsequent loss of beef and offal exports might have cost the industry more than $16 billion to date.

It’s a testament to the industry’s resilience that beef and offal exports in 2013 totaled a record $6.157 billion, up 12% from the 2012 record. Volume was up 3% to 1.17 million metric tons.

During my time, the industry has seen the national cattle herd shrink from more than 105.5 million head in 1986 to 87.7 million head on Jan. 1 this year. This decline has had a profound effect on the backgrounding, feeding and processing sectors.

Yet, it’s also remarkable that the industry during this time kept producing more beef, peaking at 2007’s record 27.2 billion lbs. That’s where the resilience and ingenuity of the industry have also shone — in finding ways to produce more beef from fewer animals, and to improve the quality of that beef at the same time.

Natutral disasters are where the true resilience of individuals in this industry stand out the most. Much of cow-calf country faced devastating drought from 2010 to 2012. Producers spent many millions of dollars on hay and other feed supplements, and even water, to keep their beef cowherds together. Some incurred great expense to send their cows to other states until their own pasture conditions improved.

Now the same thing is happening in my own state, California. While the state has only 600,000 beef cows, every one of these is important to the local and the national beef industries. The possibility that California might lose 100,000 beef cows this year is heartbreaking. But it won’t break the spirit of producers.

Steve Kay is editor and publisher of Cattle Buyers Weekly (www.cattlebuyersweekly.com). See his weekly cattle market roundup each Friday afternoon at beefmagazine.com.