Beef Industry History

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Industry History
Intro to the Beef Industry
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Industry History and Background
Economic Factors
U.S. Imports and Exports
Beef Price Cycles
Beef Production in the U.S.
Industry History and Background
1400s
1500s
Cattle reach
Texas, California
from Mexico
Cattle industry
emerging in
Florida
1600s
1700s
Cattle reach
New England/
New York from
England,
Northern Europe
1800s
Late 1800s
Cattle business
thriving; focused west
Family owned/managed
Produce 4-5 yr. old
grass-fed steers;
shipped by live train
INDUSTRY HISTORY AND BACKGROUND
1800s
 Chicago/Kansas City epicenter for sorting,
distributing cattle via rail
 Packers/processors also at rail centers
 Refrigerated rail cars
 Invented by G.F. Swift
 Larger packers operated regional
shipping/distribution
 New York, Boston, Philadelphia
INDUSTRY HISTORY AND BACKGROUND
20th Century
 Federal Meat Grading System, 1920s
 Federal Interstate Highway System, 1950s
 No longer dependent on railways
 From Carcass to Primal Cuts
 Boxed Beef
 Led to vacuum packaging
 Led to block-ready, boneless, case-ready
beef
INDUSTRY HISTORY AND BACKGROUND
Early 20th Century
 Economic recession
 Beef demand falls
 Cattle numbers drop to historic levels
 Cattle and beef prices reach record high levels
INDUSTRY HISTORY AND BACKGROUND
Late 20th Century
 From producer-driven to consumer-driven
 Beef demand in rapid decline
 “War on Fat”, 1990
 “Taste Fat” vs. “Waste Fat”
 Revived interest in quality which helped
rebuild demand
ECONOMIC FACTORS
Variables Impacting Beef’s
Profitability
92.6
140,000+
U.S. Farmers and
Ranchers
Average
herd size
million
cattle
(Jan ‘11)
Beef
production
26.3
42
billion lbs.
Gross income
of cattle
$45.3 billion
$74 billion
total inventory value
Total consumer
expenditures
$100 billion
Economic Factors Affecting
Supply and Demand
Top exporters
of beef
Top US export
market
Top US beef
supplier
Imports
 The U.S. has 8% of the world’s cattle and
produces 21% of the world’s beef
 The U.S. remains the largest importer of beef
globally, buying 2.3 billion pounds in 2010
valued at $2.83 billion
 80% of the beef imported into the U.S. comes
from Canada, Australia and New Zealand;
mainly lean grinding beef for fast food
hamburgers
Exports
 The U.S. was the #3 exporter of beef in 2010,
behind Brazil (#1) and Australia (#2)
 2010 exports were 2.3 billion pounds valued at
$3.53 billion
 The U.S. currently exports 10-11% of
production
 Top export markets include: Mexico, South
Korea, Japan and Canada (~70% of total beef
exports)
 The U.S. exported beef to 146 countries in 2010
 Typically peaks in spring and fall when middle
meat demand is strongest and cattle supplies
are lowest
 Bulk of cows used for lean trimmings are
marketed in the fall, resulting in lower prices
 Tighter supply + grilling demand support prices
in spring/summer
 Best prices during colder winter months
(cooking methods)
 Increase in price due to new steak cuts
(Flat Iron, Petite Tender, etc.)
 Holiday celebrations and summer grilling
increase demand and price
 Higher prices in spring result of limited supply,
especially for Choice
 Similar to Chucks; peak during colder months
 Prices decline in summer due to increased
supply + decreased demand
U.S. Beef Production
 Family owned/operated industry
80% in same family for 25+ years
10% in same family for 100+ years
 Cattle raised in all 50 states
 Various cattle breed types and crossbred cattle
 Adapt to various conditions
U.S. BEEF PRODUCTION
At the Ranch
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Seedstock Producer, grassland based
 “Purebred” segment
 Genetic base for breeding stock
Cow/Calf Producer, grassland based
 Combine genetic lines to best meet market demand
(crossbreeding)
 Sells to stocker or feedlots
Stocker
 Specialized segment
 Use grasslands as natural resource
 Sells to feedlots for grain-based finishing
Feedlot
 Use higher energy diets to achieve rapid gains to create the
world's highest quality beef products
U.S. BEEF PRODUCTION
From Packer to Market to Table
Packers
Purveyors/
Processors
Foodservice
Operators/Retailers
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Harvest finished
cattle
Fabricate
carcasses into
subprimal cuts
Sort and “box”
beef
Market to
purveyors,
processors
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Fabricate boxes of
subprimal cuts
Sell to foodservice
operators, retailers
Present product
to consumer
LABELING CLAIMS
Natural Beef
 Not more than “minimally processed”
 Label must explain “natural”
 i.e., no added colorings or artificial
ingredients
LABELING CLAIMS
Certified Organic
 Cattle MUST:
 Be raised separately
 Have access to pasture, though many are feedlot
finished
 Be fed 100% organically-grown feed (grains and
forage)
 Be treated when sick
 When treated with antibiotics, must be removed
from program
 Cattle MAY:
 Be provided certain vitamin and mineral supplements
 Cattle MAY NOT:
 Be given antibiotics or enhancers for any reason
(or must be removed from program)
LABELING CLAIMS
Certified Organic
 Prohibited:
 Synthetic pesticides on pastures
 Sewage sludge for fertilization of feedstuffs
 Irradiation on beef products
 Producers must be certified through USDA’s
Agricultural Marketing Service (AMS)
LABELING CLAIMS
Grass-Finished Beef
 Feeding regimen for livestock raised on
 Grass, green or range pasture, forage
 Shall be 80% or more of the primary energy
source throughout animal’s life
Beef Industry Summary
 Single most sustainable, renewable form of agriculture
that produces an amazingly nutrient-dense source of
protein
 American beef industry dates back to 1500s
 Railroads, federal highways revolutionized industry
 Federal regulation began in 1920s
 Focus moved from producers to consumers in late 20th
century
 Tough to manage supply and demand for beef
 Industry is major contributor to U.S. economy
 U.S. a top importer and exporter of beef
 Beef cuts experience seasonal shifts in price/demand
 Specialty beef requires special labeling
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