How the Marketing Structure of Beef is Failing Some Producers

 

By ShayLe Stewart, DTN/Progressive Farmer 

7/25/2022

 

In 2019, I accepted a livestock market analyst position with DTN and suited up for what became known as some of the wildest times in the cattle market's history. From packing plant fires to a global pandemic, to shutdown processing plants to record boxed beef prices, and now to record-breaking beef cow slaughter speeds and another turn in the market's cycle -- the market never ceases to amaze me. I'm thankful that the market's tone has shifted from a depressed, bruised and beaten state, to a stronger, more optimistic tone as 2022's early feeder cattle sales have demanded everyone's attention.

 

Unfortunately, the cattle market seems to be on a nonstop roller coaster ride of drastic swings that take producers from feast to famine; the feasts only seem to last a year or two while the famine drags on for the remaining eight to nine years of a cycle's course.

 

That makes it more important to be ready to capitalize on the market when it's strong, and be safe-guarded and well positioned to outplay the market when it's weak.

 

During the 21st century, elaborate marketing campaigns have been created to drive sales higher. Some of those have been good and beneficial, while others are just plain intrusive and uncanny. For example, heaven forbid you happen to mention to your spouse that you'd like a new grill for the summer because, from pop-up ads on Google to random ads on social media, grills are all you're going to see!

 

However, one marketing campaign that's built true demand and grown substantial wealth throughout its organization is Certified Angus Beef (CAB). If you walk into a high-end restaurant and view their displayed cuts, it's without a doubt that CAB cuts will be exhibited front and center, as they have been marketed to be the country's best and finest cuts of beef.

 

All this marketing hasn't gone without substantial premiums being paid for such meat; on average, CAB choice cuts are worth $15 to $20 per hundredweight more than regular choice cuts, which equates to roughly $130 per head more in premiums... 

 

... But what about the cattle that jump through all these hoops, are equal in terms of product quality, but don't get the CAB stamp and miss out on the $15 to $20 per hundredweight premiums?

 

Ken Betschart, a marketing representative for Consolidated Beed Producers, said it best. "The real kicker of this marketing strategy that goes untalked about is that the upper two-thirds of choice cuts are choice no matter the animal's color. It's as if all other cattle who jump through these hoops and meet the industry's standard for excellence are treated as the red-headed stepchild of the group, whether they be red, white or any other color than black-hided cattle," he said...

 

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https://www.dtnpf.com/agriculture/web/ag/livestock/article/2022/07/20/marketing-structure-beef-failing