Beef 2009: A positive global outlook

“THE U.S. BEEF INDUSTRY IS IN A GLOBAL SLUGFEST,” says Clint Peck, director of beef quality assurance at the Institute for Global Beef Studies at Montana State University. “To succeed we must know as producers how we can work to keep gaining ground in the marketplace at home and abroad.”

His Feb. 11 presentation at World Ag Expo, “Global Beef Systems — How Do We Compete?”, will provide participants with a better understanding of beef production and marketing systems around the world. He’ll also shed light on what consumers are demanding as they make their beef buying decisions as well as what is deemed, “quality beef” around the world.

Peck speaks with the authority of having traveled to most of the major beef producing countries in the world studying beef systems. He believes it’s imperative for producers to examine and understand foreign beef systems in order to compete.

The presentation will be at 11:00 a.m.

As cattle producers are casting a wary eye on what lies ahead in 2009, uncertainty in the marketplace makes for a difficult operating environment. Negative factors abound — from the credit crunch to lower commodity prices. Commodity markets have suffered alongside the general economy and marketplace fundamentals are erratic.

Higher production costs were the main concern of beef producers throughout much of 2008. But late in the year, feed and fuel prices eased, which provides a glimmer of optimism for producers.

In October, Derrell Peel, Oklahoma State University livestock marketing specialist reported corn futures were down 24 percent since mid-August; wheat was down 28 percent; feeder and live cattle futures were down 12 percent; the Dow Jones industrial average was down 25 percent; crude oil down 21 percent; choice boxed beef down 9 percent; and the U.S. dollar up about 8 percent.

But Peel noted, “This is a correction, not a meltdown or fundamental unraveling of everything. Out of this will come lots of opportunity for some folks. None of us know what those opportunities are yet, but I know they’ll be there because they always are in these situations — that’s how business works.”

Worried shoppers within the general economy could have an impact on beef demand. Surveys show families are eating at home more, which is good, as beef tends to be a preferred item. But, cost of beef compared to other protein choices (pork and poultry) is a concern. As commodity prices have fallen, food prices haven’t adjusted.

The good news: Despite these concerns, there are positive industry drivers beef producers must keep in mind. The first is the shrinking national cow herd. The 10-year traditional cattle cycle is in hibernation due to unsettled markets, economy worries and drought. Declining cow numbers prop up domestic prices, but may pose supply concerns at a time when some world economies are booming, such as India, Russia and China.

What’s more, access to foreign markets is increasing. South Korea is now open and acceptance of U.S. beef is picking up. Inroads are still needed in Japan, previously the largest destination for U.S. beef products.

End-product quality and branding programs are becoming more of the norm in the marketplace. U.S. beef is considered the world’s gold standard for quality.

At the World Ag Expo seminar, beef production practices in Argentina, Australia, Brazil, and the European Union will be examined in relation to the globally unique systems of the U.S. and Canada. The program will conclude with a list of suggestions on how U.S. beef producers can compete in the global marketplace as they look to the future.

The global marketplace is a key reason for optimism in the beef industry, and one of the reasons why BEEF magazine, the official beef publication of World Ag Expo, encourages producers to attend this event.

Following the hour-long presentation, seminar attendees will have the opportunity to “eat beef for lunch” as part of the World Ag Expo experience.

TAGS: Management
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