Looking into the future is tricky business. As renowned economist Peter
Drucker once said, "Forecasting future trends is a somewhat futile
exercise. The best we can do is to take trends that are already occurring
and extrapolate them into the future."
The following trends and projections represent a consensus of numerous analysts
in every beef industry sector, from seedstock to consumer. These trends,
listed in no particular order, are likely to occur over the next few years
and into the next decade.
Global markets will increasingly liberalize, assuming that developed nations,
the U.S. and Canada included, don't adopt extreme protectionist policies.
As developing nations become more affluent, their first demand is for more
protein in their diets, especially animal protein. Driven by rising demand,
total world meat production is projected to increase 13 percent by 2013.
Beef is expected to parallel this overall increase.
The U.S. and Canada will continue to dominate world production of high-quality
beef, primarily because they can more economically produce grain-fed beef.
Plant geneticists, however, are capable of developing grain varieties adapted
to non-traditional environments. This could enable nations such as Brazil
and Argentina to become competitive in the global market for high-quality
The world's water supply is becoming increasingly scarce. Water will be
the "oil" of the 21st century. Expect water management to reach
the top of the political agenda in the near future.
Consolidation will continue, especially in the retail, packing, and feedlot
sectors. Today, the top five supermarkets account for 50% of total supermarket
sales. By 2010, this could be 75 percent.
Meanwhile, the top 30 cattle feeding companies account for about 40 percent
of the fed cattle. That could be more than 50 percent by 2010. More than
70 percent of fed cattle are processed by the top three packers; by 2010,
they could be processing 80 percent.
Communication and coordination between segments will increase as the industry
becomes more vertically "coordinated." This needs to happen to
remain competitive with other proteins.
Be assured, however, that our industry won't vertically "integrate"
like poultry. No single entity could invest the amount of capitalestimated
at more than $6 billionrequired to integrate from seedstock through
Contractual arrangements between feedyards and cow-calf producers, and between
feedyards and packers, will continue to grow. Such contacts are needed to
ensure that retail and foodservice clients consistently meet their customers'
needs. Failure to deliver the specified supply on time, every time, is a
sure way to lose business.
Adoption of an individual animal ID and source verification system will
help the U.S. remain competitive globally. It won't be easy, but it is certain.
Fed cattle marketed outside the spot/cash market could increase from the
current 50 percent up to 80 percent by the next decade. Branded beef currently
is estimated to be 20 percent of the market. By the next decade, that could
be 60 percent.
Today, most branded beef products carry national brands. In the future,
supermarkets will want more products in the beef case to carry their private
Improved packaging technology will encourage supermarkets to offer more
case-ready beef products, which currently account for about 30 percent of
total units in the retail meat case. Case-ready processing, where nearly
all the fat and bone is left on the packinghouse floor, will enhance the
value of cattle with higher red meat yield.
Instrumentation capable of accurately assessing beef tenderness at line
speed in the packinghouse will finally be developed. This will allow factors
other than marbling to be used as indicators of tenderness, as the correlation
between marbling and tenderness is not high.
But, such technology won't diminish marbling's value, as it is highly correlated
with juiciness and flavor.
Today, the demand for well-marbled beef, mid-Choice and higher, accounts
for 25-30 percent of the market, which likely won't change. The value of
"guaranteed tender" USDA Select, however, will increase.
As intervention strategies improve, the incidence of disease outbreak and
beef recalls due to bacterial pathogens, such as E. coli, pasteurella, campylobacter
and listeria, will decline. Consumers will grow even more confident about
beef safety, but the industry can't afford to relax efforts in this area.
The current excitement over low-carbohydrate diets will eventually peak,
and other fads will come into play. However, demand for beef will remain
strong and not decline along with the low-carb fad.
Regardless of trends, foods need to taste good or they won't have staying
power in the marketplace. The good news: taste is beef's number one attribute.
Specialty/niche food markets are growing exponentially. Once dismissed as
a fad, the natural/organic market is growing at a 20 percent annual rate.
Increasingly, producers will ally in partnerships, alliances, and cooperatives
to produce beef for these specialty markets.
Cow/calf producers can look forward to a few more years of profitability.
Despite the positive margins, producers must continue to control their unit
cost of production ($ cost per pound of calf).
The veterinary profession will serve increasingly as a source of information
for cattlemen on numerous topics. Veterinarians will be prepared to provide
valuable advice on genetics, nutrition, reproduction, marketing, and other
beef production areas.
Improved production efficiency throughout the beef value chain will help
beef better compete with pork and poultry. Of all feed energy expended in
producing beef, 70 percent goes solely to maintenance, and only 30 percent
to productive processes such as growth and lactation.
An astounding 50 percent of total feed energy is expended at the cow herd
level. Animal scientists recently developed an expected progeny difference
(EPD) for cow maintenance. It will enable producers to put selection pressure
on the cost of maintenance.
Feedlot technology will result in continuing improvement in feed conversion.
We know some cattle are genetically capable of converting at a ratio of
five pounds of feed to one pound of gain or better. Increased coordination
of industry segments will increase efficiency and reduce the cost of producing
Recent research reveals early weaning90-150 days of ageoffers
many advantages, particularly during drought. This alternative management
strategy is likely to increase.
In addition, several studies show early weaning, followed by a backgrounding
phase that does not result in an unduly prolonged period of dietary restriction,
can enhance eventual quality grade. Another study shows heifer calves early-weaned
at 90 days reached puberty at a younger age and had a higher pregnancy rate
than those weaned at 230 days.
Because traditional crossbreeding systems are cumbersome, especially in
small herds and in intensive rotational grazing systems, more commercial
producers will utilize heterosis by rotating unrelated F1 hybrid bulls composed
of the same two breeds (AB x AB). This can result
in a 12 percent increase in pounds of calf weaned per cow exposed over the
average of the parental breeds.
Rotating F1 bulls with only one breed in common (AB x AC)
can result in a 16 percent increase. Because of the increasing demand for
hybrids, more seedstock breeders will respond by offering more hybrid bulls
to commercial customers.
Today, nearly everyone has equal access to outstanding beef genetics. Customer
service will become the differentiating factor in the seedstock business.
"Full-service genetic providers" will form the new generation
of breeders. These breeders will be able to analyze customer production
systems, determine the genetic package to best fit that need, and guarantee
consistent production at an appropriate price.
The National Beef Cattle Evaluation Consortium will use genetic markers
validated in the National Cattlemen's Beef Association's Carcass Merit Project
to enhance accuracy of carcass EPDs. DNA tests for carcass traits also are
being commercially developed. Expect a proliferation of similar diagnostic
tests in the next few years.
Cloning holds great promise for genetic advancement. However, early embryonic
mortality, late-term abortions, and low calf-survival rates must be resolved
before its use is widespread.
Food companies will face increased pressure to develop animal welfare plans
as a way to assure consumers that food animals are humanely raised and handled.
Other important issues, which aren't covered in this article, include land
use, the environment, and government regulatory policies. These issues will
continue to be a challenge for the industry just as they are currently.
Harlan Ritchie (Harlan Ritchie is a professor of animal science
at Michigan State University in East Lansing, MI.)