I hope everyone had a great Christmas and hope everyone has a happy and profitable new year. With the new year, we need to realize the state of our industry, and I would say that it is pretty good. Folks around the world really love beef if they can afford it. The world is getting wealthier every year and populations of people around the world are being lifted out of poverty and living better lives.
Beef demand has been the best it has ever been, at least in my lifetime. We have learned how to produce better cattle; genetic innovation has helped us produced 80 percent Choice and Prime beef. It only took us about 40 years to figure out what the consumers wanted. They wanted well-marbled, tender beef. What they didn’t want was to see all that rind and seam fat in the retail cuts.
Everyone in the beef producing chain has made contributions improving our product. Even the packing industry has participated. They have created new products and figured out ways to get more red meat yield. Perhaps their greatest contribution is packaging, inventory management, and distribution. You can get fresh beef in nearly every grocery store in north America because of the packing industry. As a matter of fact, every retail grocery store averaged $19,000 in beef sales per week in 2017, according to statista.com
In 2019 we produced and processed 27.3 billion pounds of beef. The last time we produced anything close to that was 2002 when we produced 27.2 billion pounds of beef. Today we’re selling more beef for more money than ever before. The average all fresh beef price for 2019 is estimated to be $5.95 per pound. In 2018 it was $5.92.
Demand is good and it will improve in the years to come because of the free trade agreements our government is working on with the collaboration of every agricultural trade group. The reason the recent passing of the USMCA trade agreement is good is because it drops tariffs that Mexico and Canada had placed on U.S. ag products. The Japanese trade deal is good because it lowers tariffs on U.S. beef going into Japan and allows us to compete with Australia.
I get very frustrated with cattle industry trade groups like R-CALF and U.S. Cattlemen’s Association. For some reason they think the only way to improve cattle markets is with Country of Origin Labeling (COOL). I’m okay with COOL, if someone can tell me just how to do it. I don’t like mandatory COOL (mCOOL) because it would give government another role in the cattle business, and we don’t want more regulation.
R-CALF’s CEO, Bill Bullard, came out with a statement just before Christmas urging cattlemen to call their congresspeople to voice opposition to USMCA because it didn’t have an mCOOL provision. Bullard says NAFTA was responsible for the demise of the cattle business over the past 25 years.
He seems to think that NAFTA is responsible for eliminating 20 percent of American cattle producers and about 7 million cattle from the U.S. cattle inventory. It also eliminated 25 percent of auction yards in the U.S., 75 percent of all feedlots, and 48 meat packing plants. Then created a $1.4-billion cattle trade deficit with Canada and Mexico since NAFTA started 25 years ago, he says.
Bullard interprets statistics a bit differently than I do. We may have lost 20 percent of beef producers over 25 years, but I would have a very difficult time placing blame on NAFTA. There has been a host of reasons there are fewer cattle producers. I would think that not embracing technology is one, ranch or farm economies of scale, or even that family heirs didn’t want to be in ag. And the same goes for feedlots. We actually have feed bunk space for 14 million head of cattle. Then we produce more beef with fewer resources than ever before. We’re weaning more pounds of beef per acre than ever before. Then there is urban growth—how many good farms are now suburban neighborhoods?
I want to know if you would rather have government involved in growing new markets for beef or have government regulating it more. This administration has been friendly to the cattle and beef industry. They will listen to the industry more than they will listen to congressmen or senators seeking re-election. I’m looking forward to a good year and export markets will help a lot. — PETE CROW
