Is High Quality Beef an Insurance Policy?

Consumers know that purchasing a high-quality steak is like an insurance policy. They’re paying quite a bit for beef these days and they want to make sure it’s good, but is high quality an insurance policy, asks Miranda Reiman, Certified Angus Beef (CAB) Assistant Director.
calendar icon 3 March 2012
clock icon 2 minute read

Study after study points to consumer preference for highly marbled beef and nearly every fedcattle grid rewards it. It’s evident in feeder calf sales and eventually even shows in bull sale reports.

Some wonder if it’s a fad. Others figure it’s a nice bonus, but nothing worthy of extra time and attention. But according to Scott Brown, livestock economist for the University of Missouri, that’s exactly what producers need to do as we rebuild the cowherd. Our future depends on it.

“Regardless of the commodity we talk about, the demand for it is going to determine long run supply,” he says. Brown sees potential for significant expansion if more herds produce premium Choice or Prime beef. That’s important to all who produce and buy registered Angus bulls, for sure.

The cattle cycle still functions in that declining cow numbers bring higher cattle prices, which provide incentive to expand cowherds. However, if producers shrug off demand for high-quality beef and stick with commodity goals, that recovery may only bring the herd back from 30 million next year to 31.7 million head by 2017. But there could be millions more, perhaps 33.8 million beef cows by 2018, if ranchers rebuild with cattle that produce beef for the high-quality markets.

Brown says, “Providing consumers a product they are demanding, is going to give [producers] a chance to expand the herd that otherwise wouldn’t have been there.”

That approach could mean “a 10% increase in overall demand for beef,” he says, noting that economic models suggest that translates into “a long-term expansion of roughly 6 million head in cattle inventories.”

This won’t just happen. It takes focus from breeders like you who are willing to make upper-percentile carcass traits a minimum requirement for entry into your program. It takes teamwork throughout the production chain. Information sharing must be the rule, not the exception. As a seedstock producer, you can lead the way, not just as a shining example of a quality-focused management plan, but as a real link to vital information that can influence a herd in the most fundamental way.

Insurance plans can be complicated, but certainly, in this case the payout is worth the work. A thriving industry more insulated from the whims of the economy, better poised to deal with high inputs—all of this in the long term, plus cash premiums in the near term. When looking at the risk-to-reward ratio, most underwriters would see this as a surefire plan for success.

March 2012

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