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Industry History
Industry History and Background Economic Factors U.S. Imports and Exports Beef Price Cycles Beef Production in the U.S.
Intro to the Beef Industry
Industry History and Background
1400s 1500s 1600s 1700s 1800s Late 1800s
Cattle reachTexas, California
from Mexico
Cattle industryemerging in
Florida
Cattle reachNew England/
New York fromEngland,
Northern Europe
Cattle businessthriving; focused west
Family owned/managed
Produce 4-5 yr. oldgrass-fed steers;
shipped by live train
Chicago/Kansas City epicenter for sorting, distributing cattle via rail
Packers/processors also at rail centers Refrigerated rail cars
Invented by G.F. Swift Larger packers operated regional
shipping/distribution New York, Boston, Philadelphia
INDUSTRY HISTORY AND BACKGROUND
1800s
Federal Meat Grading System, 1920s Federal Interstate Highway System, 1950s
No longer dependent on railways From Carcass to Primal Cuts
Boxed Beef Led to vacuum packaging Led to block-ready, boneless, case-ready
beef
INDUSTRY HISTORY AND BACKGROUND
20th Century
Economic recession Beef demand falls
Cattle numbers drop to historic levels Cattle and beef prices reach record high levels
INDUSTRY HISTORY AND BACKGROUND
Early 20th Century
From producer-driven to consumer-driven Beef demand in rapid decline “War on Fat”, 1990
“Taste Fat” vs. “Waste Fat” Revived interest in quality which helped
rebuild demand
INDUSTRY HISTORY AND BACKGROUND
Late 20th Century
ECONOMIC FACTORS
Variables Impacting Beef’s Profitability
140,000+U.S. Farmers and
RanchersAverageherd size
42
92.6millioncattle
(Jan ‘11)Beef
production
26.3billion lbs.
Gross incomeof cattle
$45.3 billiontotal inventory value
$100 billion
$74 billionTotal consumer
expenditures
Economic Factors AffectingSupply and Demand
Top exportersof beef
Top US exportmarket
Top US beefsupplier
The U.S. has 8% of the world’s cattle and produces 21% of the world’s beef
The U.S. remains the largest importer of beef globally, buying 2.3 billion pounds in 2010 valued at $2.83 billion
80% of the beef imported into the U.S. comes from Canada, Australia and New Zealand; mainly lean grinding beef for fast food hamburgers
Imports
The U.S. was the #3 exporter of beef in 2010, behind Brazil (#1) and Australia (#2)
2010 exports were 2.3 billion pounds valued at $3.53 billion
The U.S. currently exports 10-11% of production
Top export markets include: Mexico, South Korea, Japan and Canada (~70% of total beef exports)
The U.S. exported beef to 146 countries in 2010
Exports
Typically peaks in spring and fall when middle meat demand is strongest and cattle supplies are lowest
Bulk of cows used for lean trimmings are marketed in the fall, resulting in lower prices
Tighter supply + grilling demand support prices in spring/summer
Best prices during colder winter months (cooking methods) Increase in price due to new steak cuts
(Flat Iron, Petite Tender, etc.)
Holiday celebrations and summer grilling increase demand and price
Higher prices in spring result of limited supply, especially for Choice
Similar to Chucks; peak during colder months Prices decline in summer due to increased supply +
decreased demand
Family owned/operated industry
U.S. Beef Production
80% in same family for 25+ years
10% in same family for 100+ years
Cattle raised in all 50 states Various cattle breed types and crossbred cattle
Adapt to various conditions
Seedstock Producer, grassland based “Purebred” segment Genetic base for breeding stock
Cow/Calf Producer, grassland based Combine genetic lines to best meet market demand
(crossbreeding) Sells to stocker or feedlots
Stocker Specialized segment Use grasslands as natural resource Sells to feedlots for grain-based finishing
Feedlot Use higher energy diets to achieve rapid gains to create the
world's highest quality beef products
U.S. BEEF PRODUCTION
At the Ranch
Harvest finishedcattle
Fabricatecarcasses intosubprimal cuts
Sort and “box”beef
Market topurveyors,processors
U.S. BEEF PRODUCTION
From Packer to Market to Table
Fabricate boxes ofsubprimal cuts
Sell to foodserviceoperators, retailers
Present productto consumer
Packers Purveyors/Processors
FoodserviceOperators/Retailers
Not more than “minimally processed” Label must explain “natural”
i.e., no added colorings or artificial ingredients
LABELING CLAIMS
Natural Beef
Cattle MUST: Be raised separately Have access to pasture, though many are feedlot finished Be fed 100% organically-grown feed (grains and forage) Be treated when sick
When treated with antibiotics, must be removed from program
Cattle MAY: Be provided certain vitamin and mineral supplements
Cattle MAY NOT: Be given antibiotics or enhancers for any reason
(or must be removed from program)
LABELING CLAIMS
Certified Organic
Prohibited: Synthetic pesticides on pastures Sewage sludge for fertilization of feedstuffs Irradiation on beef products
Producers must be certified through USDA’s Agricultural Marketing Service (AMS)
LABELING CLAIMS
Certified Organic
Feeding regimen for livestock raised on Grass, green or range pasture, forage Shall be 80% or more of the primary energy
source throughout animal’s life
LABELING CLAIMS
Grass-Finished Beef
Single most sustainable, renewable form of agriculture that produces an amazingly nutrient-dense source of protein
American beef industry dates back to 1500s Railroads, federal highways revolutionized industry Federal regulation began in 1920s Focus moved from producers to consumers in late 20th
century Tough to manage supply and demand for beef Industry is major contributor to U.S. economy U.S. a top importer and exporter of beef Beef cuts experience seasonal shifts in price/demand Specialty beef requires special labeling
Beef Industry Summary
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