The Future

of

Angus Beef

Tom Brink

Commodity principles:

Low costs & production efficiency

Added Value &

Product differentiation

Effective Business Pyramid

Both are required for success in today’s industry.

Angus Beef

“More or Less” evaluation

What will we see MORE of ?

LESS of ?

Winners, Losers and making the industry better

MORE of the SAME regarding

Angus Beef Popularity

Dominant position with consumers will be maintained, because Angus is synonymous with HIGH QUALITY

• CAB started the revolution in 1978.

• Today USDA lists 51 certified beef brands.

• 35 brands use the ANGUS name (69%).

• 15 new beef brands were created in 2004 and 2005 alone…

• And 14 of these incorporate ANGUS into their label (93%).

• Booker Elkhorn Valley Packing• Harris Excel• Packerland National• Swift Tyson• Washington Beef Creekstone

• Plus…distributors SYSCO and AFG • Even Wal-Mart has an Angus brand

Packers are using the Angus name in their brands:

                        

Black Angus SteaksFor those who only insist on the very best, only Angus beef will do. Famous for its tenderness, juiciness, and flavor, this is the kind of meat that melts in your mouth. Pfaelzer Brothers has established a set of strict quality standards to insure that when you care enough to send Black Angus Beef, you get only the very finest.

                        

Black Angus SteaksFor those who only insist on the very best, only Angus beef will do. Famous for its tenderness, juiciness, and flavor, this is the kind of meat that melts in your mouth. Pfaelzer Brothers has established a set of strict quality standards to insure that when you care enough to send Black Angus Beef, you get only the very finest.

Angus Beef is Everywhere

…most recognized name in branded beef

                                                           

Angus Ground Chuck Products80/20

•Midwestern Grain fed

•USDA Prime, Omaha Steaks Angus & USDA Choice

•Custom Hand-Trimmed

•Small Pack Sizes

Google Search Test

• Angus Beef 1.38 million matches• Hereford Beef 312,000• Charolais Beef 131,000• Limousin Beef 124,000• Simmental Beef 116,000• Gelbvieh Beef 46,100• Salers Beef 32,200• S. Highlander Beef33,400

More Differentiation

in

Angus Beef

Program Specs

More “Granularity”

• Live animal requirements• Marbling, maturity & yield grade• Carcass weight range• Natural product claim• Source verified• Age Verified• Story line… “raised and fed with a mountain view”

Affording both opportunity and risk for producers.

More Room

for a few strong

Non-Angus Beef Brands

More Angus Beef

from

Southern Cattle

in

Southern Plants

Prime & Choice Quality Grades

40% 38%

64%

Texas Kansas Nebraska

Week ending 9-10-05

Prime & Choice Quality Grades

40% 38%

64%

Texas Kansas Nebraska

Week ending 9-10-05Costing the Beef Industry >$160 million per year

The problem is easy to see…

What do most Southern Genetics need ?

Answer: He’s black and walks on four legs

More Angus Beef

from

“Non-Angus”

Parents

More Angus Beef

Produced from

Hybrid-Angus Bulls

on Angus-based cows

Why? because…

• No success goes unchallenged• “Can’t beat them….join them”• Hybrid vigor still matters in the cow-calf business• Structured cross-breeding too difficult to implement• Hybrid seedstock are convenient to use• More muscle (better YGs) from Continentals• Feeders, packers and consumers don’t care how the

Angus genes get into the final product

Tracking the Hybrid Movement

Simmental ---SimAngus - 40% of annual registrations

Gelbvieh ---Balancers - 33%

Limousin ---Lim-Flex -12%

60% and 40% of Chi and Maine registrations are Angus-based hybrids, respectively.

Approximately 50,000 total registrations this year and growing by 15% to 20% annually.

Hybrid Seedstock Registrations*

100,000 by 2010

*Angus-based.

Per Year

Five Rivers’ Personnel Comment on Angus’ Strengths

“Grade, Grade, Grade” [Quality Grade]

“Premium Programs”

“Uniformity” ---add uniformity to a calf crop

“Rib and Volume”

“Able to eat a lot of feed”

“Crossing ability with other breeds”

“Marketability”

Five Rivers’ Personnel Identify Angus Soft Spots

“Over fats”

“Cutability problems before reaching desired dressing percent”

“Higher percentage Angus means lower yields and a higher percentage of YG4s & YG5s”

“Dressing percent, yield grade & muscling”

“Not enough muscle for their out weights”

“They cost too much”

Ideal Angus Percentage?

50% - 75%

With the balance being Continental, as opposed to another British breed.

They said….

More problems with

YG4s in the Northern U.S.(in the short run)

Total Yield Grade 4s & 5s

6%

11%13%

Texas Kansas Nebraska

Early September 2005

Increasingly difficult for feeders and packers to deal with

What will we see LESS of? LESS opportunity to produce cattle with

anonymity LESS profit potential on commodity cattle

that can’t fit any branded beef program LESS room for seedstock and commercial

cattle that have no Angus influence LESS of a “hard line” distinction between

some breeds---Angus genetics are becoming the common link

What does all this mean to you as an Angus breeder?

Angus genetics will be recognized as the main

ingredient for the entire beef supply chain

But not the only ingredient

A whole new level of genetic accountability for seedstock and commercial producers is

on the way

Extremely broad range of needs & wants within commercial cow-calf

segment

Angus genetics---some in a non-traditional package---

will continue to win big in the years ahead

Angus in both Purebred and Hybrid form will dominate more of the seedstock sector

Cement is the main ingredient in concrete

Both products can produce concrete

ANGUS

“Angus inside”

Purebreds and Hybrids Selling Side by Side

The U.S. Beef Industry WINS too.