The State of the Beef Industry

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1 Slide 1 The State of the Beef Industry Slide 2 How to Deliver a Great Eating Experience- Every Single Time Slide 3

2 Births (in thousands) Slide 4 Slide 5 What Socially Conscious Moderate Beef Eaters Say They Want: Antibiotics okay when Animal is sick Prescribed by a Vet Food safety Most Important Protect environment Animal welfare Openly share information Socially Conscious Moderate Beef Eaters Technology is ok if it improves Food safety Cattle care and conditions Less Important Organic Improving nutrition Slide 6 The Establishment Baby Boomers Gen X Millennials Birth Year

3 Slide 7 Consumer Familiarity Quiz What percent of consumers say they know almost nothing about the beef industry? A. 25% B. 35% C. 45% D. 55% More than 1/3 of consumers say they know almost nothing about the beef industry and 44% said they know very little Slide 8 Which organization recently attacked beef production s environmental impact and said: Coal-burning power plants and pollution from cars are among the most commonly cited causes of climate change. But experts point to another important cause: our diet. The solution according to the UN s Nobel Prize-winning International Panel on Climate Change may surprise you: Eat less meat. A.PETA B.HSUS C.CSPI D.Girl Scouts The misinformation is becoming widespread Slide 9 We are in the business to produce beef for a variety of consumers. But, who are these consumers and have they changed over the past 80 years?

4 Slide 10 What are examples of our consumers values by age group? The ESTABLISHMENT ( ) 7 million of them Defined by: the Depression, New Deal, WWII, and GI Bill Value: teamwork, commitment, sacrifice, discipline, plus fiscal and social conservatism Tom Field, WSASAS Slide 11 The BOOMERS ( ): Largest generation Defined by: Vietnam, Woodstock, Watergate, Sex, drugs and rock n roll Value: Idealism, Individualism, Self Improvement, High expectations, Selfcentered Slide 12 The Boomers ( ) We didn t grow up We protested on college campuses We believed in free love Smoked dope Did drugs Lowell Catlett, 2009 We still do drugs, except now it is Metamucil, Viagra, Insulin & Lipitor

5 Slide 13 Comparison of my generation (boomers) vs. my kids generation (millennials) I find it hard to make a variety of meals with beef for them Millennials Boomers My kids prefer chicken over beef It isn't healthy to give children too much red met I don't find beef to be convenient to cook for the kids Slide 14 Boomers vs. Millennials in Technology Usage Behavior Use wireless internet when away from home Boomers (46-64) Millennials (18-29) 30% 62% Use cell phone to text 51% 88% Texted while driving 21% 64% Pew Research Slide 15 Facebook, Twitter and Texting 88 percent of Americans are aware of Facebook 41% use Facebook Teens average 2,900 texts per month Americans texting exceed cell phone use

6 Slide 16 What percent of Millennials sleep with their cell phone either in the bed with them or right next to the bed? a. 93% b. 83% c. 73% d. 63% SOURCE: Pew Research Center Slide 17 You Might be a Millennial if: You have only been with the company a month, but you feel you are entitled to a shot at that Vice President position which just opened up. Your biggest long-term planning concern is figuring out who will cook for you when your parents move into assisted living. When asked to suggest an inspirational speaker for the company event who had survived adversity, your first thought was to ask Britney Spears. Slide 18

7 Slide 19 Fewer ties to agriculture Less understanding of production agriculture Increasingly concerned about safety and wholesomeness Willing to pay for added sense of security for their children Slide 20 Tyson Foods launching audit program for proper animal welfare Tyson Foods, Inc., the nation's leading producer of meat and poultry, announced it is launching a program to personally audit the treatment of animals at the livestock and poultry farms that supply the company. Slide 21 A consumer disconnect Myths of food production vs. the reality of food production Do these perceptions change our educational approaches?

8 Slide 22 What does the Consumer hear? Ag says: Our methods are proven safe Consumer says: Your methods tamper with nature Ag says: We keep food affordable Consumer says: At what expense to quality? Ag says: We care for our land and the animals Consumer says: You take profitable shortcuts when you can Slide 23 What does the consumer hear? Ag says: We need a secure and domestic food supply Consumer hears: You want subsidies and lax regulations Ag says: We have the safest food supply in the world thanks to the industry Consumer hears: Pesticides, antibiotics and hormones might not be safe in the long-run Slide 24 Reality: 98% of consumers say that taste (43%), cost (32%) and nutrition (23%) are top 3 factors considered when purchasing food. 97% of consumers are not vegetarians. 98% of consumers consume food grown conventionally. 98% report that they have no concern about biotechnology as a food safety issue. Simmons, 2011

9 Slide 25 Who can feed themselves? Slide 26 Slide 27 Meat Consumption vs. Income

10 Slide 28 What Beef Does Industry a Rancher Statistics Look Like?? 2011 Inventory of Cattle= 92,582,400 No. of herds= 742,000 (maybe less than 700,000) 90% of cow herds have less than 100 cows (avg of 44 head) Per capita spending on beef = $260 (48% of per capita spending on all meat) Slide 29 Cattle ranchers are resilient people. Despite- the increased cost of raising beef, credit requirements are staggering a poor economy, less than ideal weather conditions, questions and distrust from consumers about the way we raise food today Slide 30

11 Slide 31 A continuing challenge Slide Drought Conditions 6 th Greatest on Record Slide 33

12 Cattle, million hd Billion lb (dressed wt) Cattle, million hd Slide 34 Long-Term Decline in US Cattle Numbers Continues US Cattle Inventory 90.8 mil cattle on Jan mil fewer than 1975 & fewest since Jan 1 Total cattle inventory Tatum, 2012 USDA-NASS (2012) Slide 35 Supply Challenge Facing US Beef Industry 140 Short-term difficulty maintaining beef supply & affordable prices Cannot be done without the use of production technologies Beef production Despite 40m fewer cattle, beef production was 2.3b lb. greater in 2011 than in Number of cattle Jan 1 Total cattle inventory Domestic beef production Tatum, 2012 USDA-NASS (2012) Slide 36

13 Slide 37 Pillars of Beef Chain Success Executive Summary: The 2011 National Beef Quality Audit Slide 38 Why have we conducted a national beef quality audit every five years since 1991? To provide a meaningful set of guideposts and measurements relative to the quality conformance of the U.S. beef supply Slide 39 The NBQA is more than just an exercise to assess where our industry stands on beef quality The audit is a roadmap to help drive all sectors of the industry forward and create more opportunities for all of its members

14 Slide 40 The Audit was divided into four parts: Phase I- Interviews of various segments Phase II- Cooler audits in packing plants Phase III- Survey of Producers Strategy Workshop- Summary of results and recommendations Slide 41 How was the Audit conducted? Phase I- determine how each beef production/market sector (feeders, packers, retailers, food service and allied industry) defined quality based on 7 criteria: How and where cattle were raised Lean, fat and bone Weight and size Cattle genetics Food safety Eating satisfaction Visual characteristics Slide 42 Phase II- Assess the quality and consistency of fed steers and heifers Research teams surveyed 18,000 carcasses from 8 beef processing plants Determined quality and yield grades on 9,000 carcasses Summarized instrument grading information on 2.4 million carcasses from 17 plants

15 Slide 43 Phase III- To quantify BQA related practices Determine the adoption level of qualityoriented practices Develop a benchmark against which to measure future BQA adoption Provide a foundation to direct future educational initiatives to enhance beef safety and quality Slide 44 Phase IV- Strategy Workshop and Recommendations 41 representatives from each segment of the beef industry met in April, 2012 to review the data Discussed the implications of the results on the beef industry Developed a series of strategies to provide a blueprint of action for the next 5 years Slide 45 Challenges Identified from Phase I

16 Slide 46 Ranked Quality Challenges and Changes (1991 until 2011) External fat Seam fat Palatability Tenderness Cutability Marbling Uniformity Palatability Marbling Tenderness External/seam fat Weights Uniformity Carcass weight Tenderness Marbling Effects of implants External fat Traceability Uniformity Instrument grading Market signals Segmentation Carcass weight Food safety Eating satisfaction How and where cattle were raised Lean, fat and bone Weight and size Genetics Slide 47 Ways in which producers intentionally influence quality Method Overall Seed stock Cow/calf Feedlot Dairy Animal handling Nutritional program Health program Genetics BQA protocols Best mgt. practices Slide 48 How do producers define quality? Category Feeders Packers Foodservice/ Distributors/ Further processors Gov. and Allied Retailers Industry OVERALL Food safety Eating satisfaction Cattle genetics Weight and size How/where cattle were raised Visual characteristics Lean/fat/bone

17 Slide 49 Other concerns expressed: Cattle welfare How and what cattle were fed Origin of the product Hormone and antibiotic use Slide 50 Has the industry responded since the 1991 audit? What was not said or included in the audit? Injection site lesions Hide damage due to manure and mud Hot iron brands Liver condemnations Slide 51 A major weakness of the industry: The industry does a poor job in telling its story - Consumers are disconnected from Ag production - Have little understanding of actual practices used in cattle and meat production - Much of their information comes from uninformed sources (some who oppose animal agriculture)

18 Slide 52 Conclusions from Phase I 1. Consumers want to know more about the beef they consume and where it comes from 2. Retailers, foodservice and packers are under additional pressures to ensure that animals have been raised humanely Slide 53 Phase II- The Cooler Audit Slide 54

19 Slide 55 Phase II: The Cooler Audit Change in percent Choice and Prime over time Slide 56 Slide 57 Change in Carcass Weights Since the First National Beef Quality Audit

20 % of the population Slide 58 Carcass Weights Distribution of carcasses by weight group < >1000 Carcass weight 3.3 Slide 59 Comparison of USDA Quality Grade by Grader or Instrument Cooler 32.6 Instrument 31.5 Prime Choice Select Other Slide 60 Phase III Results Overall, 98.4% said they do not use electric prods. When it came to administering injections, 84.2% said sub-q was the preferred method 87% said the preferred location injection site was in the neck 87% had heard of BQA, 78% attended a meeting in which BQA was discussed and, Of those that attended sessions, 99% said that they were using best management practices consistent with BQA principles

21 Slide 61 Withdrawal Times The use of written records to track withdrawal times Never, 11.7 Sometimes, 14.8 Always, 46.7 Usually, 26.9 Slide 62 Phase 3 Benchmark Results: Preferred Route of Injection for Animal Health Products Route of Injection Cow/calf Feedlot Dairy IM SubQ Slide 63 Phase 3 Benchmark Results: Preferred location of administration of animal health products Injection Location Cow/calf Feedlot Dairy Neck Dewlap region Top of hip Lower rear leg

22 Slide 64 Disconcerting Results: More than 25% said they would use medications other than that directed on a drug products label without being directed by a veterinarian Off-Label Drug Use Frequency distribution of responses regarding the use of medications other than as directed on a drug products label (without being directed by a veterinarian) Frequency Overall response Always 4.2 Usually 4.1 Sometimes 17.5 Never 74.2 Slide 65 Comparison of answers from producers who either had or hadn t attended a BQA-training Trait Have a working relationship with a veterinarian Preferred location of injections is in the NECK Preferred route of injection is Sub-Q HAD NOT attended BQA training HAD attended a BQA training Slide 66

23 Slide 67 Phase IV: The Strategy Workshop Results of a workshop in which representatives of all segments of the beef chain reviewed, debated, and made recommendations to drive change in the beef industry Slide 68 The Core Pillars of Value and Opportunity for Beef Include: Product Integrity Eating Satisfaction Proactively tell the beef story It is imperative that we effectively tell the beef story based on our continued improvement of product integrity and eating satisfaction Slide 69 Recommendation 1: Product integrity A transparent system of information flow. We must assure clear communication that enhances trust and increases value throughout the chain

24 Slide 70 Why was the Strategy Group so insistent on information sharing? By developing our ability to share information, coordination among segments is improved, the supply chain is strengthened, trust is increased and value is enhanced Slide 71 Product Integrity Influence consumer confidence in the areas of- 1. Food safety 2. How and where cattle were raised 3. Animal health care 4. Handling and well being 5. BQA is important in protecting and improving product integrity Slide 72 Eating Satisfaction The factors that influence eating satisfaction include: Flavor Tenderness and Juiciness

25 Slide 73 Slide 74 Factors that Influence Eating Satisfaction Include: Use of growth promoting technologies Genetics Handling Health practices Slide 75 Comments from Strategy Workshop Producers want and need the education of BQA - Cattle feeder If we don t have feedback signals or don t use them, then we can not be successful. Cattle feeder

26 Slide 76 Top Strategies to Maximize Eating Quality As ranked by the NBQA Strategy Workshop participants 1. Develop an information system to improve supply chain coordination in the industry 2. Develop strategies for management and determine impact of beta-agonists on eating quality 3. Match growth promotant strategy to specific production systems/consumer targets 4. Increase research to improve eating satisfaction 5. Use genetics to optimize cutability and palatability Slide 77 Comments from Strategy Workshop participants Calves should not be part of a witness protection program. When the rest of the world and our competitors are identifying their animals, why can t we? - Cattle feeder It doesn t matter what our weights or yield grades are if we don t have a consumer who will buy our products - Cow-calf producer Slide 78 Telling Our Industry s Story Here are examples of successes- 1. Beef Quality Assurance is an industry success story 2. Animal welfare has always been a top priority for cattlemen 3. There is a terrific story when it comes to food safety, flavor and tenderness 4. Our story for an international audience is unique, positive and compelling 5. Science is only a part of our story; why are we in the business? 6. The industry must be authentic, honest and transparent

27 Slide 79 What were some key shortcomings that must be addressed by the Industry? 1. Increase the use of written protocols 2. Increase the trust between industry segments 3. Improve BQA practices with Dairy beef 4. Monitor emerging pathogen issues, Salmonella 5. Poor story telling; help the consumer understand what and why we follow certain management protocols Slide 80 It s time for courage not spin! We can t afford to be selectively transparent! We must evaluate decisions, processes, inputs and technologies by asking three questions.. 1. Will this decision affect eating satisfaction? 2. Does this decision improve product integrity and thus consumer trust? 3. Will I be proud to make this part of the beef story? Slide 81 There are only two options in business. We can get it right! OR.. We can explain to customers, clients, and critics why we didn t!

28 Slide 82 The Choi ce Is Your s! Slide 83 This research project was funded by the Beef Checkoff Executive Summary: The 2011 National Beef Quality Audit Slide 84

29 Slide 85 Story in Stephenville, TX Newspaper The shooting happened when a load of cows arrived at ABF Packing. When one of the cows went down an employee of the trucking company grabbed a gun to shoot it. The round went through the side of the trailer and struck the driver, (who is recovering), in the chest. Slide 86 Global Animal Partnership s (GAP) 5- Step Animal Welfare Rating- Whole Foods Market shoppers can know exactly how turkeys were raised for their holiday meals. Whole Foods Market is the first national retailer to offer full transparency in regards to raising practices for turkeys sold in the meat department.

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