U.S. Beef Industry in 20 Years. January 13, 2017 Glynn Tonsor Dept. of Agricultural Economics, Kansas State University

Transcription

1 U.S. Beef Industry in 20 Years January 13, 2017 Glynn Tonsor Dept. of Agricultural Economics, Kansas State University 1

2 Situational Summary 3

3 Data Source: USDA & LMIC, Compiled by LMIC Livestock Marketing Information Center C-P-66 12/29/16

4 Data Source: USDA & LMIC, Compiled by LMIC Livestock Marketing Information Center 12/29/16

5 mlowprofitcow-calfproducers_ pdf 7

6 8

7 9

8 Variability of Cow-Calf Returns Variability over 41 Years Avg Returns Over Total Cost: -$91/cow Low of -$306 & High of +$226 Greater Variability ACROSS PRODUCERS 10

9 Variability of Cow-Calf Returns 11

10 Variability of Cow-Calf Returns 12

11 Variability of Cow-Calf Returns 13

12 Variability of Cow-Calf Returns 14

13 Interesting Times in the Beef Industry TRADE w/ BRAZIL Mandatory Price Reporting & GIPSA Rule Discussions TPP/TTIP & US Election CATTLE MARKETS BROKEN NEW FED CATTLE EXCHANGE Re-emergence of MCOOL? Veterinary Feed Directive

14 Broader View on Economic Forces & Role of the Public The Center For Food Integrity tweeted on Wed, Sep 04, 2013: Science tells us if we can do something. (supply) Society tells us if we should do it. (demand) Think about VFD, beta-agonists, feeding GM corn, gestation stalls, laying hen cages, handling techniques, euthanasia practices, 16

15 Economic Realities Going Forward Outcomes will only partially align with best science Public will give license to utilize only a subset of available production options that technically work (CFI quote ) Economic &/or political optimality will trump Vote-buy disconnect will persist Short-term unfunded mandates will continue 17

16 Effectiveness & Feasibility Why create something with limited odds of industry adoption? How would investors react? 18

17 Effectiveness & Feasibility Just because something works doesn t mean it will be 100% implemented Feasibility, effectiveness, & net econ. value (reflects acceptance) are key E.coli vaccines for fed cattle are prime example 19

18 Comparative Advantages World trust & places premium on U.S. beef 20

19 Comparative Advantages World trust & places premium on U.S. beef Grain-finished production Sound & effective infrastructure Feed grain base, processing, safety, transportation Genetics & meat quality expertise Research discovery & outreach education Property rights encourage investment 21

20 Comparative DISadvantages Not lowest $/lb producer 22

21 Comparative DISadvantages Not lowest $/lb producer Public research funding declining Will public trust new discoveries going forward??? 23

22 Comparative DISadvantages Not lowest $/lb producer Partially effective communication, coordination, and signaling Fragmented support of increased traceability systems focus on current and future beef demand 24

23 Key Opportunities & Challenges Refining domestic consumer efforts Expanding foreign consumer focus 25

24 Domestic Consumers Continue to leverage size, wealth, and historic reliance on domestic consumers Key questions Cultural mix and diverse food preferences Ongoing shift from FAH to FAFH Preparation time and cooking knowledge Ground beef s share of total beef volume Are really big steaks good or bad??? 26

25 US Population by Age and Race, 2016 Source: US Census Bureau White Hispanic Black Asian yr 50% 26% 14% 5% yr 54% 23% 14% 5% yr 57% 21% 13% 7% yr 67% 14% 12% 5% 65+ yr 78% 8% 9% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 27

26 US Population by Age and Race, 2036 Source: US Census Bureau White Hispanic Black Asian yr 43% 30% 13% 7% yr 46% 27% 13% 7% yr 47% 27% 13% 8% yr 54% 22% 13% 8% 65+ yr 69% 13% 11% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 28

27 Exports Arena of expected population and income growth = meat demand growth Key questions/issues Identify wealthiest top 10% as target markets TPP & TTIP trade deals Support to increase exports AND imports? Global competitor adjustments Mexico s expanding infrastructure, Brazil s move into grain-finishing, Ongoing India (buffalo meat) expansion 29

28 Data Source: USDA-ERS & USDA-FAS, Compiled & Analysis by LMIC Livestock Marketing Information Center I-N-07 12/28/16

29 View on Trade & Technology Key is Diverse Products from Each Carcass 36

30 View on Trade & Technology Key is Diverse Products from Each Carcass Brazil-US: Top Sirloin Cap (Picanha) vs. Ground Beef 37

31 View on Trade & Technology Key is Diverse Products from Each Carcass Brazil-US: Picanha vs. Ground Beef Domestically: Large Steaks vs. Cheaper Ground Beef 38

32 View on Trade & Technology What is a sure-fire way to increase domestic per capita beef consumption in KS immediately??? 39

33 Situation Synthesis Immense opportunity exists 40

34 Situation Synthesis Immense opportunity exists; BUT Internal industry coordination must improve National animal ID & traceability Generic advertising International trade deals MCOOL comeback? 41

35 REALLY GRAY CRYSTAL BALL Forecast for 2036 Less animals & operations, yet more beef 42

36 Forecast for 2036 Less animals & operations, yet more beef Growing challenges with new large operations, acceptance of science, and public/private funding 43

37 Forecast for 2036 Less animals & operations, yet more beef Exports as share of production >11% 44

38 Forecast for 2036 Less animals & operations, yet more beef Exports as share of production >11% Improved coordination & information flows Technology enhancement alone may drive this 45

39 Forecast for 2036 Meat quality signals will expand & diversify Quality Prime, Choice, Select, Standard CAB, Dairy, Dark Cutter Yield Grade <.1 fat thickness,, <.6 (3 score),, >1.2 Weight lbs,, lbs,... > 1,050 lbs Current Signals 46

40 Forecast for 2036 Meat quality signals will expand & diversify Quality Prime, Choice, Select, Standard Yield Grade CAB, Dairy, Dark Cutter <.1 fat thickness,, <.6 (3 score),, >1.2 Weight lbs,, lbs,... > 1,050 lbs Future Signals? Tenderness, Technology/Production Practice Claims, Source Verification Current Signals 48

41 Key Questions for What is balance of collaboration & competition? 49

42 Key Questions for What is balance of collaboration & competition? 2. What support is there to prioritize export demand focus? 50

43 Key Points for Vets in ) Fewer customers, but larger volume 51

44 Key Points for Vets in ) Fewer customers, but larger volume 2) Comfort with partial use of science 52

45 Key Points for Vets in ) Fewer customers, but larger volume 2) Comfort with partial use of science 3) Less pure public info and expertise 53

46 Key Points for Vets in ) Fewer customers, but larger volume 2) Comfort with partial use of science 3) Less pure public info and expertise 4) Income inequality will grow 54

47 More information available at: This presentation will be available in PDF format at: Glynn Tonsor Professor Dept. of Agricultural Economics Kansas State University 55

48 Utilize a Wealth of Information Available at AgManager.info

49 Receive Weekly Updates for AgManager.Info