More burgers, fewer steaks

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iStock photo American consumers love their ground beef. They want increasing quantities of it, and they want it priced more competitively, according to a new report from Rabobank called “Ground Beef Nation: The Effect of Changing Consumer Tastes and Preferences on the U.S. Cattle Industry.” So should the industry adjust its processes to produce less-expensive ground beef more efficiently?

The report’s author, Don Close, points to a “remarkable upsurge in ground beef consumption,” with ground beef now representing close to 62 percent of all domestic beef consumption. Another striking ground beef statistic, which shows it’s not just home cooks buying ground beef for a quick meal: Burgers make up 72 percent of beef servings in restaurants, according to NPD FoodWorld CREST Research. (Steak came in second — at 9 percent of beef servings.)

“Consumers increasingly seek ingredients for quick meals, grab a quick burger on the go or simply shop for value,” Close writes. “The industry production model must follow suit.”

Close looks back to the late 1990s, when efforts focused on improving beef’s consumer image; the industry sought to offer consumers a quality eating experience from every beef product. Objective quality measures improved, yet demand continued to fall. Americans consumed just less than 95 pounds per year in 1974 and 54 pounds per year in 2013. Close concludes, “Cost is a more likely driver of the continuous decline in beef consumption, especially when compared with other competitive proteins.”

The production model hasn’t changed, however, even as we’ve become what he calls a “ground beef nation.” Close puts the paradox this way: “Burgers, sauces and tacos are on the plates and in the drive-thrus of Americans, while at the same time the U.S. cattle industry is operating within an infrastructure that pays a premium for high-performing cattle.”

So the industry aims to increase the quality of a small portion of the carcass — as the majority of it heads for the grinder. “While over 60 percent of the carcass can find its way into lower-value or ground products, the production model requires most of these animals to be fed an expensive ration that aims to perfect the quality of, at best, 30 percent of the carcass,” Close writes. “Essentially, the industry is producing an extraordinarily high-grade product for consumers who wish to purchase a commodity. This is the crux of the problem.”

Instead, maybe the industry should consider raising between one-third and one-half of its cattle with ground beef in mind, he writes. Identify an animal’s genetic potential and manage it toward what that market requires. That would mean separating high- and low-quality genetics, which would have the added advantage of improving the performance of the top end through efficiency gains. Such a system could be more cost-effective because the cattle not destined for the Choice and Prime markets could remain on lower-cost forage longer and have a shorter feeding period (with a lower-energy ration).

This is really about listening to consumers, whose purchasing habits reveal what they want. “While change is often difficult,” Close writes, “the industry can either adapt to the realities of the modern end-user market or continue with the status quo of contracting supplies and shrinking demand.”



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