“Improve the quality of your cattle and you’ll earn premiums.” That simple message describes the driving force behind the dramatic turnaround in beef demand over the past 15 years.
Improving beef quality, of course, is no simple task. Improvements have come in many areas, and progress toward improved beef quality has been documented through industry research, including the National Beef Quality Audits that have been conducted every five years since the early 1990s. But while there are goals for most aspects of the quality puzzle, the job is one that will never be complete. The reasons? Beef quality means different things to different people, and the quality target keeps moving.
Adopting quality practices
Producers responded quickly to that first National Beef Quality Audit, conducted in 1991. In a nutshell, that report told cattlemen that carcasses were “too big, too fat and too inconsistent.” That audit famously identified losses of $280 per head due to quality, with more than $200 of that due to excess fat production.
At the time, beef demand was in a free-fall as consumer preferences shifted toward chicken. The National Beef Quality Audit helped the beef industry recognize the crisis and develop short-term goals to stop further erosion in beef demand.
The most immediate and dramatic success generated by the information from the 1991 NBQA was the decline in injection-site blemishes. In 1991, the initial NBQA carcass survey found an incidence of injection-site damage in 21.6 percent of all top-butts evaluated. An aggressive educational campaign helped reduce that incidence to 9.8 percent within two years, and it was down to 6.2 percent by 1997.
The number of cattle with bruises also has decreased significantly from that first NBQA, and much of the credit for that improvement belongs to producers who have eliminated horns from their cattle, either genetically or mechanically. In the 1995 NBQA, 68 percent of cattle had no horns. By the 2000 NBQA that number without horns had increased to 77 percent.
Throughout much of the 1990s, the beef industry focused on eliminating those costly defects. But many other quality challenges were identified. While research in the early 1990s indicated consumers no longer were willing to buy excess fat, studies also revealed consumers were becoming much more discriminating. They wanted taste, tenderness and an assurance of safety with their beef.
To satisfy those consumer demands, many producers changed their management and their marketing programs. First, they identified specific consumer targets and adjusted their selection and management programs to produce carcasses that hit those targets. Then, many producers joined production alliances or supply chains to help identify more cattle aimed at specific targets and to assist in marketing those cattle. Premiums became available for carcasses that successfully hit targets for quality, yield grades, natural, etc.
Building beef demand
At the start of this decade, it was clear that American cattlemen had orchestrated a remarkable turnaround. In late 1998, consumer beef demand had begun to increase. The Beef Demand Index recorded gains in six of the seven years from 1999 and 2005. Despite a decline in 2006, beef demand was 13 percent higher than it was at the low point in 1998. And 2007 is expected to show an increase in demand.
According to Randy Blach, executive vice president of Cattle-Fax, “We’ve got record-high retail beef prices, and we’re asking the consumer to pay more for the beef product. So far, so good. Demand year-to-date is up.”
Many reasons exist for that demand increase, but producer attention to quality has played a significant role. For instance, the 1991 NBQA identified total lost opportunities per head of $70.20. The 2005 NBQA showed the industry had reduced lost opportunities to $55.68 per head.
Additionally, the industry is finding new ways to give consumers what they want. We’ve identified various consumer markets that demand various forms of quality. One quality objective may be highly marbled steaks and roasts, while another target may be for a leaner product. Other markets call for management protocols such as natural or organic.
Satisfying consumers is also the goal of the checkoff-funded Beef Innovations Group, a program launched in the late 1990s with the checkoff’s muscle-profiling research. That research led to the development of new beef cuts and products that help increase the value of beef carcasses. One of that program’s biggest successes is the Flat Iron Steak (beef shoulder top blade steak), which has experienced tremendous growth since its retail launch in 2003. The most significant growth in sales of the Flat Iron came in the second quarter of 2006, with a 668 percent increase in sales compared to the previous year, and a 46 percent increase versus the prior quarter.
Another evolving market for today’s producer is the one for source-and-process-verified beef. Dr. Jason Cleere, extension beef cattle specialist at Texas A&M, says, “Consumers are wanting to know where their product comes from and that it’s 100 percent safe.” Consumer focus on safety has become such an important issue that the theme of the 53rd Annual Beef Cattle Short Course at Texas A&M was “Producing safe, quality product.”
Viewed as a whole, the beef industry has made significant strides the past 15 years. We’ve removed many of the defects, and we’re more conscious of carcass traits, though not all cattle are aimed at the same targets. But, unlike our industry in 1991, today we have targets to aim cattle toward.
Despite the valuable information gleaned from the National Beef Quality Audits, and the subsequent improvements that information has spawned, most beef industry analysts agree there is much room for improvement.
For instance, Oklahoma State University meat scientist Brad Morgan said after the 2005 NBQA, “We’re not winning the war on fat. Not yet.” Morgan says cattle gen-erally go to market fatter, and about 15 percent are too fat, but still may not be marbled well enough.
And for all the focus on carcass quality in the past decade, the resulting industry-wide improvement to carcass quality has been modest, according to Kansas State University geneticist Dan Moser. “There is a perception that we’re just doing a bang-up job in terms of changing our carcass genetics to meet consumer expectations. Yet any measure of carcass performance that you see out in the industry doesn’t reflect that. We’re not seeing dramatic changes in carcass quality or cutability.”
All of the blame for excess fat and heavier carcasses doesn’t rest with producers, however. Livestock marketing experts acknowledge that market signals the past few years have rewarded producers for feeding cattle to heavier weights. That was especially true before the price of corn spiraled higher last year. In many instances, producers are still paid for pounds. Premiums exist on most price grids for quality, but many marketers say the discounts for “out” cattle are not extreme enough to discourage over-feeding.
Despite the quality goals unmet in recent years, industry leaders are generally pleased with the progress. Today, there are more programs that evaluate carcasses and carcass traits, and reward producers for hitting a specified target. And more producers are able to capture additional value for their cattle by adopting new management practices and new technologies.
But just as we’ve witnessed dramatic changes over the past 15 years, producers must be ready for more change and acknowledge that consumers determine the ultimate value of our products.