SALMON ARM. B.C. – The North American beef industry must aggressively invest in itself and make fundamental changes or it risks reaching the point where cattle grazing in pastures have more aesthetic than commercial value.
Ted Schroeder, an agricultural economist from the University of Kansas, told last month’s meeting of the British Columbia Cattlemen’s Association that the industry has experienced a greater decline in demand for its product in the last 20 years than the tobacco business.
Globally, beef consumption grew by 13 percent in the last 10 years while pork increased 28 percent and poultry rose 35 percent.
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The next generation may rescue the industry, he added.
“If we don’t have talented youth coming in to solve the problems that we are in the midst of, we won’t have much of an industry anymore,” he said.
“If we can invest and if we are willing and able to change and figure out how to make the market work for us, and if we can figure out our comparative advantage, I think there are still lots of opportunities.”
If that doesn’t happen, he added, the industry will shrink.
Food safety issues linked to E. coli, listeria and campylobacter have had a major effect. However, Schroeder added, BSE isn’t a major health concern, even though it closed trade borders because importers worried beef was unsafe.
“We all know that BSE is really not a food safety issue in a broad context.”
Quality has been a greater problem. Even with efforts to guarantee tenderness, he said, 30 percent of carcasses still produce tough meat.
Part of the problem may be the grading system, which relies on visual assessment for meat colour and fat content. Some studies have shown that lower-grading meat can sometimes be just as tender as higher grades.
Some plants are setting their own standards for guaranteed tenderness and new non-invasive technology is in development to assess quality. The Warner Bratzler shear force tests are now the best indicator of quality. These tests measure the amount of force required to cut through a core sample of meat.
Some of the fault with declining demand also lies with the production system. The system is not co-ordinated and each sector guards information rather than returning proper signals so that members can make improvements.
“The cattle and beef complex prides itself on not providing information to those further down the line,” Schroeder said.
The major economic goal for all production sectors has been to produce the most pounds of beef for the least amount of money.
Producers have been offered clear incentives to be low cost and efficient while signals were ignored that showed what people wanted in terms of quality food. People walked away from the product and demand was cut in half.
Surveys have discovered that consumers want assured food safety as well as a product that is tender, flavourful, consistently high quality, healthy and competitively priced.
Schroeder believes branded products offering specific quality attributes may be beef’s salvation. The brand may promote certain production practices such as organic, natural or containing no hormones or antibiotics. It may be guaranteed tender.
If the product does not measure up, consumers abandon it, but if it is excellent, people remember the name and buy it again.
Branding can be done in a number of ways. Products may appear on retail shelves or a producer group could be the exclusive supplier to a food service company.
An individual producer may not be able to provide consistent, continuous supply so partners might be needed.
“If you don’t find partners and affiliates, how long can you live on your equity as the cattle cycle takes us down again?” Schroeder said.
He believes Canada’s growth opportunity is in branded products, meal packages and food service.
Co-ordinated alliances are needed rather than vertical integration such as what Tyson Foods uses. The company owns the genetics, production unit, feed supplies and processing arm, giving it complete control.
Alliances require a paradigm shift so information is shared up and down the system. Some may still fail but Schroeder believes it is worth trying.
Many brands emerged from small firms and were producer oriented alliances, such as Certified Angus Beef, Laura’s Lean Beef and Harris Farms. A Canadian example is Sunterra Farms in Alberta. It is a small name but has developed a good reputation in a local area with its own retail chain.
The greatest challenge is financing the idea.
“You can’t develop a national brand with a small alliance,” Schroeder said.
“You won’t have enough capital, you don’t have enough clout, you don’t have enough public relations to get it out.”
Banks are generally not interested because food processing is a high risk venture. A better bet is seeking venture capital from an international bank.
“There is money available for good, well planned projects,” he said.
