SMITHERS, B.C. – Cattle producers may not like the extra paperwork associated with tracing animals, but traceability has a real value to consumers, says the head of business development for a growing American beef company.
“People are willing to pay an amazing amount of money for something that has value to them,” Rick Stott of Agri Beef Co. told the British Columbia Cattlemen’s Association annual meeting. However, the cattle industry is not good at listening to what consumers want.
Stott said consumers have made it clear that food safety and traceability are important to them, but everyone in the industry from beef producers to packers have resisted changes that would increase traceability of beef animals.
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He said demands for traceability have increased dramatically due to spinach recalls and BSE.
“The reality is traceability is becoming a much bigger issue on the world market,” he said.
“Consumers are willing to pay a premium for it. Tomorrow it will be a minimum standard.”
Stott said Agri Beef has invested heavily to ensure the traceability of its beef products and believes this is one way a small company can compete against North America’s meat packing giants.
Agri Beef began as a ranch and cattle feeding operation and has expanded into an integrated food company based in the northwestern United States. It has created lines of premium beef brands as a way to grab a share of the beef market.
Stott said that in the last year, the number of people who believed food is safe dropped from 82 percent to 62 percent and the food that consumers stopped buying because of perceived safety issues increased from nine percent in 2006 to 38 percent in 2007.
Beef was fourth on the list of food that consumers perceived to be unsafe.
“We’re not immune to this issue,” he told the B.C. producers.
One way to buck the trend is to create a brand to differentiate high-end beef from commodity beef. Certified Angus Beef, Hereford Beef and Agri Beef’s Snake River Farms brand are examples of ways the beef industry has added a premium to beef.
Natural beef products are 1.5 to two percent of the market and Stott said it’s predicted to rise to five to 10 percent in the next two years.
“The top 10 retailers and packers and grocery stores are going to have a natural beef brand in the next few years. It’s an important marketing tool.”
About 80 percent of beef sold in North America is classified as commodity beef, while the rest is sold as branded products that can demand a premium price.
Stott said in 2002 consumers identified tenderness and convenience as their top concerns. Today the top two are source verification and food safety.
“What consumers thought was important in 2002 is not what they want today.”
