National Cattlemen’s Beef Association (NCBA) 2013 President Scott George said the most vital issue for his members is the drought impacting all sectors of the cattle and beef industry, a perspective that is reflected in the CattleFax 2013 Outlook.
Analysts reported that total cattle numbers have declined more than 7 million head in the past six years and are now below 90 million head for the first time since the early 1950s. CattleFax Senior Analyst Kevin Good predicted per-capita supply will decline 2.2 percent. The Wholesale Beef Demand Index will decline by 1 percent, due to a 1 percent decline in real income of consumers.
“The challenge will be commanding additional dollars from consumers through the supply reduction,” noted CattleFax during the NCBA’s 2013 Cattle Industry Convention. CattleFax analysts said a one percent decline in disposable incomes is forecast in 2013, which is the first decline in consumer incomes since the 2009 recession, “creating possibly the biggest threat to beef demand since that time.” The low cattle numbers will mean higher prices and consumer preference for a cheaper product, noted George. He said the Beef Checkoff addresses this challenge by developing new products, like the Flatiron steak.
“Our checkoff addresses the consumer concerns,” he said. “And they’ll continue to get that message out to them about the nutrition and essential nutrients in beef.”
NCBA CEO Forrest Roberts told the Board of Directors that the goal over the next year will be to increase the beef consumption of the millennials, or those 80 million people ranging from age 13 to 33, from two times per week to three or more times per week.
Additionally, he said the millennial generation has more questions about how their food is raised. “Sustainable growth starts by building trust,” Roberts said. “You do that by being incredibly transparent.”
However, he acknowledged a “crossroads” for the industry, which includes significant challenges from Mother Nature over the past three to five years.
CattleFax noted that retailers will struggle to feature beef in advertisements due to higher prices and the industry should expect a four percent drop in beef advertising. “A fragile domestic economy and lagging consumer incomes will limit expansion,” the analysts projected.
The drought, which has affected more than 70 percent of cattle country, as well as decreased herd size and high feed and input costs will result in a guaranteed higher price for the consumer, noted 2012 NCBA President JD Alexander. “Record prices by no means guarantee profit,” he added. “We’re operating on most cases right now on pretty substantial losses.”
According to Professor Emeritus Art Douglas of Creighton University, dryness will likely persist in the West and Southern Plains this spring, due to continued La Nina conditions. He noted that there is a chance the eastern corn belt of the United States will see a return to more normal precipitation patterns during the upcoming growing season.
The difficult weather and economic conditions for the industry make it particularly important to pass legislation for haying and grazing on federal lands, noted George. The “Grazing Improvement Act.” introduced by Sen. John Barrasso, R-Wyo., last week extends Bureau of Land Management and Forest Service Livestock grazing permits from 10 to 20 years for permits completed under the National Environmental Protection Act (NEPA), among other provisions.
“Our cattlemen are great stewards, providing benefits to society that some people don’t recognize,” said George, noting that some federal lands used by ranching cattlemen are “in better shape than they were 50 years ago.”
He said federal land usage is one of the biggest priorities for cattlemen in the West.
A dairyman as well as a beef producer, George runs his operation with two brothers and five nephews. “We have to do teamwork, we have to have some rise and up and take responsibility for certain things, and I see this opportunity at the national level,” he said. “NCBA has producers from all segments and all walks of life. It’s literally an effort of teamwork between the members and staffers,” he added. “We have staffers focused on building demand and we have staffers looking at laws and regulations.”
When it comes to regulatory agencies of the federal government, particularly the Environmental Protection Agency (EPA), Alexander said he “firmly believes they’ll be going full steam ahead” in the next four years. “Even these rules we’ve been successful in blocking before, I wouldn’t be surprised if they come up again.”
CEO Roberts said the NCBA policy team faces pressures “on a day-to-day basis” that consist of defending against “the actions of regulations” instead of the “the forming of legislation.”
“A good offense is not well-rounded unless you have a good defensive plan,” he said.
Alexander added that when it comes to choosing battles to fight for the industry, “we look at every aspect, good, bad and indifferent. We’re going to be there at every one,” he said. “Sometimes the most insignificant issues snowball into huge problems for the industry.”
Alexander handed off the NCBA presidency to George during Board of Directors meeting at the Cattle Industry Convention. “I loved every minute of it,” he said of his year serving as head of NCBA during an interview with Agri-Pulse. “The highlight was going to all the different states meeting producers of all walks of life. I like to say: we’re all in this together but we all do it different.”
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