Ted Schroeder, Kansas State University Economist urged U.S. beef industry to be competitive with other countries as demand for beef continues to grow
March 23, 2012
A Kansas State University Economist urged beef industry representatives to take a pro-active position in encouraging more domestic and international demand for U.S. beef. Ted Schroeder was one of the featured speakers during the Cattle Feeders and Veterinarians Day at the Nebraska Cattlemen’s Classic in Kearney, NE. He spoke to cattle feeders and producers about the future of beef demand.
“Look at domestic and international demand,” Schroeder said to a group of nearly 50 cattlemen. “We can’t sit back and wait for it to happen. We have to take a pro-active position through our products and position to make it happen,” he explained.
As an economist, Schroeder told the group he sees incredible potential for building export markets for U.S. beef. However, other countries like Brazil are also eying these same markets to increase their own export potential, so the U.S. needs to be on top of its game.
“There will be tremendous opportunity, but the competitors will be fierce,” he said, referring to a trip to Brazil where he met many of the leaders of that country’s beef industry. “They are young, they are tough, and they are well-educated,” he said of the leaders. “They are also very competitive, and seem to enjoy it,” he noted.
“The key for us will be to gain the trust of the consumers in these export markets, and keep it,” he stated. “We have to, because they will do an audit, and if we aren’t doing everything we claim, we will lose that market and never get it back,” he said. In 2003, when the BSE issue came to light in the U.S., Schroeder said our country lost many of the export markets they once had. “It is only now that we are starting to get back to the global presence we enjoyed up to 2003,” he said. “Since 2009, our exports have almost doubled,” he explained. “They probably will double in the next year or two as those export markets continue to grow.”
The growing export market has made U.S. fed cattle worth even more. “Since 2009 through 2011, the added value to our fed cattle price has been $4 per hundredweight, just from export market growth,” he said.
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Schroeder said the industry is now reaching out for new customers in countries with growing populations, and more importantly, growing incomes. “I think China, Vietnam, and Korea will all be future markets for more U.S. beef,” he said. The free trade agreement recently signed with Korea may quickly open the doors for more U.S. beef moving into their country. At one point, Korea tacked a 80 percent tariff onto U.S. beef being imported there, but today that tariff is below 40 percent, and through the agreement, will be zero in just a few years, Schroeder explained.
As demand for U.S. beef continues to grow, Schroeder said it is becoming more and more important that every segment of the beef industry focus on food safety and producing the best product they can. “We do have control over what we put in the market, how we position it, how we produce it, and how we match what the consumer wants,” he said.
Schroeder said consumers are looking for a product that is assured safe, tender, flavorful, has consistently high quality, is healthy and nutritious, has been produced in an animal and environmentally friendly environment, is preferably locally produced, convenient to prepare, and competitively priced. “These are the things that are important to consumers, but they are not listed in order of preference because different things are important to each consumer,” he said. “What is important to remember is you have the influence on food safety at the retail counter,” he said, referring to the development of programs to reduce E-coli outbreaks as an example.
“You need to think about these things and the consumer you are providing this product to,” he urged. “Most of these attributes are things that the consumer who eats the product doesn’t even know. You can help them know, and a lot of them do care,” he added. “Attach something to the product to help them know it. Brand the product with a set of characteristics that match that consumer’s preference segment and make sure it has integrity,” he said. “Think about which area your operation and business farm plan fits the best,” he added. “There are a lot of opportunities out there.”
Schroeder said the most successful exporters on the global market will be those that can be cost competitive, provide trusted product assurances, safe food assurance, quality, accountability and are politicially positioned.