May 19, 2000

Change means
opportunity for cattle industry

First of two-part series

By Lana Robinson
Field Editor

A beef industry specialist told producers at the recent Heart of Texas Cow Calf Clinic in Brownwood they can expect more change in food production over the next decade than since the “dawning of mankind,” and noted opportunities for cattlemen in the midst of change.

“We’re on fast forward. Businesses that are organized around knowledge, rather than tasks, will have opportunities to create wealth,” said Dr. Harlan Ritchie, Extension beef specialist at Michigan State University. “We’re seeing a paradigm shift in the beef industry—from animals, to meat, to food. Producers of the future will be producing ‘food’ in a specific way for a specific market.

“This does not mean the beef industry could or should become vertically integrated like poultry or pork,” he continued. “But, as a marketing specialist recently stated, ‘The future challenge of an industry that is not vertically integrated is to look and act like one.’ The beef industry is, in fact, beginning to look and act like one.”

Ritchie said the industry must move towards coordinated systems of production and marketing of beef to solidify demand and markets that enhance profitability and ensure sustainability.

He cited the following factors as reasons that moved competing meats in that direction:

• Increased responsiveness to consumer demand.
• Improved quality control (consistency, food safety, etc.).
• Increased efficiency, resulting in reduced cost of production.
• Risk shifting and risk reduction.

Characteristics of a food supply chain, according to Ritchie, include a traceback system, a better flow schedule, and a chain that is end-user friendly.

Ritchie noted that the kind of system that is shaping up for the beef industry is “coordinated,” rather than “vertically integrated,” which puts power in the hands of those who have resources to add value.

He explained that the key points of control are at the ends of the food supply chain, suggesting that genetics at one end and information from end-users at the other will control how the system behaves.

“Middle participants must become indispensable to have a measure of control of governments or mitigate the role of genetics through unique processing technology,” he added.

Ritchie said the small producer can compete, but again, he must appear to be big, through an alliance, network, or marketing pool.

Food quality major driver
Food quality will be the major driver in the food supply chain, with source verification through electronic identification implants for tracking the history of calves as to ownership, genetic make-up, pre- and post-weaning performance, health status, carcass composition, and meat quality becoming more and more important.

“As far as traceback technology, there’s a supermarket in France where smart cards allow consumers to check the background of meat before they buy it. In the future, retailers will have an electronic terminal to read the card to identify the animal, producer, processor and its weight and grade. The terminal will subtract the quantity purchased from the weight of the carcass,” he said.

Ritchie said progressive seedstock breeders will become full-service vendors capable of providing numerous services for their commercial customers, such as: assistance in merchandising feeder cattle; programs for retained ownership that will return feedyard performance and carcass data on individual cattle; contracting of specific matings two years in advance of delivery of bulls; recipient females carrying male embryos for commercial producers who wish to raise their own bulls in their specific environments; and replacement heifers that are A.I. bred and sorted for calving date and sex of calf.

According to Ritchie, there will eventually be widespread availability of semen and embryos specific for gender, color, polledness, production traits, reproductive traits and disease resistance traits.

“Approximately 83 percent of U.S. commercial cow herds presently use some form of crossbreeding. Because traditional crossbreeding systems are difficult to maintain and often result in wide generation-to-generation swings in biological type, some commercial producers are now using composite bulls. A number of composite breed populations have been formed in recent years. This trend will likely continue. However, for various reasons, not all of these attempts will be successful,” he predicted.

Regardless of the breeding system used in commercial herds, the Extension beef specialist said purebred populations will still be needed to provide the genetic foundation of the beef industry. However, he suggested the time is fast approaching when as few as 10 breeds will have the lion’s share of the seedstock market.

“The other 70-something breeds won’t go away. However, some could be replaced by others waiting in the wings,” said Ritchie. “The Shorthorn, in 1929, was the most popular breed, and it tumbled to Hereford, and on and on and on...”

Part 2 of the series will focus how the industry may respond to tenderness, food safety, environmental and market issues.