Beef Market Outlook

K-State ag economists share their 20-year outlook on the North American beef market.

by Shelby Mettlen, assistant editor

MANHATTAN, Kan. (June 15, 2016) — The United States has an advantage in the beef market, said Glynn Tonsor, ag economist with Kansas State University (K-State) June 15 at the annual Beef Improvement Federation (BIF) symposium hosted in Manhattan, Kan.

“Beef that comes from the U.S. is generally trusted to be safe. In particular, it’s generally trusted to know where it came from, and people will pay a premium for it,” he said. “We can’t lose that.”

Tonsor listed the United States’ sound feedgrain base, strong processing and packing industries, technology, safety, and extensive transportation system as other advantages above its competitors.

“We have room to improve all of these, but in relation to our key competitors, these are all advantages.”

North American beef has cornered the market on a grain-finished product, he said, adding the country’s genetic and meat quality, research and outreach to the list.

While those are all positives, Tonsor also listed some of the country’s weaknesses and areas to improve.

Most American beef is not the lowest cost to produce, he noted. A pound of grass-fed beef can typically be produced cheaper, where the majority of American beef is grain-fed.

“We can’t lose sight of that,” he urged.

Aggregate research funding is declining, he added, and communication and coordination on certain issues, including traceability systems and the focus on current and future beef demand is only partially effective.

The nation is fragmented on key issues, Tonsor noted, and those issues aren’t going to go away in the next five years.

An area for the country to pay close attention to is the United States’ increasingly diverse culture. Hispanic and multi-racial families are the fastest-growing segments in the country, and Ted Schroeder, K-State ag economist, urged producers to take note.

“The prosperity of our entire industry rests with our consumers,” he said. “It’s where the revenue that this industry enjoys is.”

International trade agreements like Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) present opportunities for market growth, Tonsor said. He wrapped up by sharing that he believes that, in 20 years, there will be fewer cattle and fewer cattle operations in the United States, but those operations will be more efficient and will produce more beef. He said exports should share greater than 11% of production to be sustainable, he hopes for improved coordination and information flow, and an expansion of meat quality signals and diversification.

There are immense opportunities within the industry, Tonsor concluded, but if we don’t communicate as an industry, as well as within each sector, we’ll miss those opportunities.

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