Issues in Brief

This summary offers a brief statement about the topics covered in this edition of Issues Update. The goal is to provide a useful, quick overview of current issues, as well as serve as a guide to determine which updates and reports you wish to read for more detailed information.

Insight to the Beef Industry - March/April/May 2009

October 2008 - March 2009 Media Analysis

Animal Health/Wellbeing

The Stockmanship & Stewardship Tour returns in 2009

The popular Stockmanship & Stewardship Tour is an innovative seminar series that uses live cattle demonstrations to inform cattlemen about the importance and benefits of proper cattle handling – and its critical role in increasing consumers’ confidence in beef. The 2009 tour will be held in more than 25 towns in 13 states.

Integrated BVD control plans for beef operations

Bovine viral diarrhea (BVD) is an animal health issue that costs beef producers significant amounts of money annually. Economic and production losses related to infections caused by the BVD virus affect all aspects of beef and dairy operations. The National Cattlemen’s Beef Association BVD Working Group is focused on implementing effective, voluntary BVD control strategies in the beef industry, especially through educational efforts.

A review of international animal welfare systems

Approaches to farm animal welfare vary greatly around the globe; systems are dependent upon culture, level of prosperity and political system. The methods vary from very legalistic, government-imposed requirements to primarily agriculture-led approaches; some countries adopt a hybrid approach. Activists often tout systems that are more restrictive as being superior. To support confidently the current U.S. approach, it is beneficial to look at how farm animal welfare is addressed by other nations.

Diet/Health/Nutrition

Beef checkoff communicates sound science in response to cancer studies

The beef checkoff made a significant, proactive investment two years ago in researching whether there was a relationship between red meat and cancer and this research did not find a causal link. As responsible food producers, we believe it is important to understand our product and its impact on human health. Two recent examples highlight the complex relationship between diet and occurrence of chronic disease and point out the importance of communicating sound science on red meat and cancer.

Assessing dietary intake in America and its correlation with health

Various agencies in the federal government collaborate to assess what Americans eat and correlate food intake with nutrient intake. Program policies and regulatory decisions within the U.S. Department of Agriculture, the Environmental Protection Agency, the Food and Drug Administration, the Department of Health and Human Services and other government agencies are based on this assessment. In turn, nutrition researchers use the data to correlate nutrient and food intake with chronic disease.

Beef Safety/Quality

Collaboration and knowledge sharing key to advancements in beef safety programs

Representatives of all sectors of the beef production, processing and marketing chain gathered at the checkoff-funded 2009 Beef Industry Safety Summit. Attendees discussed emerging safety issues, explored solutions to safety challenges and discussed industrywide, science-based strategies to help each sector reduce foodborne pathogen incidence and enhance the safety of U.S. beef products.

Consumers confident in beef safety in 2009

High-profile foodborne illness outbreaks are maintaining consumer awareness of foodborne illness in 2009. While beef products have not been implicated in recent major outbreaks, research funded by The Beef Checkoff has underscored consumers’ overall concerns about food safety – concerns that have the potential to limit growth in beef demand. The safety reputation management program plays an ongoing role in educating consumers about the beef industry’s commitment to safety, as well as teaches consumers about safe food handling practices.

Environment

Foodservice operators embrace sustainability, promote environmentally conscious food choices

Foodservice operators are increasingly encouraging consumers to make environmentally conscious food decisions. Whether by providing information through pamphlets or Web-based tools about the environmental impact of certain food choices, or by removing those items identified as “high carbon footprint” choices from menus altogether, restaurants are encouraging consumers to choose foods, based not on taste or nutritional benefit, but on environmental concerns. Beef often is identified as a food to avoid for those consumers looking to reduce their carbon footprint or greenhouse gas emissions.

Trade/Marketing/Economics

Worldwide economic factors drive U.S. beef business

Many industries, including the beef industry, the auto industry, the manufacturing sector and the dairy industry have seen the double impact of deflation, along with a historic housing/mortgage/banking crisis, which has evolved into a worldwide economic emergency. These factors add up to tough times for the beef industry. The net result of the declining dollars derived from hotels, restaurants and institutions, export demand and the drop credit has been a wholesale beef price that is 10 percent lower than a year ago. Lower prices for live cattle, combined with last year’s record-high corn prices, resulted in historic losses for the U.S. cattle feeding industry.

Global economy affects U.S. export trends

Ongoing global economic uncertainty continues to affect trade worldwide. Tight credit, currency fluctuations and consumer belt-tightening have combined to raise serious concerns about meat consumption in various countries. U.S. meat trade will be critical to domestic beef and cattle prices in 2009. U.S. beef exports could potentially see a 6 percent to 8 percent increase in 2009.

Climate affects global beef supply

Severe weather conditions in several key livestock and grain producing regions around the world could significantly affect regional beef supplies in the coming year, and perhaps for years to come. A decline in grain and beef supplies has the potential to create opportunities for the U.S. beef industry, although weak global demand and declining cattle prices may have an offsetting effect.

U.S. beef demand drivers and enhancement opportunities: A research summary

Large shifts in domestic beef demand have had substantial impacts on the beef industry. Designing programs to increase domestic retail beef demand requires a comprehensive understanding of the many factors that cause beef demand to fluctuate. Increasing consumer demand for beef requires concerted effort by all vertical segments of the production, processing and marketing chain. This article, updated from a January 2009 Kansas State University fact sheet of the same name, focuses on the impact of key drivers on U.S. consumer demand for beef and what these results mean for the U.S. beef industry.

Research Briefs

Ground beef leads in-home beef usage

With 80 percent of individuals consuming beef in-home at least once in an average two-week period, beef maintains its prominent position at the American dinner table, according to data for the 52 weeks ending Aug. 30, 2008. Among these beef eaters, beef is consumed an average of 1.7 times per week. Considering population growth, fresh beef eatings have increased to levels similar to those experienced in 2000.

Consumers see factory farming in negative light

An independent, national consumer survey of 1,000 U.S. adults funded by the Cattlemen’s Beef Board and managed by the National Cattlemen’s Beef Association found that more than half of American consumers have heard the term “factory farming” used to describe the way livestock are raised. For those who have heard the term, it creates a negative picture of animal agriculture and creates food safety concerns.

Toolbox

FACT SHEET: Critical Analysis of Livestock’s Long Shadow

Headlines like “cattle are worse for the environment than cars” or “eat one less beef meal to go green,” are increasingly common in top-tier media and are based on the United Nations’ report, Livestock’s Long Shadow. This new fact sheet counters the greenhouse gas claims from the UN report and explains why they aren’t applicable to the United States.

Beef industry media analysis
October 2008 – March 2009

The following checkoff-funded report analyzes media coverage of beef and cattle industry issues through a special service called CARMA (Computer-Aided Research and Media Analysis). The beef checkoff-funded issues management program commissions this analysis for tracking and responding to beef media coverage in the following areas: diet/health, environment, food safety, beef marketing, animal rights and economics.

The CARMA system rates media coverage favorability on a scale of zero to 100 based on criteria including headline, length, placement, number and quality of favorable and unfavorable sources and general tone of an article. In this rating system, articles that fall in the 45-55 range are considered neutral or balanced. In the reports on ratings, favorable means favorable to the beef industry.

Because a single article can address more than one issue, it may be analyzed as part of more than one issue area. Therefore, article volume and percentages across the issue areas will not add up.

Overview

• Total volume of coverage: 2,359 articles
• Average favorability rating: 51 or neutral
• Estimated impressions: 985 million
• Leading (non-wire) media outlet: Chicago Tribune and New York Times (85 articles each)

Beef industry media coverage from October 2008 through March 2009 consisted of 2,359 reports that averaged a neutral 51 rating. Compared to the same period last year, the volume of beef industry coverage declined 37 percent and the favorability increased by 3 points. Last year’s high volume was due in part to the widely publicized Hallmark/Westland Meat Packing Company controversy and subsequent recall. The largest portion of the industry’s coverage consisted of neutral articles, which comprised 41 percent of the total volume, while favorable and unfavorable stories accounted for 35 percent and 24 percent, respectively.

Economic issues led industry coverage this period, with news focused on beef prices, foreign trade and packer issues. News of the struggling economy and its impact on consumers and the beef industry drove the volume of beef prices coverage, while multiple ongoing trade issues generated foreign trade coverage.

Beef marketing accounted for nearly one-third of beef industry reporting this period, due to a high volume of beef recipes focusing on holiday dishes and cold weather comfort foods. Cost-cutting was an underlying theme of a large portion of beef marketing coverage as shoppers sought to trim their grocery bills.

Reporting on nutrition/health was dominated by beef recipes with nutrition information and nutritional vegetarianism. While beef recipes with nutritional information received a solidly favorable 64 rating, stories about nutritional vegetarianism were slightly unfavorable, resulting in a neutral overall rating for nutrition/health coverage.

Beef safety coverage experienced a significant decrease compared to the same period last year. Trade issues surrounding bovine spongiform encephalopathy (BSE)/mad cow disease and discussions of pathogens and beef in the context of a large-scale peanut recall contributed to beef safety coverage this period.

The interaction of cattle and wildlife accounted for 39 percent of environmental coverage this period as media outlets reported on the management of the wolf population in several states. Another prominent sub-issue for environmental reporting this period was stories about cattle and global warming, which generated negative coverage for the beef industry.

Animal rights articles comprised the smallest category of beef industry reporting for the October-March period. A large portion of this coverage was about cruelty in production practices, due to a high volume of reports about California’s Proposition 2.

Economics

• Volume: 808 reports, 34 percent of total
• Favorability: 50 rating, or neutral
• Leading Sub-issue: Beef prices – 236 reports
• Leading Media: Associated Press – 171 articles

The volume of economics coverage declined 37 percent to 808 reports compared to the same period last year. However, economics coverage volume remained at 34 percent of overall reporting this period. The favorability of economics news increased by 2 points from the October-March period last year to a neutral 50 rating. This can be attributed to an increase in the portion of favorable reporting from 19 percent to 21 percent, and a decrease in unfavorable coverage from 30 percent to 23 percent. Neutral articles represented 56 percent of economics reporting October-March.

Economics (808 reports, 50 rating) was the leading issue category for the industry during the October-March period, accounting for more than one-third of the total volume of stories. “Beef prices” was the most prominent sub-topic for economics reporting, primarily due to news regarding the impact of the recession on the beef industry. In October, Lauren Shepherd of the Associated Press reported about the restaurant/fast food industry being compelled to change menus or raise prices in order to cope with higher beef prices. The widely published article noted that quick-service food chains such as McDonald’s and Carl’s Jr. had to remove or change promotional beef items to offset the higher cost of beef (Oct. 13).

Media attention on changing consumer habits also generated beef prices coverage as many articles described how consumers were cutting costs at the grocery store. A Reuters Feb. 27 article discussed how this shift hit the beef industry, reporting, “Americans are eating more hamburgers and fewer steaks as the economy wallows in recession, and that has led to huge losses at U.S. feed yards that fatten the cattle for steaks.” More positive news characterized beef prices coverage in March as the industry reported that despite a decrease in overall meat consumption, supermarket sales of beef rose more than 3 percent in the fourth quarter of 2008. National Cattlemen’s Beef Association spokesman Gregg Doud discussed the favorable sales results in a March 19 Reuters article, noting, “On the steak side, you are seeing a lot of features for rib-eyes and T-bones at below $5 a pound. That is some of the best featuring we have seen in many, many years.” These positive stories mitigated the effect of negative reporting earlier in the period, resulting in a neutral average rating for “beef prices” coverage.

Foreign trade also accounted for a large share of economics coverage, dominated by news about the country-of-origin labeling (COOL) law, the resumption of beef exports to South Korea and trade negotiations with the European Union (EU). COOL generated reporting throughout the period, particularly following Canada’s decision to file a World Trade Organization complaint over the law. In a Dec. 2 Associated Press report shortly after the complaint was filed in December, Canadian Trade Minister Stockwell Day explained, “We believe that the country-of-origin legislation is creating undue trade restrictions to the detriment of Canadian exporters.” Canada dropped its complaint in January, but Canadian cattle producers continued to express their displeasure with the regulation. In February, U.S. Department of Agriculture Secretary Tom Vilsack asked meatpackers to voluntarily provide additional details on meat labels, which drew criticism from the Canadian Cattlemen’s Association; they argued that the law was harmful to Canada’s red meat industry (Fort Worth Star-Telegram, Feb. 26). Media coverage of COOL was neutral overall, with unfavorable coverage neutralized by a sprinkling of positive press in the latter half of the period.

An ongoing trade dispute with the EU also contributed to foreign trade coverage in the latter part of the six-month period, as the EU’s refusal to lift its ban on hormone-treated beef prompted the Bush Administration to drive up tariffs on European imports. While coverage in January and February was negative overall, news of a possible resolution generated positive coverage in March. Although EU representatives made it clear that hormone-treated beef would still be prohibited, trade representatives from both sides expressed confidence, and U.S. Trade Representative Spokeswoman Nefeterius McPherson asserted, “The settlement will provide benefits for U.S. beef producers” (Reuters, March 12).

Beef Marketing

• Volume: 657 reports, 28 percent of total
• Favorability: 60 rating, or solidly favorable
• Leading Sub-issue: Beef recipes – 456 reports
• Leading Media: St. Paul Pioneer-Press – 27 articles

The volume of beef marketing coverage decreased slightly from the October-March period last year, falling 6 percent to 657 reports. The volume of beef marketing coverage increased from 19 percent to 28 percent of total beef industry coverage. In terms of favorability, 81 percent of beef marketing coverage was favorable, a 7 percentage-point decline from the same period last year. Beef marketing’s overall favorability rate also declined 6 points to a solidly favorable 60 rating. This can be attributed to a decrease in the volume of beef recipes coupled with an increase of negative and neutral reporting on beef choices. The increase in negative and neutral beef choices stories is due in part to the addition of “local” beef to the sub-issue. Several articles discussing the “locavore” movement featured consumer commentary on why they preferred local, pasture-fed beef to traditionally produced beef.

Reporting was driven by “beef recipes” (456 reports, 63 rating) which focused on seasonal and low-cost recipes inspired by the recession. Fall and winter weather prompted several outlets to publish recipes for hearty stews and chilies, meatloaf variations and slow cooker recipes. Additionally, the holiday season led to a high volume of holiday meal ideas. In December, several outlets published brisket recipes for Hanukkah and cost-friendly Christmas recipe ideas such as Beef Bourguignon (Commercial Appeal, Dec. 10). Beef recipe coverage in March centered on St. Patrick’s Day, with recipes for corned beef and Irish stew.

“Ground beef recipes” (158 reports, 63 rating) generated media attention this period as ground beef was featured as a low-cost meat option for consumers looking to control food costs. The Chicago Sun-Times published several recipes to “help stretch your family’s food budget,” including a beef skillet supper made with ground chuck (Jan. 21). The Kansas City Star’s “Desperation Dinners” column published a recipe for “S-t-r-e-t-c-h-e-d Meatloaf” that uses breadcrumbs and oats to lower the amount of ground beef (Feb. 25).

Nutrition/Health

• Volume: 616 reports, 26 percent of total
• Favorability: 51 rating, or neutral
• Leading Sub-issue: Beef recipes with nutrition information – 204 reports
• Leading Media: Chicago Tribune – 38 articles

Nutrition/health coverage declined by 34 percent compared to this period last year, from 930 reports to 616 reports for the October-March period. The volume of nutrition/health coverage compared to overall reporting increased by 1 percentage point to 26 percent. The favorability of nutrition/health stories increased 1 point from the same period last year to a neutral 51 rating. This period, 40 percent of nutrition/health coverage was favorable, and 33 percent was unfavorable.

Nutrition/health was the third most prominently discussed issue. Nearly one-third of nutrition/health reporting consisted of “beef recipes with nutrition information.” These recipes were solidly favorable overall, and explored a wide range of beef dishes. For instance, in January, the Lunar New Year inspired a high volume of Asian-themed recipes such as Crispy Orange Beef (Pittsburgh Post-Gazette, Jan. 22) and Slow Cooker Short Ribs Braised in Spicy Black Bean Sauce (Orange County Register, Jan. 8).

Nutritional vegetarianism was the second leading sub-issue for nutrition/health, with 161 reports that averaged a slightly unfavorable 39 rating. Although it was one of the least favorable leading sub-issues for the industry this period, the volume of reports on nutritional vegetarianism declined by more than half from the same period last year. In addition to vegetarian recipes, several media outlets reported on a U.S. Centers for Disease Control and Prevention study that indicated 1 in 200 U.S. kids choose a vegetarian diet. These stories often noted that eating a vegetarian diet can be healthy if children are able to get a sufficient amount of the nutrients often found in meat (Associated Press, Jan. 11).

Beef Safety

• Volume: 442 reports, 19 percent of total
• Favorability: 46 rating, or slightly unfavorable
• Leading Sub-issue: BSE/mad cow disease – 89 reports
• Leading Media: Associated Press – 75 articles

Beef safety was the fourth most prominently discussed issue in the October-March period by number of articles. Notably, the volume of stories about beef safety declined 71 percent from the same period last year, when the topic garnered 1,527 reports. Beef safety’s share of volume also fell, as there were no major recalls for the industry like the Hallmark/Westland Meat Packing Company recall that dominated coverage during this period last year. The favorability of beef safety reporting increased 4 points to a slightly unfavorable 46 rating, reflecting the decline in unfavorable stories, which fell 18 percentage points to 37 percent of beef safety’s total volume.

Beef safety (442 reports) coverage was driven by “BSE/mad cow disease” (89 reports, 48 rating) and “pathogens and beef” (88 reports, 43 rating). South Korea’s decision to resume imports of U.S. beef in late 2008 generated neutral and positive coverage for the beef industry. While some Korean consumers were still wary of the beef’s safety, “many shoppers simply grabbed U.S. beef and moved on,” (Washington Post, Dec. 10). BSE reporting was also driven by news that the U.S. Food and Drug Administration would be implementing a rule prohibiting the use of specified risk materials from older cattle in livestock feed and pet food. Originally set to take effect in April, Reuters reported that implementation would be delayed 60 days to allow the industry time to better prepare for proper disposal of the cattle (March 18).

“Pathogens and beef” generated several reports regarding the new administration’s plans for food safety. The executive transition and a salmonella outbreak causing a broad recall of peanuts and peanut products led to an examination of the country’s current food safety system, which often referenced previous pathogen outbreaks and beef recalls. While most of this coverage did not focus specifically on the beef industry, it was nonetheless slightly unfavorable.

Environment

• Volume: 354 reports, 15 percent of total
• Favorability: 48 rating, or neutral
• Leading Sub-issue: Cattle and wildlife – 139 reports
• Most Favorable Leading Media: Associated Press – 50 rating

Environmental reporting decreased by 6 percent from the October-March period last year to 354 articles this period. Despite the decrease in volume, the share of environmental coverage increased by 5 percentage points. The favorability of stories on the environment decreased slightly, falling one point to a neutral 48 rating. The portion of unfavorable articles increased 12 percentage points from the same period last year to comprise 31 percent of environment coverage.

Environmental reporting accounted for 15 percent of the beef industry’s coverage this period. “Cattle and wildlife” was the most prominently discussed environmental sub-issue, with 139 reports that averaged a neutral rating. Management of the wolf population generated a high volume of reports as state and federal officials considered changes to existing wolf management regulations. A federal court decision to relist the gray wolf as an endangered species in Michigan, Minnesota and Wisconsin drew heavy criticism from ranchers, who said the law prevents them from legally protecting their livestock (Associated Press, Nov. 8). However, the Department of Interior later reversed the decision and removed the wolf from the endangered species list in the northern Rocky Mountain states. In March, incoming Secretary of Interior Ken Salazar upheld the earlier decision, pleasing ranchers and drawing ire from environmental groups.

“Cattle and global warming” (62 reports, 42 rating) was the second leading sub-issue for environmental reporting. Articles on this topic discussed whether meat consumption contributes to climate change. Several of these reports suggested that giving up meat lowers a person’s carbon footprint and cited a United Nations statistic that emissions from livestock production account for 18 percent of greenhouse gas emissions. Nearly half of reporting on cattle and global warming consisted of letters-to-the-editor, opinion pieces and editorials, which were often critical of the beef industry.

Animal Rights/Welfare/Health

• Volume: 279 reports, 12 percent of total
• Favorability: 44 rating, or slightly unfavorable
• Leading Sub-issue: Cruelty in production practices – 107 reports
• Leading Media: Associated Press – 74 articles

The volume of animal rights articles fell by more than half compared to the same period last year, from 651 to 279 reports this period. The Hallmark/Westland Meat Packing Company controversy, which supported an atypically high volume of animal rights/welfare/health coverage from last October-March period, was absent this period. Animal rights/welfare/health coverage volume decreased by 5 percentage points to comprise 12 percent the beef industry’s overall volume this period. The favorability of animal rights/welfare/health coverage increased significantly, from a 37 rating for the October-March period last year to a 44 rating this period. Unfavorable stories accounted for 47 percent of animal rights/welfare/health reporting, a decline of 26 percentage points.

Animal rights/welfare/health was the least favorable issue for the beef industry this period, averaging a moderately unfavorable 44 rating. “Cruelty in production practices” (107 reports, 39 rating) was the most prominent sub-issue due in part to heavy media attention on California’s Proposition 2, the ballot initiative that would ban certain animal production practices that proponents deemed inhumane. Reports following the measure’s passage on Nov. 4 noted that the veal industry is relatively small in California and the impact of the law would have little effect. However, Humane Society of the United States Chief Executive Officer Wayne Pacelle included the veal industry in his criticism of animal production practices. In addition to coverage of Proposition 2, reporting later in the period discussed several state and local animal cruelty bills, including an Oklahoma bill that would restrict cities and counties from regulating livestock. Coverage of the Oklahoma measure was favorable toward the beef industry and received broad support from both farm groups and legislators.

Articles about “cattle diseases” were also prevalent in animal rights/welfare/health reporting, with 70 articles that averaged a neutral rating. Yellowstone National Park’s consideration of a new bison management plan generated media discussion of brucellosis. Ranchers opposed a plan to relocate 40 disease-free bison to Montana and Wyoming, as well as a bill that would transfer bison management from the Montana Department of Livestock to the Department of Fish, Wildlife and Parks, arguing that both initiatives would put the livestock industry at risk.

Conclusions

• Economic issues led beef industry media coverage October 2008 through March 2009. Economics coverage focused on beef prices, foreign trade and packer issues. The struggling economy and its impact on consumers and the beef industry also drove economics coverage.
• Beef marketing accounted for nearly one-third of beef industry reporting this period, due to a high volume of beef recipes focusing on holiday dishes and cold weather comfort foods. Cost cutting was also a focus as shoppers sought to trim their grocery bills.
• Beef safety coverage experienced a significant decrease compared to the October-March period last year.
• Reporting about cattle and wildlife and cattle and global warming were prominent issues within environmental coverage this period; cattle and global warming coverage generated negative coverage for the beef industry.
• Animal rights articles comprised the smallest category of beef industry reporting for the October-March period. A large portion of this coverage was about cruelty in production practices, due to a high volume of reports about California’s Proposition 2.

March-April-May 2009

Stockmanship & Stewardship Tour returns in 2009

by Brad Schneider, Associate Director, Beef Quality Assurance – NCBA

Summary

The popular Stockmanship & Stewardship Tour is an innovative seminar series which uses live cattle demonstrations to inform cattlemen about the importance and benefits of proper cattle handling – and its critical role in increasing consumers' confidence in beef. The 2009 tour will be held in more than a dozen states thanks in part to the generous financial support of beef industry partners and the beef checkoff. The Livestock Marketing Association endorses the 2009 tour.

Background

Cattle producers know that one of the keys to the long-term sustainability of our industry relies upon educating consumers about industry stakeholders’ commitment to proper animal handling. One outstanding example of this commitment is the Stockmanship & Stewardship Tour, which highlights practices implemented daily throughout the beef industry. In 2008, the tour appeared in 35 towns in 20 states. Plans for the 2009 tour currently include seminars in 13 states.

The 2009 Stockmanship & Stewardship Tour will be led by renowned rancher, horseman and stockmanship instructor Curt Pate, along with assistance by lifelong cattleman Dr. Ron Gill, Texas A&M livestock specialist and cattle handling advisor.

The tour includes special hands-on training sessions at livestock auction markets and other venues where cattle producers and employees come together to discuss stockmanship methods. Improving the efficiency of daily work, minimizing stress on cattle and on cattle handlers as well as discussing the producers’ pivotal role in sustaining beef quality for the consumer are essential elements of the training.

Additionally, meeting participants will discuss their role in beef industry stewardship by highlighting the responsibility shared by all beef industry stakeholders to protect and promote the industry. Key to this effort is the use of beef production practices that ensure long-term sustainability of the industry and enhance consumer perceptions of our product.

The Stockmanship & Stewardship sessions teach handling methods that improve gathering, penning, chute work and hauling. Emphasis is placed on ways to increase cattle productivity by reducing stress. Discussions of beef industry stewardship are also included, illustrating how cattlemen can actually shape consumers’ perception of beef.

For more information, visit http://www.cattlelearningcenter.org/Meetings.aspx.  

Integrated BVD control plans for beef operations

by Elizabeth Parker, DVM, Chief Veterinarian & Dale Grotelueschen, Chairman, BVD Working Group – NCBA

Summary

Bovine viral diarrhea (BVD) is an animal health issue that costs beef producers significant amounts of money annually. Economic and production losses related to infections caused by the BVD virus affect all aspects of beef and dairy operations. The disease can result in infertility, fetal resorption, abortions, congenital defects, weak calves, immune suppression leading to other disease losses and other effects. The National Cattlemen’s Beef Association (NCBA) BVD Working Group is focused on implementing effective, voluntary BVD control strategies in the beef industry, especially through educational efforts.

Background

With excellent tools available to control BVD – some of which are relatively new – the beef industry has the opportunity to improve profitability, sustainability and animal stewardship using planned, practical approaches to contain BVD.

The NCBA BVD Working Group, which is associated with the NCBA Cattle Health and Well-Being Committee, is a committed team of individuals with open membership. It functions as four subcommittees – Education, Technical, Research and Liaison.

The BVD Working Group is expanding its outreach and education to help producers control and eliminate BVD. Additionally, the group is working toward the ethical disposition of persistently infected cattle. The group published educational material in National Cattlemen magazine, organized trade show booths at the 2007 and 2008 Cattle Industry Annual Convention and NCBA Trade Shows and developed control plan strategies and a research-needs document.

Additionally, the group has hosted two educational symposia on the issue. The applied sessions of the BVD Symposium in 2009 in Phoenix outlined a simplified approach to BVD control. Beef producers and BVD experts cooperated to present the best in practical, implementable, cost-effective BVD control concepts, working closely with ad hoc BVD committees in the Academy of Veterinary Consultants and the American Association of Bovine Practitioners.

There are still significant gaps in our knowledge about BVD control, such as the role of wildlife populations, so research is of paramount importance. The new Web site, www.BVDinfo.org, will potentially become a central location for BVD information for the industry.

The reason for this expanded work to educate producers on BVD control is simple. BVD costs the cattle industry millions of dollars annually. Fetal BVD infections result in the birth of persistently infected calves, which are the major source for spread of the virus in individual herds as well as across the cattle industry. Females that are persistently infected themselves often give birth to persistently infected calves. These persistently infected BVD animals are defective individuals present in our cattle populations. Although their health is often compromised, some survive to maturity.

Pregnancy percentage decreases of 5 percent have been detected in beef cow herds with persistently infected BVD animals. A modeling study suggested losses related to presence of persistently infected BVD animals in a beef herd would average about $14.85-$24.84 per cow exposed to a bull annually. Although results of feedlot cost analyses have been mixed, a recent comprehensive study focused on high-risk cattle found fatality losses of $5.26, performance losses of $88.26, and costs of persistently infected exposure in feedlot cattle of $41.84-$93.52 per head.

Currently, BVD control in the United States is focused on voluntary plans of individual cattle operations. Several states have implemented voluntary BVD control programs. The Montana program has been particularly successful. Eradication programs are in progress in several European countries, with some accomplishing significant reductions in BVD disease.

Voluntary BVD control includes implementing planned strategies to maintain negative status, reduce incidences or eliminate BVD from a unit of interest; controls include documentation and monitoring of progress. Proactive, effective control of the BVD virus in beef operations requires use of biosecurity and biocontainment strategies that incorporate available tests and vaccines. Prevention at the cow-calf level results in returns to all levels of the industry. Simply stated, biosecurity for BVD focuses on actions to keep BVD virus out while biocontainment focuses on getting BVD virus out of infected herds. The primary target is persistently infected BVD animals.

Individualized plans accomplish producer goals and address risks and risk tolerances in operations. Members of the NCBA BVD Working Group are developing user-friendly approaches that are accomplishing this.

Successful herd BVD control plans include a surveillance component to establish herd BVD status – positive or negative; a biocontainment component to eliminate the virus if needed; a biosecurity component to keep the virus out; and a vaccination component in the event exposure occurs.

Cattle that are persistently infected with the BVD virus are defective animals and responsible disclosure and disposition is imperative. A directive entitled, “Disclosure of BVD PI Animals” addresses this important issue. Paraphrased, the directive states that the cattle industry has a moral, ethical and potentially legal obligation not to sell known diseased or damaged animals to other parties without full disclosure. Marketing or movement of persistently infected BVD animals in any manner that potentially exposes at-risk cattle is strongly opposed.

The U.S. cattle industry has the tools to reduce and eliminate effects and losses from the BVD virus. Economic and production motivations are driving voluntary efforts. Continuing education efforts and continued development and use of practical control plans are keys to achieving higher-level goals for BVD control.

This article and key points are funded by NCBA dues dollars and other non-checkoff funding sources.

Animal Health/Well-being

A review of international animal welfare systems

by Philip Lobo, Communications Director – Animal Agriculture Alliance

Summary

Approaches to farm animal welfare vary greatly around the globe; systems are dependent upon culture, level of prosperity and political system. The methods vary from legalistic, government-imposed requirements like those outlined in several European Union countries to the United States’ primarily agriculture-led approach; some countries adopt a hybrid approach, like Canada and New Zealand. However, all face pressure from activist groups, and more restrictive systems are often touted by activists as being superior to the United States’ systems. To confidently support the current U.S. approach, it is beneficial to look at how farm animal welfare is addressed by other nations.

Background

An agriculture-driven approach

National farm and ranch groups have predominantly led the approach to farm animal welfare in the United States. The U.S. government does not regulate farm animal welfare until animals arrive at meat processing plants. There are two important reasons for this hands-off approach on farms. The first reason is that it has been traditionally recognized that farmers and ranchers take excellent care of their animals because the animals represent their livelihood. The second reason is the logistical difficulties posed by attempting to regulate the vast number of farms and ranches in the United States.

All major farm animal producer groups have developed science-based animal welfare guidelines for their species, although processes vary by group. All of the industry-developed guideline programs are thorough, science-based, reviewed on a regular basis and continuously updated as advancements are discovered.

The United Egg Producers (UEP) formed an Animal Welfare Committee – a team of independent scientists, veterinarians and other recognized animal welfare specialists – to develop guidelines with no input from UEP. After the guidelines were developed, UEP reviewed the guidelines and chose to adopt the guidelines in full, as recommended by the committee.

UEP chose to implement a third-party annual audit program to verify that its members properly implement and operate under the system. Additionally, UEP created a certification labeling program to communicate its members’ commitment to animal welfare to consumers. UEP members must pass each audit in order to market their eggs under the UEP Certified label.

The National Pork Board took a slightly different approach. Pork Board’s animal welfare team included industry representatives along with independent scientists, veterinarians and other recognized animal welfare specialists and resulted in guidelines that most experts believe are of comparable quality to UEP’s guidelines. Pork Board had concerns that an audit process might be too adversarial an approach for the farmers that make up its industry. As a result, Pork Board adopted an assessment process, which consists of a representative visiting the farm and completing an assessment of the farm’s animal welfare system.

Pork Board incorporated its animal welfare program into its Pork Quality Assurance (PQA) program, making it a requirement for market access to major packers. Pork Board also incorporated its transportation guidelines into the PQA program, now called PQA Plus.

The beef checkoff's Beef Quality Assurance program followed a similar approach to that implemented by the National Pork Board, and added a transportation component to its program.

All United States farm animal welfare programs, including those mentioned here, are carried out on a voluntary basis rather than through government regulation. The only exception is those programs implemented in New Jersey, although industry guidelines exceed New Jersey’s standards. As a result, farm animal welfare programs in the United States are more adaptable and improvements can be implemented faster. They ensure guidelines are developed using science by experts in the fields, rather than through a vote of popular opinion by consumers who lack the understanding of farm animals’ needs or by activists driving a vegan agenda.

Multi-party approach is functional, collaborative

New Zealand has had balanced and comprehensive legislation covering the protection of animals since the last century. In 1999, the New Zealand government adopted its Animal Welfare Act, which created a National Animal Welfare Advisory Committee (NAWAC). When the Animal Welfare Act created NAWAC, its intent was to balance different perspectives on animal welfare and, in a nation with a very small animal rights movement, NAWAC appears to be achieving its intended purpose effectively.

Meat and Livestock New Zealand, an industry trade group, explains the approach the New Zealand government has taken is functional and collaborative; neither the government nor the agricultural community sees animal welfare as static, but rather, a work in progress.

At least part of the reason for New Zealand taking an aggressive stance toward animal welfare is that the nation is highly dependent on agricultural exports and is concerned about animal welfare being used as an artificial trade barrier to exclude its products. In a nation where the number of sheep is 10 times the number of people and the number of cows is slightly greater than the number of people, this concern is understandable. Making that even more reasonable is the fact that agriculture contributes about 7.3 percent of New Zealand’s Gross Domestic Product (GDP), according to a 2002 estimate by World Resources Institute. Agriculture accounted for roughly 1 percent of the United States’ GDP in 2002.

Retailer-driven approach yields unintended consequences

In the United Kingdom (UK), retailers initially led the charge on animal welfare in the mid-1980s, telling farmers that stricter animal welfare guidelines were required. The retailers even shared surveys with farm groups indicating that UK consumers said they would be willing to pay a premium for domestically produced pork labeled as “humanely raised.” Some retailers began to impose animal welfare guidelines on farmers that were based on consumer perceptions of welfare rather than reason, science and experience.

Although they had consumer perception data, the retailers did not have any data on consumer behavior. Retailers and farmers found that there was a major difference between what consumers said in surveys and items on which they actually spent their money. The retailer-driven guidelines resulted in legislation regulating how animals were raised; but the legislation had the undesired impact of effectively driving both the veal and swine sectors out of the nation.

In October 2008, the well-respected German Agricultural Society published an article chronicling the more than 40 percent decline in British pig production since 2001, despite surging demand for pork both domestically and abroad. The article, titled “British Pig Production: Welfare Fails to Win Market Share,” was published in the German Agricultural Society Agrifuture magazine, and examined “the chain of events that brought this crisis” since some of the developments “could well affect other European pig sectors in time.”

The unintended negative consequences of the legislation also affected UK consumers. Almost simultaneous with the Agrifuture article, the Wall Street Journal reported that food inflation in the United Kingdom increased a stunning 12.7 percent in September 2008 following a shocking 14.5 percent jump in August. The Journal’s report cited an article by Chatham House, a London think tank, which indicated the UK might have maxed out its ability to produce more food and overlooked the negative consequences of the unnecessary regulation crippling the nation’s agricultural productivity.

The UK’s policy makers mistakenly thought they could use animal welfare to give their farmers an advantage. Instead, they are uncompetitive, have poor production performance and British consumers are paying for the mistakes made by Britain’s retailers and policy makers. The most appalling aspect of this crisis is that while global pig meat demand has increased over 30 percent from 1997 to 2007, the UK’s ability to meet its own nation’s demand has decreased about 40 percent.

Lessons learned

The various farm animal welfare systems outlined provide insight and lessons for animal agriculture in the United States. Successes seen in our current agriculture-driven approach, and those successful practices easily adapted from the multi-party approach, offer a foundation for new ideas to advance farm animal welfare best practices in the United States. Likewise, the situation in the UK is a lesson for U.S. food chain stakeholders as pressure mounts from animal rights activist groups to adopt certain policies related to farm animal welfare.

Beef checkoff communicates sound science in response to cancer studies

by Shalene McNeill, PhD, RD, Executive Director, Nutrition Research, and Michele Peterson Murray, Executive Director, Public Relations – NCBA

Summary

The quest for answers about cancer risk is critically important and understandably personal, especially for those who’ve been affected by this disease. The beef checkoff made a significant, proactive investment two years ago in researching whether there was a relationship between red meat and cancer and this research did not find a causal link. As responsible food producers, we believe it is important to understand our product and its impact on human health. Two recent examples showcase the complex relationship between diet and occurrence of chronic disease. In addition, these two examples point out the importance of communicating sound science on red meat and cancer.

Background

The World Cancer Research Fund (WCRF) and the American Institute for Cancer Research (AICR) released a Policy and Action for Cancer Prevention Report in late February, which laid out recommendations for behavior change through public health policy. These two organizations in late 2007 released a summary of epidemiological studies that suggested a link between red meat and cancer and recommended individuals consume no more than 18 ounces of red meat per week, and that processed meat especially should be limited.

The beef checkoff commissioned a group of independent researchers to review the science and totality of the epidemiological studies and found the evidence does not support a causal relationship between red meat and cancer. Based on these scientific findings, consumers can continue to choose lean beef with confidence and follow the U.S. Dietary Guidelines, which recommend adults eat 5.5 ounces of lean protein each day. On average, Americans eat 2.3 ounces of red meat a day, well within those guidelines.

Just a few weeks after the WCRF/AICR Policy Report was issued, the Archives of Internal Medicine (AIM) published an epidemiological study associating red and processed meat intakes with modest increases in total mortality, cancer mortality and cardiovascular disease mortality. Researchers from the National Institutes of Health’s National Cancer Institute followed half a million people aged 50 to 71 years old for 10 years and investigated more than 70,000 mortalities. However, the findings from this study are complicated by the fact that study participants exhibited unhealthy behaviors such as smoking, lack of physical activity and maintaining a higher body mass index, which are known risk factors for chronic disease.

The reported change in relative risk is a comparison between the extremes – those consuming the most and the least amounts of red meat. Overall, the study did not address the effect of eating meat (of various types) when consumed at recommended intake levels in a balanced diet with appropriate levels of fruits, vegetables and fiber, along with maintaining an ideal body weight and adequate exercise.

Both the WCRF Policy Report and the study published in the Archives of Internal Medicine drew media interest about red meat and cancer prevention. The comprehensive assessment on red meat and cancer funded by the beef checkoff helped provide a scientific foundation for responding to media and nutrition influencer interest.

As with any communications response, it was imperative that the response be fact-based and vetted through scientists. The checkoff team engaged external scientists and health professionals to provide their expert points of view on scientific studies on this topic. This careful approach to the science is no different from any other response strategy in place through the beef checkoff. However, the complexity of the science on cancer is particularly challenging to summarize in a short media sound bite. As such, the national nutrition team worked closely with state partners and fellow red meat industry groups to help extend science-based information about red meat. The bottom line, however, in both these situations is that nothing changes the long-standing recommendation to include lean red meat as part of a healthy diet.

The nutrition team frequently educates reporters, nutrition influencers and consumers on these emerging studies. In the AIM study in particular, a major wire service reporter reached out to the beef checkoff for comment, which the team provided. The relationship led to beef’s perspective being included in several balanced stories that were picked up nationwide. In addition to the wire story, the AIM study received a large amount of coverage online, in newspapers and on television and radio broadcasts. To help set the record straight on red meat and cancer, the nutrition team posted a media statement on the newswire and distributed it to top national nutrition media who might be covering the story. This resulted in a number of consumer and agricultural trade interviews that provided a balanced point of view.

While these are just two examples of recent efforts, no two studies are alike. Therefore, the team continues to research, explore and build measured communications response efforts that pay close attention to the evolving science on food, physical behavior and cancer risk.

Diet/Health/Nutrition

Assessing dietary intake in America and its correlation with health

by Betty Anne Redson, Director, Research, Education and Innovation Dissemination – NCBA

Summary

Various agencies in the federal
government collaborate to assess what Americans eat and correlate food intake with nutrient intake. Program policies and regulatory decisions within the U.S. Department of Agriculture (USDA), the Environmental Protection Agency, the Food and Drug Administration, the Department of Health and Human Services and other government agencies are based on this assessment. In turn, the data are used by nutrition researchers to correlate nutrient and food intake with chronic disease.

Background

Primary government departments involved in the data collection process include:

• The USDA National Nutrient Database for Standard Reference, which develops authoritative food composition databases for many foods eaten in America. This information is used to compile nutrient intake tables after food consumption is determined.
• What We Eat in America, which is the dietary intake interview component of the National Health and Nutrition Examination Survey. What We Eat in America is a collaborative survey conducted by USDA and the Department of Health and Human Services. USDA is responsible for the data collection methodology and data processing. The Department of Health and Human Services formulates the sample design and collects the data.
• USDA’s Food and Nutrient Database for Dietary Studies (FNDDS), which is a comprehensive database for use in coding dietary intakes and analyzing those intakes for nutrient content. It defines the weights for typical food portions used to process the What We Eat in America food intake data. FNDDS differs from Standard Reference in that it analyzes food consumption while Standard Reference compiles food composition information. FNDDS provides data for foods with mixed ingredients and, therefore, can determine nutrient/food intake in a meal. FNDDS uses the Standard Reference data to determine actual food/nutrient data based on primary descriptions for 13,500 foods and 30,000 weights; each is assigned an eight-digit code.

Impact of FNDDS data

What We Eat in America, the National Health and Nutrition Examination Survey and FNDDS are updated every two years. The current FNDDS release, 3.0, reflects the What We Eat in America data collected in the National Health and Nutrition Examination Survey 2005-2006. It provides values for food energy and 63 nutrients/food components for each of the 13,500 food codes. The accuracy of FNDDS is dependent on the currency of the Standard Reference data.

FNDDS is a fundamental scientific component of several federally funded research and nutrition education programs. Most notable is its use as the data source for the consumer nutrition education products of USDA’s MyPyramid food guidance system, including the MyPyramid Tracker, an interactive, Web-based tool for individual diet and physical activity assessment. Health professionals and registered dietitians throughout the country use the MyPyramid Tracker to teach clients how to monitor their diets. FNDDS is used in other food intake studies to code foods and amounts eaten as well as to calculate the amounts of food/nutrient components in these foods.

Every five years, the Dietary Guidelines for Americans Committee recommends nutritional and dietary guidance for the public (healthy Americans 2 years and older) based on the preponderance of current scientific and medical evidence. The committee accesses the nutrition research studies correlating FNDDS data with chronic disease as well as those studies, again based on FNDDS data, which determine the nutrient shortfalls of Americans. Because of its focus on health promotion and risk reduction, the Dietary Guidelines are the foundation for several food and nutrition assistance programs and education activities conducted both at the federal and state level, including:

• Food Stamp Program
• National School Lunch Program
• School Breakfast Program
• Summer Food Service Program for Children
• Supplemental Nutrition Program for Women, Infants & Children
• Child and Adult Care Food Program – Resources to assist afterschool, homeless, and preschool programs in using the child nutrition programs
• The Emergency Food Assistance Program for Homeless Children and Youth
• Legal Immigrants and the Food Stamp Program
• Senior Citizens and the Food Stamp Program

Implications for the beef industry

Beef is a nutrient-rich food that contributes essential nutrients to the diet. The Dietary Guidelines for Americans Committee will evaluate beef’s role in the diet based on current scientific knowledge correlating beef intake to healthy outcomes. For this reason, it is imperative that FNDDS data assessing dietary intake and nutrient content be as accurate as possible.

Unlike many other foods, there are hundreds of beef products available in Standard Reference. In the event beef’s most current data is not available or being accessed by the FNDDS database, the results may not reflect what Americans are eating. The first step toward ensuring FNDDS accurately portrays the nutrient content of today’s beef is to complete the checkoff-funded nutrient analyses of new beef value cuts and the update of the traditional retail cuts, now available at much closer trim than when first analyzed. A recent, beneficial Standard Reference improvement was the deletion of many obsolete cuts. Over the next few years, the checkoff-funded Standard Reference update project will be completed, and researchers and nutrition professionals around the country will be assured they are accessing the most accurate beef nutrient composition data available.

The second step is to address the challenge of ensuring that the nutrient contribution of beef to the American diet is accurately depicted in FNDDS data. To achieve this goal, it will be necessary to evaluate all FNDDS food codes with beef as a component and correct those that are not referencing the most appropriate beef product in Standard Reference. At the completion of this project, the industry will be assured that policies and regulations, as well as federal food programs, are based on beef’s actual nutrient contribution to the diet.

These improvements in the federal nutrition databases should enhance beef’s nutrient-rich image among scientists and health professionals. Today’s beef is lean and trimmed closely. In all, there are 29 cuts of beef that meet government guidelines for lean, and this number increases as further beef nutrient analyses are completed. The ultimate result will be a reduced contribution from beef to the total fat and saturated fat consumption of Americans.

Collaboration and knowledge sharing key to advancements in beef safety programs

by Michelle Rossman, Director, Beef Safety Research & Mandy Carr, Executive Director, Beef Safety – NCBA

Summary

Representatives of all sectors of the beef production, processing and marketing chain gathered at the checkoff-funded 2009 Beef Industry Safety Summit March 4-6 in San Diego. Attendees discussed emerging safety issues, explored solutions to safety challenges and discussed industrywide, science-based strategies to help each sector reduce foodborne pathogen incidence and enhance the safety of U.S. beef products.

Emerging issues such as non-O157 E. coli and Mycobacterium avium subspecies paratuberculosis were discussed at the Summit, as well as practical application of research results that will strengthen safety systems. The collaboration and information sharing demonstrated at the Beef Industry Food Safety Council (BIFSCo)-hosted summit will ensure the continued production of safe and wholesome beef products.

Background

The 2009 Safety Summit was the sixth annual gathering of industry professionals dedicated to producing safe U.S. beef products. Representatives from beef production, processing and marketing attended, as did scientists conducting research on beef safety issues. Participants recognize that collaboration and communication among all sectors of the beef industry to develop unified safety programs is essential to eliminating pathogens in beef products.

This year’s summit kicked off with a keynote address from Al Almanza, administrator, U.S. Department of Agriculture, Food Safety and Inspection Service. Almanza commended Summit attendees for their continued focus on beef safety issues and collaborative approach to addressing those issues. He commented on the current Obama Administration’s review of safety policy and desire to have a full understanding of current policy prior to initiating any new regulatory programs.

During the research update session, scientists shared research data on pre- and post-harvest safety interventions, pathogen prevalence and new technologies that can be adopted to enhance beef safety. The pathogen prevalence data will help optimize interventions. A conditional license has been granted for a vaccine that can be used to decrease the shedding of E. coli by cattle. The license approval was announced at the Summit as well as plans to continue research to generate data that will be used as part of the evaluation process for a full license. Several other pre-harvest interventions including a feed additive, vaccine and bacteriophage product are being evaluated for use in production settings.

Technical workshops covering ground beef patty production, non-intact product definitions and case studies as well as recall insights were held during the second day of the Summit. Attendees had the opportunity to learn from content experts and discuss the issues presented with colleagues. Because of a discussion focusing on current regulatory initiatives, BIFSCo is organizing a follow-up meeting.

Additional presentation topics at the Summit included consumer perceptions of beef safety as well as an update on the European Union ProSafe Beef Program.

The information sharing and in-depth discussions at the Summit resulted in action plans to address safety challenges as well as ideas that can be implemented by all sectors of the industry to proactively address potential issues and enhance the safety of U.S. beef products.

Beef Safety/Quality

Consumers confident in beef safety in 2009

by Stephen Myers, Manager, Reputation Communications – NCBA

Summary

High-profile foodborne illness outbreaks, most recently in peanut products, are maintaining consumer awareness of foodborne illness in 2009. While beef products have not been implicated in recent major outbreaks, research funded by The Beef Checkoff has underscored consumers’ overall concerns about food safety, and that concerns about safety have the potential to limit growth in beef demand.

It is estimated that the beef industry spends $350 million annually on food safety, in addition to the more than $27 million checkoff investment in safety research. However, the scale of the industry’s investment in safety isn’t tangible for consumers, which is why the beef checkoff plays an ongoing role in educating consumers about the beef industry’s commitment to safety, as well as teaches consumers about safe food handling practices, through its safety reputation management program.

Background

Consumers are confident in beef safety

According to the results of a checkoff-funded national survey conducted in March, more than two-thirds of consumers said they believe the number of food recalls and foodborne illnesses is on the rise, particularly on the heels of recall news related to peanut products. In comparison, just 49 percent of consumers answered in the same way in November 2008. The national survey of 1,023 Americans had a margin of error of +/- 3.1 percent.

However, despite a rise in their overall concern about food safety, the survey indicated consumers are confident in the beef industry’s efforts to produce safe food. More than eight in 10 of those respondents agreed that the entire beef industry is working together to ensure safe and wholesome food.

When asked specifically about the beef industry’s efforts to improve safety, 81 percent agreed that the entire beef industry – from farmers and ranchers to processors and retailers – is working together to provide consumers with safe, wholesome food. Seventy-eight percent of consumers also agreed that safeguards developed by beef industry scientists have made ground beef safer than ever.

Safety as a limiter of demand

While high consumer confidence in the beef industry’s efforts to produce safe food is great news for beef producers, it is also important to evaluate how consumer concerns about food safety can exert downward pressure on demand for beef.

In a separate checkoff-funded study, researchers sought to better understand the factors that restrict beef consumption. The study identified concerns about E. coli illnesses as one of the top five limiters of beef demand. This is further underscored by checkoff-funded research performed by James Mintert at Kansas State University that modeled the effects of beef recalls on beef demand. Presented at the 2009 Cattle Industry Convention, the study concluded that a 10 percent increase in beef recalls translates to a 0.2 percent reduction in beef demand. See “U.S. beef demand drivers and enhancement opportunities: A research summary” on page 30 for additional information.

2009 checkoff safety reputation management activities

Food safety is a critical element of beef demand, and the checkoff’s safety reputation management program is addressing this issue in 2009 through outreach within the industry as well as to consumers.

Highlights of the program this year include the 2009 Beef Industry Safety Summit, where the program held a communicator’s session to discuss industry-wide safety communications strategies and ideas, as well as a workshop to cultivate relationships with retailers in providing food safety information to shoppers. The team also worked to publicize the summit to the broader industry in seven influential industry media outlets. As a result of this outreach, National Cattlemen's Beef Association Senior Vice President of Research, Education and Innovation, Bo Reagan, also had the opportunity to publish an article on the safety achievements of the beef industry in an upcoming issue of Food Quality magazine.

The safety reputation management program also worked with the Associated Press in March to achieve positive, national-level coverage of the beef checkoff’s investment in new safety innovations. Director of Beef Safety Research Michelle Rossman was interviewed in an article about the U.S. Department of Agriculture’s conditional approval of a new vaccine to reduce E. coli O157:H7 in cattle, describing the beef industry’s investment in pre-harvest safety interventions and the overall industry investment in safety. This article successfully communicated the beef industry’s safety commitment to a national audience of more than 1.6 million readers.

The program is also conducting ongoing consumer education efforts on how to handle and cook beef products safely, especially ground beef and burgers. Highlights of this consumer outreach include an episode of Steven Raichlen’s "Primal Grill" that will include information on how to cook burgers to 160 F using an instant-read meat thermometer. This episode is expected to air this summer on PBS stations. Consumers will also see the "Safe and Savory at 160" message in prepackaged news briefs distributed to newspapers and Web sites across the country.

Consumer confidence tends to be event driven, and as we approach “hot season” for ground beef recalls over the summer and fall, beef recalls in the news can easily affect consumer sentiment. However, through consistent, positive communications efforts about industry efforts to ensure and improve food safety, we can continue to share the news about the safety attributes of beef to consumers throughout the year.

For more on the checkoff’s consumer food safety efforts, please visit
www.safeandsavory160.com.

Foodservice operators embrace sustainability, promote environmentally conscious food choices

by Rick McCarty, Vice President, Issues Analysis and Strategy & Jennifer Stolp, Manager, Issues Communication – NCBA

Summary

Foodservice operators are increasingly encouraging consumers to make environmentally conscious food decisions. Whether by providing information through pamphlets or Web-based tools about the environmental impact of certain food choices or by removing those items identified as “high carbon footprint” choices from menus altogether, restaurants are encouraging consumers to choose foods, based not on taste or nutritional benefit, but on environmental concerns. Beef often is identified as a food to avoid for those consumers looking to reduce their carbon footprint or greenhouse gas (GHG) emissions.

Background

Foodservice conservation initiatives

Foodservice operators have embraced environmental sustainability and are encouraging consumers to choose foods based on environmental friendliness. In fact, the National Restaurant Association said in January 2009, “It’s clear that ‘SUSTAINABILITY’ is the new restaurant buzzword as more and more consumers vote with their wallets on the environment.”

The National Restaurant Association’s environmental initiative, “Conserve – solutions for sustainability,” is designed to “initiate and inspire actions that improve a company’s bottom line, but also are good for people and the planet.” The Conserve initiative also explores conservation efforts adopted by restaurants around the United States and “offers suggestions and resources to help [foodservice operators] reduce the cost of running your operation – both to your bottom line and the environment.”

The Conserve initiative Web site, www.conserve.restaurant.org, provides information for restaurateurs about basic green initiatives that can be incorporated in the areas of energy efficiency, water conservation and building improvements. Although Conserve doesn’t offer recommendations for food choices, as the leading business association for the restaurant industry, the National Restaurant Association’s initiative is noteworthy in that is sets a precedent for foodservice operators throughout the United States. Common restaurant chains to incorporate green initiatives include Ruby Tuesday, Subway, Ted’s Montana Grill and McDonald’s.

In addition to traditional restaurants, other foodservice operators are also encouraging consumers to “green” their diet. Chartwells, a foodservice management company that serves more than 900 schools, recently produced and distributed a brochure at its Kansas State University location encouraging college students to consider dietary choices to reduce their environmental impact. The four-page brochure, available to students at the campus dining facility, recommended students “substitute a vegan or vegetarian meal a couple times a week” and claimed, “Eating a vegan diet will save 1.5 tons of CO2 per year per person.” The brochure also noted increased beef demand “results in an additional loss of forestry for cattle grazing cattle, especially in South America; as well as increased consumption of other resources or contamination of resources, like fresh water.”

Among other misleading claims, the brochure also said, “10 people could be fed with the grain it takes to raise enough beef for one person” and, “For every pound of beef you don’t’ eat, you save 2,500 to 5,000 gallons of water.” Citing the United Nations’ report Livestock’s Long Shadow, the brochure informed students, “Cattle, both for dairy and for beef, are the number one contributors to greenhouse gases, contributing 18 percent of CO2 measured emissions – more than transportation.”

The brochure’s claims are directly contradicted by established GHG emissions data for the United States. According to the U.S. Environmental Protection Agency (EPA), the entire U.S. agricultural sector accounts for only 6 percent of total annual U.S. greenhouse gas emissions, and livestock production accounts for only 2.8 percent. The 18 percent figure cited by the United Nations’ report Livestock’s Long Shadow is a global estimate, which has no relevance for the United States or other developed countries. This report attributes almost half (48%) of livestock related GHG emissions from massive land use changes and deforestation. Deforestation does not occur in the United States. In fact, the United States has 16 million more acres of forestland than a century ago, according to the U.S. Department of Agriculture (USDA) and the U.S. Forest Service.

Bon Appétit Management Company is another foodservice operator that emphasizes sustainable foodservice, touting itself as a “model” to other foodservice operators. Focusing on where food comes from and how it is grown, the company’s pledges apply to all of its cafés, not just specific “green” locations. Bon Appétit says it serves an estimated 80 million meals a year in 400 locations at colleges, universities and corporations in 29 states.

The company is just beginning the final year of its three-year Low Carbon Diet Commitment to reduce its carbon emissions by 25 percent by April 2010. In the first year, Bon Appétit pledged to reduce the amount of beef purchased by 10 percent from its 2007 baseline; the company reports exceeding this goal, reducing beef purchased by 23 percent. In the second year, Bon Appétit pledged to buy 25 percent less beef (also from the 2007 baseline) and again reported exceeding that goal and reducing beef purchases by 33 percent. According to a news release issued by the company in April 2009, by offering other options such as turkey and vegetarian burgers, the company provides alternatives that replace beef in a way that is satisfying to diners and still reduces the amount of beef purchased. The release notes, “This reduction is a key component of the program because regardless of how far it travels, or how the animals are raised, beef and cheese come from methane emitting ruminant animals and methane is a greenhouse gas 23 times more powerful than CO2.”

What is never explained in such claims is that GHG emissions always are converted to CO2 equivalents (CO2e) which means methane emissions are always multiplied by 23. In the United States, methane from all sources (including enteric fermentation from ruminants, landfills, natural gas systems, coal mining, petroleum systems, wastewater treatment and rice farming) account for only 8 percent of total annual U.S. GHG emissions. Fossil fuel combustion accounts for 85 percent of U.S. emissions.

Carbon “food-print” calculators

Online carbon calculators for determining carbon impact have also become available for consumers. Bon Appétit Management Company’s Low Carbon Diet Calculator is an interactive tool that allows consumers to “determine how [their] meal is contributing to global warming.” The calculator assigns point values the company says are based on more than 40 peer-reviewed lifecycle assessment studies from published research gathered by two teams of science advisors.

The calculator allows consumers to “drag and drop” menu items into a virtual frying pan. Breakfast, lunch and dinner meals are on the menu, as are a la carte options with vegetables, fruits, meats, portion sizes and cooking methods. Items added to the pan are calculated for a total score.

Consumers would be advised to treat these tools with healthy skepticism. For example, to accept the GHG emissions ascribed to beef by Bon Appétit Management Company’s calculator one must be willing to believe that different beef cuts produce different amounts of GHG emissions. Bon Appétit Management Company’s calculator says 4 oz. of grilled ground beef accounts for 5.4 pounds CO2e while 4 oz. of grilled top round is responsible for 10.5 pounds CO2e. The topper, however, is 4 oz. of grilled tenderloin which the calculator says is responsible for 16.7 pounds CO2e. Since all the cuts come from the same animal, it seems rather unlikely different cuts would have different CO2e values.

Worldwide economic factors drive U.S. beef business

by Gregg Doud, Chief Economist – NCBA

Summary

Many industries, including the beef industry, the auto industry, the manufacturing sector and the dairy industry have seen the double impact of deflation, along with a historic housing/mortgage/banking crisis, which has evolved into a worldwide economic emergency. These factors add up to tough times for the beef industry. Like many sectors of the economy, the situation for the beef industry is unique in that it encompasses a number of variables (retail, restaurants, exports and drop-credit values) that seldom point in the same direction at the same time. The net result of the declining dollars derived from hotels, restaurants and institutions, export demand and the drop credit has been a wholesale beef price that is 10 percent lower than a year ago. Lower prices for live cattle, combined with last year’s record-high corn prices, resulted in historic losses for the U.S. cattle feeding industry.

Background

Americans change spending habits, eat fewer meals outside the home

Americans are changing their buying habits after losing about $11 trillion since the highs in the stock market were established. Historically, about 50 percent of U.S. beef is consumed away from home – at hotels, restaurants and institutions (like schools). This “HRI” demand is always a key economic driver for the beef industry, as it involves a sizable portion of the highest value items, including steak. One of the biggest indicators that disposable income is on a downward trend can be seen in the decrease in meals eaten outside of the home. This trend has had a significant negative impact on the wholesale cutout or composite value for U.S. Department of Agriculture Choice beef carcasses.

The challenge for the beef industry will be finding the price-point that brings consumers back into their favorite steakhouse and, once identified, what that price-point will mean for profitability. Consumers have traded down from $8 per pound steak to $2 per pound hamburger in the past six to nine months, and that trend is likely to hold for the balance of 2009. At the retail meat case, although beef has seen significant competition from pork and poultry, heavier cattle weights have, until recently, increased beef supplies despite fewer cattle on feed. In spite of shifting consumer purchasing practices, beef demand at retail has remained strong, and consumers are seeing some of the best values on steaks in years at their local grocery stores.

Exports increase in light of exchange rate

The top story of 2008 in terms of beef, beef variety meat and processed beef-product exports was the value of the U.S. dollar against most major currencies in the world. On average, during most of 2008 it took 10 Mexican pesos to buy one U.S. dollar. This led to a significant increase in the buying power of Mexican consumers and spurred strong U.S. beef sales until the mid-October turmoil quickly pushed the exchange rate first to 13:1, and later 15:1. The peak in sales to Mexico occurred during a record-setting August when the United States exported an average $5 million per day in beef to our North American Free Trade Agreement neighbor to the south.

Total U.S. beef, beef variety meat and processed beef-product exports in 2008 were $3.62 billion – the highest level the United States has seen since the 2003 (pre-bovine spongiform encephalopathy) level of $3.86 billion. Of our top 10 overseas markets, all countries other than Japan and South Korea imported a new record level of U.S. beef and beef products (in dollars) in 2008. The top 10 countries account for 95 percent of total U.S. beef export dollars, with Mexico and Canada accounting for 58 percent of the total.

During the historic global economic chaos between mid-October to mid-March, the value of the U.S. dollar climbed to staggering heights making U.S. beef, pork and poultry exports much less attractive to foreign customers, and these additional supplies placed tremendous price pressure on domestic meat prices.

Between July 1, 2008, and March 17, 2009, the U.S. dollar had appreciated an incredible 40 percent against the Mexican peso and South Korean won and 26 percent against the Canadian dollar. Despite this substantial decrease in the buying power of customers in our top three markets for U.S. beef exports, U.S. beef and beef variety meat exports in January remained strong at 63,805 metric tons (mt. or 141 million pounds) worth $222 million, compared to 63,945 mt. worth $213 million during January 2008.

Russia second largest meat importer in 2008

In terms of global meat trade, arguably the most important story in 2008 was Russia. Led by phenomenal economic growth spurred by crude oil prices that exceeded $100 per barrel, Russian demand for meat exploded, making Russia nearly the largest meat importer in the world in 2008, second only to China and its brief but massive pork imports.

Russian meat and retail food markets expanded at a rapid pace in 2008 as personal incomes exploded based upon the country’s burgeoning income from exports of oil and other commodities. In 2008 Russia became a top customer for Australia, Brazil, Argentina, Paraguay and Uruguay. In fact, through the first nine months of 2008 Russia actually may have bumped the United States out of the top spot as the world’s largest beef importer for the first time in many decades – until crude oil prices collapsed.

For U.S. beef, this meant that our outside “gooseneck” rounds were, for the first time, competitive with Brazilian grass-fed beef in the Russian marketplace due to the historically low value of the U.S. dollar against most major currencies. As a result, the United States sold Russia an unprecedented $55 million worth of fresh/chilled or frozen whole muscle cuts in 2008.

The other side of the remarkable story behind Russia’s meat exports in 2008 is that the collapse in oil prices suggests it likely won’t be repeated in 2009. An interesting bellwether is Uruguay, where January-February 2009 exports to Russia are 7,854 mt., which is a 59 percent decline from the 19,282 mt. during the same period in 2008. The speed at which the Russian beef market turned from boom to bust for global meat exporters in mid-October was shocking. Particularly hard hit by this sudden shift was Australia, which had a very large export program with Russia but was suddenly turned away with beef already on the water to its destination. These rerouted supplies soon found themselves at South Korean ports, which within days, had a ripple effect on U.S. cattle prices.

Some good news emerged on the horizon for U.S. beef exports on March 18 when the Federal Reserve announced plans to purchase $300 billion in long-term U.S. Treasury securities over the next few months. While in the longer-term this move is likely to lead to inflation, the short-term result was a quick decline in the value of the U.S. dollar, particularly against the Mexican peso and South Korean won, which should make U.S. beef exports more competitive.

Another huge part of the success behind U.S. beef exports in 2008 were record-breaking exports to Canada, where the exchange rate and fuel prices had an enormous impact on U.S. beef movement via truck across North America. Diesel prices of over $4 per gallon meant that U.S. beef supplies, which were closer to Canada’s population center of Toronto, had a significant competitive edge versus Canada’s domestic supplies. The outlook for 2009 is not nearly as rosy, however, particularly as long as the value of the U.S. dollar remains strong against the Canadian Loonie.

A long dreamt of market for U.S. beef has always been the European Union (EU) but the successes of 2008 may mean that we could begin to change our description of Europe from “potential” to “reality.” The United States actually exported $111 million in beef to the EU-27 in 2008. Europe is now a net importer of roughly 400,000 mt. of beef, and market access and development efforts in this mark et bear close attention in the years to come.

Lastly, we should note Egypt’s dramatic rise as a major buyer of variety meats. At $93 million in 2008, Egypt is now our largest market for liver.

Market access to Japan and China remain a frustration

The only significant market still completely closed to U.S. beef is China, and the “20 month and under” limitation still drastically affects U.S. beef trade into Japan.

Exports to Japan were $244 million in 2007 and $383 million in 2008 versus $1.391 billion in 2003, suggesting that U.S. beef is still at least $1 billion shy of what it is capable of in that market. The U.S. beef industry continues to press for full World Organization for Animal Health compliance with Japan and all of our trading partners. Regaining this access to Japan is critical to the economic livelihood of U.S. beef producers, as it would add roughly $70 per head to U.S. live cattle prices.

Exports to South Korea were $119 million in 2007 during the brief periods (totaling approximately 109 days) that Korea was open to U.S. boneless beef from cattle fewer than 30 months of age. The United States exported $294 million in 2008 once that market opened to all products under 30 months of age on July 10. South Korea imported $815 million in U.S. beef and beef products in 2003, but the potential demand for U.S. beef in South Korea today could be as much as $1 billion.

Weak dollar decreases imports

What the weak dollar meant for boosting exports also led to a significant decrease in U.S. beef imports, which were down 17 percent in 2008. Although imports were down from every origin except Canada and New Zealand, Uruguay accounted for the vast majority of the decline as Russia was clearly a better market for them during most of 2008.

It should therefore be no surprise that the high value of the dollar has meant a dramatic flip in U.S. imports from Uruguay and other origins so far in 2009. In fact, imports from Australia are up 38 percent and from Uruguay, they’re more than double. Again, the sharp decrease in demand from Russia and the strong U.S. dollar are combining to make the United States a much more attractive market for beef exporting countries than it was at this point in 2008.

Drop credit

The drop credit is another unique factor that has contributed to a decline in live cattle prices. The drop credit is comprised of 23 individual non-meat items derived from a slaughter steer – including the hide, bone meal, heart, tallow, tongue and tripe – that make up a cattle’s byproduct value. The hide traditionally represents the greatest share of the byproduct value (around two-thirds) followed by inedible tallow, edible tallow, tongue and bone meal. About 80 percent of U.S. hides are exported for further processing for items such as shoes and leather car seats. A decline in the demand for staple consumer items such as these, along with the collapse in crude oil prices, which directly affected the price of tallow, led to the drop credit falling from roughly $170 per steer last summer to around $90 so far in 2009.

Climate affects global beef supply

by Erin Daley, Economist, and Ricardo Vernazza-Paganini, Director for Central and South America – U.S. Meat Export Federation

Summary

Severe weather conditions in several key livestock and grain producing regions around the world could significantly affect regional beef supplies in the coming year, and perhaps for years to come. A decline in grain and beef supplies has the potential to create opportunities for the U.S. beef industry, although weak global demand and declining cattle prices may have an offsetting effect.

Background

Argentina, Uruguay and other regions of South America have sustained the most visible damage from the ongoing climate-related challenges, but they certainly are not alone. China, Australia, Africa, the Middle East and even parts of the southern and western United States have been hard-hit by drought.

For the global beef industry and its supporting grain industry, there are several key markets showing the strain of drought-related conditions on their ability to sustain livestock and grain production.

Argentina: In the past decade, Argentina’s cattle herd has lingered in the 50 million head range. But the worst drought in half a century is creating a state of emergency in this major beef-producing nation. There are reports of carcasses littering the fields as Argentina’s fertile prairies have turned to dust. Argentina’s cattle numbers were already down by about 1.3 million head last year, even before the full impact of the drought was felt. There are estimates that the herd could fall by another 1.8 million head in 2009. The cumulative effect would be a 5.5 percent reduction in total herd size compared to 2007, taking the herd back to its lowest level since 2002.

The Argentine government is well known for imposing numerous regulations on beef production – including price controls and export restrictions – in order to keep domestic food prices under control. These interventions even include minimum slaughter weight regulations, which can make it difficult for producers to adjust the size of their herds. However, growing conditions have deteriorated to the point that the Argentine government recently eased these requirements. The Argentine Secretariat reports that beef cattle can now be sold at weights of less than 280 kilograms (616 pounds), and ranchers will not be fined for selling up to 10 percent of their cattle at this lighter weight as long as the animal weighs more than 128 kilograms (282 pounds).

If beef production continues to decline, Argentina will struggle to maintain export levels, especially considering the government’s restrictive export policy. In addition, the relative strength of the Argentine peso versus the Australian dollar, Brazilian real and Uruguayan peso is compounding the challenges Argentine beef is facing in the global marketplace.

Argentina’s beef producers have focused on exports of high-quality chilled beef in light of the government’s export restrictions. This trend is expected to continue. In 2008, Argentina’s beef exports were down 22 percent in volume to 283,474 metric tons (mt., or 624.9 million pounds) but up 15 percent in value to $1.6 billion. The increase in value reflects the 35 percent increase in high-quality, mainly chilled exports to the European Union (EU), accounting for 53 percent of Argentina’s total export value compared to 45 percent in 2007.

Recovery from the current economic conditions and the drought could take years and force the industry to become more reliant on grain feeding, but grain and soybean production is down. The U.S. Department of Agriculture’s March World Agricultural Supply and Demand Estimates report shows a 7 percent decline in Argentina’s soybean production for 2008-2009. For corn, the current forecast calls for a 39 percent production decline compared to 2007-2008, with exports down 53 percent.

Since Argentina is the world’s second-largest corn exporter (after the United States), this could have implications for livestock production in South America as well as other areas like the Middle East. Normally, the European Union would be affected as well, except the EU currently has plentiful crop production.

Another implication of the grain shortage in Argentina is that corn and soybean export tax revenue subsidizes grain-fed beef production. According to reports, an Argentine government program would build five feedlots to finish 200,000 Holstein calves that are currently slaughtered at birth. It is expected that the government would continue to support intensified beef production practices to meet domestic demand and keep beef prices low.

The International Meat Secretariat reports that the Argentine government decided to subsidize feedlot activity to increase domestic beef supply, meet domestic demand and keep prices low. At present, feedlots receive a subsidy of approximately $0.62 per day, per animal slaughtered of less than 300 kilos. This constitutes a great incentive for feedlot production, which increased to 4 million slaughtered head in 2007.

In 2008, feedlot production continued to grow, reaching 5 million animals, equivalent to approximately 33 percent of the country’s total slaughter. Feedlot production is therefore strongly established as an important instrument to sustain Argentina’s livestock production system and to remedy the country’s increasing scarcity of pasture resources. The continuous expansion of the agricultural frontier and the curbing of pastoral lands show that feedlot production is here to stay. Today, there are 700 professional feedlot establishments as well as 400 occasional or informal ones, for a total 1,100 feedlots.

Uruguay: While there is less documentation of the drought’s impact on Uruguay, it is apparent that this South American nation has been hard hit as well. The government of Uruguay declared an agricultural emergency in January because inflation – linked to rising food costs associated with the drought – had jumped to its highest point in five years. In addition, an estimated 100,000 cattle in Uruguay have died in the current drought.

Paraguay: The sixth-largest soybean producer in the world, Paraguay is reporting that the drought will cause harvests to decline 43 percent from 2008 totals.

China: China, which produces 18 percent of the world’s grain, is facing drought conditions across key farming regions. Henan, China’s largest crop-producing province, reportedly is facing its most severe drought since 1951. Throughout northern China several million people and an estimated 2.1 million livestock are facing water shortages. The Chinese government reportedly has allocated about $12.7 billion for relief of drought-stricken areas.

Australia: The world’s second-largest beef exporter (after Brazil) has been beset by climate challenges at both ends of the spectrum – from raging fires in the south to flooding in the north. While wildfire damage has mostly spared the nation’s cattle industry, an estimated 150,000 cattle have died in floods in North Queensland.

Despite intense weather challenges, the Australian beef industry is expected to continue rebuilding its herd. While a projected 2 percent rise in beef production in 2009 will come primarily from higher carcass weights, Meat & Livestock Australia is predicting that the Australian beef herd will reach nearly 28.6 million head by mid-year – a 3 percent increase over the previous year.

Implications for the U.S. beef industry

Argentina: While the impact on Argentina’s beef industry could be significant, history indicates that the country is unlikely to become a net beef importer. Argentina has recorded large fluctuations in domestic beef consumption, indicating that declining production may be offset by lower domestic use. Over the past decade, domestic consumption has varied by more than 30 pounds per person – from 128 pounds in 2003 to more than 160 pounds this past year – depending on the state of the economy.

Although Argentina may not begin importing beef, its exports may remain curtailed. If that is the case, Europe offers the most short-term potential for the United States, especially if the United States and the EU can agree to an expanded high-quality beef quota (a measure often discussed as a possible remedy for the long-running hormone dispute). Argentina, however, is expected to continue to focus on supplying high-quality chilled beef to the EU, its largest value market. Argentina has a 28,000 mt. (61.7 million pounds) high-quality beef quota for the EU, compared to the North American quota of 11,500 mt. (25.4 million pounds). The eligible product definitions are quite different though, with only pasture-grazed beef qualifying for Argentina’s quota while the North American quota requires grain-fed beef, with cattle on feed for at least 100 days. Thus, the United States and Argentina are supplying different products to the EU market. Argentina’s growing grain-fed beef production will continue to be largely destined for the domestic market, driven by both export policies and the stipulation that feedlots are only eligible for subsidies when producing for the domestic market.

South American exports: South American beef exports declined by more than 300,000 mt. (661.4 million pounds) in 2008. U.S. and Australian exports grew to Russia and the EU, the second- and fourth-largest beef importers in the world and generally Brazil’s largest markets.

Other exports: Global beef exports to Greater Hong Kong/China increased by nearly 70 percent in 2008 – an increase of more than 100,000 mt. (220.5 million pounds). Russia and Mexico combined for a similar 100,000 mt. increase in beef imports – an increase of 15 percent. Mexico already is the largest market for U.S. beef exports, and all three are poised to be top growth markets for U.S. beef in the coming years. A further decline in imports from South America could accelerate this growth.

Cattle prices: Even with the decline in beef supply, global demand remains extremely weak and cattle prices have declined 30 to 45 percent compared to peak levels of August 2008. Interestingly, Argentine and U.S. cattle prices have declined at a much lower rate – roughly 18 percent. Argentina’s prices didn’t increase with the rest of the world thanks to its export restrictions, while U.S. beef prices have not declined as dramatically as other major producers, reflecting the strength of the U.S. dollar.

Over the past year, U.S. beef prices fell 15 percent through the end of February based on live animal equivalents. Prices are down nearly 40 percent in Australia and Uruguay and more than 40 percent in Brazil. Argentina’s prices are down 8 percent from a year ago – remaining 40 percent lower than U.S. prices.

U.S. beef demand drivers and enhancement opportunities: A research summary

by James Mintert, Professor, Department of Ag Economics, et al. – Kansas State University

Summary

Large shifts in domestic beef demand have had substantial impacts on the beef industry. Designing programs to increase domestic retail beef demand requires a comprehensive understanding of the many factors that caused beef demand to decline precipitously during the 1980s and 1990s. Likewise, it is important to determine what caused beef demand increases from the late 1990s through the middle part of this decade. Increasing consumer demand for beef requires concerted effort by all vertical segments of the production, processing and marketing chain, as there are myriad opportunities to improve product quality, food safety and diversity of product offerings. How the industry collectively responds to these challenges will ultimately determine the success or failure of demand enhancement initiatives.

Background

The purpose of this study was to provide a comprehensive and updated assessment of factors influencing U.S. consumer demand for beef. To assess the relative impact various factors have on beef demand, a demand model was built to estimate the impacts of beef, competing meat and other goods prices; consumer expenditures; published information on food safety, health and nutrition information related to meat consumption; female labor force participation; and expenditures on food consumed away from home. Quarterly data from 1982 through 2007 were used to estimate the model. Estimates obtained from the model provide measures of expected impacts from changes in each of the demand drivers. This article, updated from a January 2009 Kansas State University fact sheet of the same name, focuses on the impact of key drivers on U.S. consumer demand for beef and what these results mean for the U.S. beef industry.

Before the late 1970s, growth in the U.S. economy and rising consumer incomes contributed to beef demand increasing for a sustained period. In response to growing product demand, the beef industry increased in size. However, starting about 1980, domestic retail beef demand weakened and subsequently declined every year through 1998. The long-run decline in retail beef demand contributed to a reduction in cattle industry size, particularly in relation to competing meat sectors such as poultry and pork. In 1999, following nearly 20 consecutive years of decline, domestic beef demand began to strengthen. From the late 1990s through 2004, the all fresh domestic retail beef demand index increased from a low of 76 to a peak of 92, before weakening again from 2005 through 2008.

Consumer income and expenditures

Consumer income increased steadily from the early 1980s through 2007, averaging about 6 percent compound annual growth. Personal consumption expenditures grew even more rapidly than income during this time as consumers consistently reduced their personal savings rate (Figure 1). In the early 1980s, personal savings ranged from about 8 to 12 percent of disposable income, but the savings rate declined steadily and by 2007 averaged less than 1 percent. This is important because it reveals that consumers were allocating nearly all of their income to living expenses with little money left for savings by late 2007, just as the U.S. economy was entering a recession.

Demand model results reveal beef demand is very responsive to changes in
consumer expenditures on goods and services. On average, a 1 percent increase in U.S. consumer total expenditures results in a 0.9 percent increase in the quantity of beef demanded. Results indicate that from 1982 through 2007, beef demand benefitted from increases in consumer incomes and from consumer willingness to increase consumption expenditures even more rapidly than income was increasing. In other words, the beef demand decline experienced from 1980 through 1998 would have been even more severe if incomes were not growing and consumers were not reducing personal savings rates during this time.

Looking ahead, weakness in the U.S. macroeconomic outlook for 2009 suggests that a decline in per capita consumer income can be expected. Moreover, the impact of weaker consumer income is expected to be compounded by consumers’ desire to increase savings in response to uncertainty and risk present in the financial and real estate markets. An increase in consumer savings means consumption expenditures will decline even more rapidly than income and, given the importance of consumer expenditures, a decline in U.S. retail beef demand is likely during 2009. Longer term, it is unlikely that domestic beef demand will rebound until the U.S. economy strengthens and consumers regain enough confidence to spend more of their income. Since the beef industry can do little to dampen the industrywide effect of this macroeconomic demand determinant, it will be important to focus resources in areas where noticeable impacts are possible.

Price effects

U.S. consumer demand for beef is inelastic with respect to changes in beef price. On average, from 1982 through 2007, a 1 percent increase in beef price resulted in a 0.4 percent decline in the quantity of beef demanded by consumers. As expected, beef consumption was much less responsive to changes in competing meat prices than to beef prices. This means that, although price is integral to attracting consumers to purchase beef, small price increases or declines by themselves have small discernable impacts on beef consumption. Beef expenditures represent a progressively smaller proportion of total consumer expenditures over time, which implies that beef demand will become even less responsive to price changes in the future.

Since consumer demand for beef is inelastic with respect to beef price, the beef industry should focus attention on ensuring that consumers do not have nonprice reasons to shift away from beef consumption. One implication is that the industry should continue to strive to provide consumers with product attributes that consumers want. Results from this project, in conjunction with other research, confirm that consumers want consistently high quality beef products that are nutritious, flavorful, tender, safe, healthy and convenient to prepare. Providing beef products meeting these characteristics is challenging. Furthermore, the dynamic nature of emerging nonprice demand determinants necessitates regular updates regarding factors influencing beef demand and ongoing efforts to identify and design effective industry strategies to increase consumer demand for beef.

Food safety

Figure 2 documents the number of U.S. Department of Agriculture Food Safety Inspection Service beef recalls from 1982 through 2007. Food safety recalls related to beef averaged fewer than four per quarter during this period, but ranged from a low of zero to a peak of 15. When reviewing beef recall history, food safety recalls have exhibited a troubling upward trend in recent years. Not surprisingly, model results reveal food safety recalls adversely impact consumer demand for beef. For example, a 10 percent increase in beef recalls is associated with a 0.2 percent decline in beef demand. However, the impact of food safety recalls is most pronounced when recalls increase sharply. The recent rise in food safety recalls provides a good example of how food safety recalls can negatively influence domestic beef demand. Beef food safety recalls jumped from 18 in 2006 to 38 in 2007; this rise in recalls alone contributed to a 2.6 percent drop in retail beef demand.

Consumers expect food to be safe. When a food safety recall occurs, the food safety assurance system has failed. Responding to food safety recalls after the fact is inadequate because the damage to beef demand has already taken place. As the industry develops programs designed to improve beef demand, ensuring a safe supply of beef is critical to maintaining consumer confidence. Moreover, while the analysis focused on domestic demand, it is also important to recognize the need for high quality, safe beef as a necessary condition for increasing beef exports. The beef industry has devoted considerable resources over the years to various food safety initiatives. The demand study results suggest a continuing need for proactive food safety efforts by the beef industry to avoid the negative impacts associated with food safety breaches. Because introduction of food safety hazards can occur at any stage, including production, processing, handling and food preparation, ensuring a cooperative effort among vertical market participants is essential.

Health and nutrition information

To examine the impact of consumer concerns regarding the healthfulness of eating beef, several information indices were developed and included in the demand model. The first index focused on articles in medical journals that contained information relating diet and fat consumption to cholesterol, heart disease or arteriosclerosis. Results reveal that as the number of articles focusing on this link increases, beef demand declines and demand for nonmeat food increases. The second index identified the number of net positive articles (e.g., positive articles minus negative articles) published regarding Atkins, high protein or low carbohydrate diets. Beef demand responded positively to the publication of information promoting Atkins, high protein or low carbohydrate diets. Beef demand declined when net negative information about low carbohydrate diets was disseminated. The third index counted the number of articles published in medical journals regarding health benefits associated with having zinc, iron or protein in diets. Both beef and poultry demand benefit from increasing published information regarding health benefits associated with zinc, iron or protein.

Assessing the influence of evolving public health information on beef demand requires consideration of both elasticity estimates and the magnitude of changes in the respective factors. Results indicate that consumers change consumption in response to evolving information regarding healthfulness of eating beef. For instance, the number of medical journal articles published linking fat in the diet with cholesterol and heart disease nearly quadrupled from 1982 through 2004 (Figure 3). Beef demand declined about 9 percent because of this influx of information linking fat in the diet to cholesterol and heart disease. Similarly, the 268 percent increase in the number of medical journal articles published noting the importance of zinc, iron and protein from 1982 and 2007 boosted beef demand by about 7 percent, while also increasing poultry demand about 13 percent. Finally, the net number of articles promoting low carbohydrate diets increased by 245 percent from 1998 through 2003 and then declined precipitously after 2003. The media frenzy supporting low carbohydrate diets helped boost beef demand by nearly 2 percent from 1998 through 2003. However, the rapid shift from positive to negative information regarding low carbohydrate diets reduced beef demand by approximately 0.8 percent over the four-year period commencing with the fourth quarter of 2003.

Overall, results from the three health-related indices confirm that consumers respond to information about impacts on human health associated with eating beef. The industry must first, conduct research that helps identify positive impacts derived from beef consumption. Second, these findings need to be presented to health professionals, nutritionists and especially consumers. Furthermore, investing in the development of new production or processing technologies that enhance beef’s nutritional properties can be a source of future demand improvement.

Convenience

Direct measures of meat product preparation convenience at the industry level do not exist. Thus, two indirect measures, female employment outside the home and food consumed away from home, were used in the meat demand analysis. As the percentage of women employed outside the home increases, it is hypothesized that time available for in-home food preparation declines, thereby increasing consumer demand for products that can be prepared quickly and easily. The percentage of women employed outside the home increased from about 53 percent in the early 1980s to about 60 percent in the late 1990s, where it remained through 2007. Food consumed away from home was viewed as a proxy for consumer demand for convenience since consumers often consume food away from home because it eliminates in-home meal preparation time. Food consumed away from home increased from less than 41 percent in the early 1980s to more than 47 percent by 2006.

Model results reveal that as female employment outside the home and food consumed away from home increases, beef demand decreases. On average, from 1982 through 2007, a 1 percent increase in female employment resulted in a 0.6 percent decline in beef quantity demanded by consumers. Conversely, poultry demand increased about 0.6 percent when female employment increased by 1 percent. During the study period, a 1 percent increase in food consumed away from home resulted in a 1.6 percent decline in the quantity of beef demanded by consumers, whereas pork and poultry demand benefitted.

As consumer demand for products that are convenient to prepare increases, beef demand suffers, whereas poultry and pork demand benefit. The differential impact on beef versus competing meats could be related to differences in the pace of new product introductions. For example, a search of Mintel’s Global New Product Database from 1997 to 2008 containing the words Convenient, Microwaveable, Ease of Use or other timesaving claims identified 5,633 new poultry products, but just 3,579 new beef products. To address this issue, the industry needs additional resources devoted to new beef product development. Development efforts should focus both on new beef products adapted for use in the food service market and products suited for featuring in supermarkets.

For more information about this and other agricultural economics topics, visit www.AgManager.info.

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Global economy affects U.S. export trends

by Mike Miller, Chief Operating Officer – Cattle-Fax

Summary

Ongoing global economic uncertainty continues to affect trade worldwide. Tight credit, currency fluctuations and consumer belt-tightening have combined to raise serious concerns about meat consumption in various countries. U.S. meat trade will be critical to domestic beef and cattle prices in 2009. U.S. beef exports could potentially see a 6 percent to 8 percent increase in 2009.

Background

While the United States is not as dependent on exports as some other countries, in 2008 beef exports represented 7.1 percent of production. Pork exports reached 19.9 percent and poultry exports were 18.9 percent of 2008 production. The significance of pork and poultry exports elevates their export success as critical to the beef and cattle markets, like the sharp negative effects seen during Russian poultry bans in the past.

In the chart showing U.S. meat exports, the monthly trend shows export declines immediately following the global financial unwinding that began in mid-September 2008. January and February exports appear to show stability, with pork increasing. Beef and broiler exports in February are actually higher than previous year levels. The data indicate that U.S. export demand remains largely intact, in spite of tight credit, a strengthening dollar and consumer budgeting. In fact, U.S. beef and pork are both considered budget items compared to domestic beef and pork in Japan, the world’s second-largest importer. Consumer budgeting should improve U.S. shipments to Japan as well as South Korea in 2009.

While Japan and South Korea should see good consumer demand for U.S. beef in 2009, other markets raise concern. U.S. beef exports to Mexico have fallen. Reaching 67 million pounds in August 2008, volumes fell to 40 million pounds in February, a 40 percent decline. At the same time, U.S. pork exports to Mexico trended higher through February, ranging near 75 million pounds from December to February. This supports the notion that Mexican consumers are trading down to 50 cents per pound hams from $1.50 per pound beef rounds. The Russian market, which began aggressively buying U.S. beef in mid-2008, has seen U.S. beef trade virtually stop since October. Credit issues and currency rates have been particularly punitive there.

U.S. meat trade will be critical to domestic beef and cattle prices in 2009. Shocks to this trade from the global financial crisis appear to have mostly stabilized. Data indicate pork and poultry exports will likely decline proportionally with smaller domestic production while beef exports stand to see a 6 percent to 8 percent increase in 2009.

Ground beef leads in-home beef usage

by Betty Anne Redson, Director, Research, Education and Innovation Dissemination – NCBA

Summary

With 80 percent of individuals consuming beef in-home at least once in an average two-week period, beef maintains its prominent position at the American dinner table, according to data for the 52 weeks ending Aug. 30, 2008. Among these beef eaters, beef is consumed an average of 1.7 times per week. Though fresh beef consumption declined during the early years of the decade, since 2004 the number of annual per capita in-home beef eatings has stabilized at about 70. Taking population growth into account, fresh beef eatings have increased to levels similar to those experienced in 2000.

Background

The National Cattlemen’s Beef Association, on behalf of The Beef Checkoff, subscribes to the NPD Group’s National Eating Trends Service (NET) and has accumulated nearly 20 years worth of data tracking beef servings in the home. The NPD Group, an innovative global market information company that provides market information on product movement and consumer behavior, maintains an online consumer panel to measure the number of eating occasions for all foods. This research, however, does not measure food volume.

Fresh beef overview

Ground beef is the most popular cut of fresh beef consumed in-home, followed by steaks and roasts. In an average two-week period, 67 percent of the population consumed ground beef an average of 2.4 times. Down 0.9 percent since 2007, steak consumption has dipped to its lowest rate in the past decade. The frequency of steak consumption has held steady since 2000 at 1.6 times in an average two-week period, though the percentage of the population consuming steak in an average two-week period has decreased from 42 percent to 34 percent. During the same period, ground beef consumption has increased by almost 1 percent.

Dinner is the most important meal occasion for fresh beef. In the past two years, however, beef consumption at dinner has slightly dipped, bringing it down to levels witnessed in 2004. This decline was driven by reduced steak consumption on weekdays. While fresh beef is most often consumed as a center-of-plate protein, the eatings of fresh beef as an ingredient to another dish have increased in the past few years. Consumption of many combination end dishes has steadily increased in recent years indicating an opportunity for increased beef usage.

Demographic trends

While all ages consume fresh beef at average rates, in the past decade we have started to see an upswing in consumption by older females. Males 18-34 and 65+, as well as females 45+ have primarily been responsible for the increased consumption since 2004. Since the low in 2004, all cuts, with the exception of steaks, have increased in eatings.

• Ground Beef: In 2008, adult males ages 18-34 and adult females ages 45-54 increased their consumption at the greatest rates since 2004.
• Steak: Despite increased consumption by females ages 65+ during 2008, steak consumption has decreased since 2004.
• Roast: Roast consumption has remained relatively stable since 2004 due to increased consumption by males and females ages 65+. Overall, roast consumption has declined since 2000.

Families continue to be important contributors to beef consumption as households with kids consume 11 more eatings per capita annually than households without. This difference is primarily due to ground beef eatings. Despite the reduced number of dinner meals using fresh beef in 2008 versus 10 years ago, beef remains the top protein consumed at the dinner occasion. Hispanics consume 25 percent more end dish steaks than white/non-Hispanics.

Consumers see factory farming in negative light

by Rick McCarty, Vice President, Issues Analysis and Strategy – NCBA

Summary

An independent, national consumer survey of 1,000 U.S. adults funded by the Cattlemen’s Beef Board and managed by the National Cattlemen’s Beef Association found that more than half (56%) of American consumers have heard the term “factory farming” used to describe the way livestock are raised. For those who have heard the term, it creates a negative picture of animal agriculture and creates food safety concerns.

Background

The term factory farming has been around a long time. It was coined in 1964 by Ruth Harrison, author of Animal Machines, which described modern intensive farming practices in Great Britain. However, only in recent years has it become a widely used activist weapon whose effectiveness has been increased by wide use on the Internet and acceptance by the mainstream media.

Activists frequently use the claim of factory farming to attack animal agriculture and denigrate large-scale agricultural enterprises and the use of technology in livestock production. The activists have had success in inserting the term into media coverage of animal agriculture. Negative images associated with the term include inhumane treatment of animals, use of chemicals and antibiotics that can negatively affect human health, environmental damage and production of unsafe food. A series of activist-produced animated flash movies attacking animal agriculture as factory farming (“The Meatrix” series) have been heavily viewed items on the Internet and have spawned Web sites and movements attacking modern livestock production.

A number of activist groups have created “factory farming” Web pages and a Google search for the term turns up literally millions of hits.

Factory farming is an attempt to create a negative picture of livestock production in the consumer’s mind where the image is a little fuzzy, or absent altogether. Consumers typically see beef production at its polar extremes. They drive down the highway and see cows and calves grazing peacefully in a field. But the next time they see beef it is a steak on their plate or a choice in the meat case. In between there is an information void which anti animal agriculture groups work hard to fill with unpleasant and unsettling pictures about beef production. The purpose is to persuade consumers that the steak on their plate comes at a high cost – in terms of human health, damage to the environment and animal welfare.

Factory farming is an issue the beef industry must address by telling the positive, factual story of beef production. A consumer survey was conducted to analyze how factory farming claims have affected consumer perceptions.

Awareness of factory farming: In the survey, 56 percent of respondents said they had heard the term factory farming used to describe the way livestock are raised. The following statistics relate to the respondents who had heard the term factory farming applied to livestock production. The margin of error for this group’s responses is plus/minus 4.5 percent.

Types of animals: When asked what types of animals were associated with the term factory farming, 69 percent of respondents mentioned chickens. Fifty-five percent of respondents mentioned cattle with 46 percent of those mentioning beef cattle, 6 percent mentioning dairy cattle and 5 percent mentioning both. Following cattle were hogs (25%), turkey (6%), fish (5%) and veal (2%).

Connotations of factory farming: When asked what the term factory farming brought to mind, scale of operation topped the mentions with 78 percent of respondents mentioning something about machinery, technology, industrialization, factories and owned by big corporations. Only 13 percent mentioned something about confinement of the animals, crowded conditions and not being able to move around freely. Only 7 percent of respondents mentioned issues related to animal treatment including inhumane treatment and animal abuse and 4 percent mentioned animal health issues such as use of chemicals/steroid and disease.

Beef and factory farming: Fifty-nine percent of consumers said they believe the beef they buy at the supermarket comes from animals raised in a factory farm setting while 11 percent said they weren’t sure. Of those consumers who think their beef comes from factory farms, more than half (53%) also said they were concerned about the safety of beef.

Fact Sheet: Critical analysis of livestock's long shadow

For more info, contact the National Cattlemen’s Beef Association at info@BeefFromPastureToPlate.org

Updated 4/2009