US beef industry requires structural changes to remain competitive: Rabobank report

The US cattle industry requires structural changes to keep the country’s beef industry in a competitive position, according to a Rabobank report titled ‘Ground Beef Nation’.

The report states that shifting consumer preferences and a model designed for the production of top-shelf steaks has led to a position where the US cattle industry is losing market share to competitive proteins.

Rabobank cattle economist Don Close said, "Under the existing business model, the US cattle industry manages all fed beef as if it were destined for the centre of the plate at a white table cloth restaurant.

"The industry is, essentially, producing an extraordinarily high-grade product for consumers who desire to purchase a commodity. More than 60% of US beef consumption is ground product.

"If the US cattle industry continues to produce ground beef in a structure better suited to high-end cuts, the result will be continued erosion of market share."

The report explores the trend of changing consumer options and the role of pricing in declining beef consumption.

Industries that produce proteins such as pork and chicken have achieved growth and become more efficient, making their products available at competitive prices.

Close said that the industry must change to a production model that determines the best end use of an animal as early as possible, in order to compete in a ‘ground beef nation’.

"A new system for end-use categorisation that influences calf selection, cattle management, production costs, and feeding regimen throughout the life of the animal is vital to keeping beef competitive with other choices at the meat counter," he added.

With nearly $1trn assets, Rabobank is a financial services provider to the wholesale and retail banking, leasing, real estate services, and renewable energy sectors and operates in more than 40 countries.

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Image: The report states that the US cattle industry has been affected by the shifting consumer preferences and a model designed for the production of top-shelf steaks. Photo courtesy of Koos Schwaneberg.