2020 Vision for the Beef Industry
CattleFax CEO gives vision of what the beef industry will be in 2020.
NASHVILLE, Tenn. (Feb. 5, 2014) — Don’t underestimate the efficiency of the markets. They will work if we let them, said Randy Blach, CEO of CattleFax, during the CattleFax Outlook session at the 2014 Cattle Industry Convention and NCBA Trade Show in Nashville, Tenn.
The beef supply that Americans consume annually has decreased to less than 55 pounds (lb.), compared to 95 lb. in the late 1990s, Blach shared. The main driver why markets change is supply. The trade price ranges are increasing as the herd is in a rebuilding stage, though, and high prices will stick around. In 2014, retail and wholesale beef prices are expected to increase 7%, though per capita net beef supplies will drop 4% to 54 lb. per person.
However, in 2020, Blach predicted, global growth will continue and global markets will add $307 in value of beef, beef byproducts and hide exports per carcass, a strong increase from $175 in 2003.
Currently, the United States is the largest beef producer in the world, but it needs herd expansion to retain that title. Blach said 27% of the meat — beef, pork and poultry — exported globally comes from the United States. The United States exports about 13%-14% of its beef production, and the export market shows promise to increase in value. In 2013, the United States exported 7.3 billion lb. of beef, and Blach predicted that by 2020, that number could increase to 12.2 billion.
The United States has many advantages in global trade, including an infrastructure that is in place; one of the most efficient production systems in the world, evident by its being the largest beef producer; many trade agreements in place; nationwide regulations; and producers who adapt to market signals.
To prepare for an increasingly global marketplace in 2020, Blach suggested the U.S. beef industry
- will continue to consolidate,
- must must expand the cow herd in the next one to four years,
- will increase capital requirements,
- must be prepared for more volatility,
- increase risk management, and
- enhance global market access and trade agreements to respond to increased global buying power.
Other countries need more of what we have, and now they have the income to pay for it, he explained.
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