Transcript of Improving Information Signals in Beef Supply Chain Ted Schroeder Professor of Agricultural Economics...
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- Improving Information Signals in Beef Supply Chain Ted
Schroeder Professor of Agricultural Economics Kansas State
University tcs@ksu.edu Canadian Cattlemens Association August 14,
2003 Moose Jaw, Saskatchewan http://www.agmanager.info/
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- U.S. Beef Demand Index (1980=100)
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- U.S. Chicken Demand Index (1991=100)
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- Markets at each stage coordinated chain, but worked poorly -
highly varied product - little price-quality distinction - no
incentives to improve - huge loss of market share Lack of
Coordination
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- 1. Safety Assured 2. Tender 3. Flavorful 4. Consistently High
Quality 5. Convenient to Prepare 6. Healthy & Nutritious 7.
Competitively Priced Consumers Demand
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- Wheres the Action? Beef industry will be segmented Divergent
needs for each segment Key to success will be to determine role of
producers in effectively and profitably meeting needs of the
sectors
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- 1. Fresh Branded Case-Ready Products Branded beef used to be
nonexistent Now common USDA has 50 beef certification programs
Original Alberta Beef
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- 2. Meal Packages Single dish quick fix meal consumer
expenditures expanded 83% in 2001 to $141 million AC Nielsen 472
beef products introduced in 2001 Compared to 70 in 1997 - NCBA
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- 3. Food Service Food service continues to grow Diversity of
product needs Quality control in volume are critical Contracts
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- What do they require? Product integrity quality, consistency
High level of accountability of input supplier Product safety
assurances mega responsibility/risk Production practice assurances
(including location?) Traceability Consistent continuous
supply
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- How will producers get the signal? What Wont Work: 1.Marketing
fed cattle on average live or dressed weight basis for same price
2. Relying on visual sorting for quality differentiation 3. Buying
cattle without knowing how they will perform.
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- How will producers get the signal? What can work: 1.Increase
Vertical Alignment cow/calf - feedlot - processor - retail/food
service 2. Objective information measured and accounted 3.
Responsibilities & Rewards clearly identified System must be
set up to: penalize nonperformance reward superior performance 4.
Commitment to a common goal is essential
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- Consolidated Beef Producers Beef Alliances abound 60 or more in
U.S.
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- Goal Attainment is three-step process 1.Significant goals are
set based on priorities 2.A well-constructed plan is put into place
3.A just do it attitude is adopted Goal attainment is always a
balance between a focus on long range goals and daily improvement
Coach Bill Snyder Kansas State Football: -One 10-game win season in
100 years -Ended 1980s 1-36-1 -Snyders first year 1-10 -Last six
years 61-15 -6 of last 8 years 10 or more wins
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- Schroeder et al. 2002 cattle feeder survey Kansas, Texas,
Nebraska, Iowa Producers Changing Marketing
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- Source: Schroeder et al. 2002 Feedlot Survey Weighted-Average
Percentage of Respondent Fed Cattle Marketing Using Live or Carcass
Weight, Grids, and Other Pricing Methods, by Year 82.3% 52.5% 33.1%
15.6% 45.4% 62.1% 2.1% 4.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100% 19962001Expect in 2006 Year Percentage of Cattle Live or
Carcass Weight Grids Other Cash Market Disappearing
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- Ribeye Steak Prices in Kansas City April 1, 2000 Retail Steak
Prices Source: Lusk
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- Critical Research Questions 1.How can the beef producer
(seedstock, cow-calf, and feedlot) position their operation to be
part of the new food environment?
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- Critical Research Questions 1.How can the beef producer
(seedstock, cow-calf, and feedlot) position their operation to be
part of the new food environment? 2.What form of business
ownership, risk sharing, valuation, and financial arrangements are
most likely to be successful in meeting the needs of the consumer?
In other words, what is the most efficient way to provide the
products demanded?
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- Critical Research Questions 1.How can the beef producer
(seedstock, cow-calf, and feedlot) position their operation to be
part of the new food environment? 2.What form of business
ownership, risk sharing, valuation, and financial arrangements are
most likely to be successful in meeting the needs of the consumer?
In other words, what is the most efficient way to provide the
products demanded? 3.How will incentives to add value, innovate,
and invest in development and research be rewarded?
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- Critical Research Questions 1.How can the beef producer
(seedstock, cow-calf, and feedlot) position their operation to be
part of the new food environment? 2.What form of business
ownership, risk sharing, valuation, and financial arrangements are
most likely to be successful in meeting the needs of the consumer?
In other words, what is the most efficient way to provide the
products demanded? 3.How will incentives to add value, innovate,
and invest in development and research be rewarded? 4.How will
producers manage increased risks associated with greater
accountability/liability?
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