U. S. Herd Smallest In 50 Years — And Shrinking Fast – for Sep. 16, 2010

The cattle herd in the United States is entering its 15th year of decline, and now, at just under 31 million head, stands at the lowest level since 1959.

“It’s pretty shocking when you look at that,” said James Bo Reagan, senior vice-president of research, education, and innovation for the National Cattlemen’s Beef Association based in Centennial, Colorado, at the recent CCA semi-annual meeting.

“Cattlefax is predicting for next year that we’re looking at 400,000- 500,000 cow inventory decline.”

A shortage of lean beef trimmings for ground beef has sent prices skyrocketing, from the normal level of $1.10 to $1.20 to $1.80 per pound.

With those high prices pulling more cull cows to market, and heifer placements at feedlots running at 37 per cent and climbing, there is no end in sight to the trend, he added.

DECLINING CONSUMPTION

Even though U. S. per capita beef consumption has been in decline for years, demand for ground beef in a struggling economy and the lack of heifer retention are clear indicators that the cattle herd will continue to shrink in the coming years.

Per capita consumption of beef in the U. S., pegged at 58 pounds in 2010, and is expected to fall to 55 pounds per person in a few years.

“Some guys are saying, ‘Damn, this is depressing,’ with the things going on. But I think we have to look at those challenges as opportunities,” said Reagan.

Increasing beef demand and meeting consumer expectation about nutrition and safety are the keys going forward, he added.

With the world population expected to grow by 700 million people in the next decade, and 27 million in the U. S. over the same period, if each of them ate two to five pounds of beef per year, the industry’s fortunes could turn around dramatically.

However, if per capita consumption by Americans continues to fall to 55 pounds, then there is room for the cattle herd to fall to 30 million head and still meet domestic demand.

“The other thing that is going to change that, is if we start growing our export market,” said Reagan.

CARCASS WEIGHTS

One overlooked aspect is carcass weights. Since 1975, carcass weights have risen by 175 pounds, and in 2010, the average has risen to more than 900 pounds per slaughtered animal.

“But let’s start looking at what that really means. When you start getting eight-to nine-weight cattle, those cuts start to get pretty darn big,” said Reagan. “They are not only heavy, they’re large. We’re going to have 18-to 20-inch ribeyes. What the heck do you do with those things?”

As an example, he noted that a 12-ounce serving for a 20-square-inch ribeye would have to be roughly one-quarter of an inch thick.

“Right now, we’re hearing from food service operators: ‘Your darn cuts are too big.’”

Research into innovative meat-cutting strategies has yielded successes. Using the second tenderest muscle cut in the carcass, “flat iron steak” has exploded in popularity, he said. “Bound cuts” or medallion cuts, which are large ribeyes and sirloins wrapped in netting, have also taken off with consumers. Marinated rounds are going into fajitas, he added.

SAFETY

Most worr isome is that although research has found that consumers say beef tastes better, chicken is consistently rated higher due to a perception of lower fat content and ease of preparation.

“The other thing we’re getting hit on is safety, which is huge for us,” said Reagan. “Safety has cost us a heck of a lot of money and adds to the cost of beef.”

“Hot days” at packing plants, are when testing shows positive results for E. coli. One solution that has become standard is to debone and grind the meat, then send it to a fully cooked processing line. The end result is “very safe,” but what was once worth dollars per pound has been reduced to pennies per pound.

Although the top five American packers spend $400 million per year on food safety, the perception that beef is not safe closes off export markets. [email protected]

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