There is absolutely no truth to the claim that the beef checkoff program has weakened the U.S. cattle industry by helping importers capture a greater share of the domestic market.

Dr. Nevil Speer

September 14, 2018

4 Min Read
Beef continues to take center plate in U.S.

Before the days of TSA PreCheck, unpacking our laptops was a routine part of airport security screening. Amidst the confusion of rescreening and bag checks, someone would hurriedly grab the wrong laptop and subsequently make their way to the gate. To help prevent against that occurrence many of us learned to shamelessly identify our computers.

My defense over the years has always been a “Beef. It’s What’s For Dinner” bumper sticker. It stood out and proved to be fool-proof; no one ever walked off with my computer. But more important, it inevitably served as a great conversation starter.

People would see the bumper sticker and want to talk about it. And without fail, they’d share two thoughts. Usually it was that they were beef lovers and always pleased to find a kindred spirit. Two, there was always a reference to the television ads that featured Robert Mitchum, Sam Elliot and music from Aaron Copeland’s Rodeo.

Those conversations are testament to the success of the promotional campaign. That’s backed up by market research indicating that nearly 90% of Americans recognize the tagline, “Beef. It’s What’s For Dinner.” It’s certain to be one of the most impactful promotional campaigns of recent history.

The advertisements started in the early ‘90s. The timing was critical as beef was fighting off a strong surge from pork and poultry. Beef’s competitors were winning at the meat case. The worst occurred between 1980 and 1998: pork and poultry combined for $112 in per-capita spending growth, while beef gathered only $6 in new spending.

Fast forward 20 years to 2018. The beef industry has executed an amazing turn-around. That’s best demonstrated by what occurred through the gauntlet of the financial crisis. The expectation being the economic downturn would severely hamper the beef industry and enable pork and poultry to gain new market share.

That didn’t occur. To the contrary, the beef industry has experienced remarkable growth from a demand perspective. That’s the direct result of better genetics, better management and efforts like the National Beef Quality Audits and Beef Quality Assurance. Simultaneously, promotional efforts reinforced beef’s position in the marketplace (especially important for time-starved consumers facing ever-increasing options at the grocery store). The cumulative effect of those efforts has led to enduring, unprecedented pricing power for beef in the market place.

None of that matters to R-CALF. The organization is now making an active challenge to the industry’s checkoff program. Here’s the catch, its reasoning is misleading: “The checkoff program has weakened the U.S. cattle industry by helping importers capture a greater share of our domestic market.” That’s assertion doesn’t match reality.

First, the claim of the checkoff having “weakened the U.S. cattle industry,” isn’t substantiated by any measure. As noted above, the beef industry has gained market share since beef demand bottomed in 1998.

To that end, last year in Feedstuffs I noted that, “The real story is a favorable one for the beef industry. That’s the result of committed work during the past 20 years, resulting in an industry that’s increasingly responsive to consumer demands. As a result, consumers continue to reward the beef industry for its efforts with their dollars. And in the end, that’s the only measure of business success that matters.” Those dollars matter.

Total feedyard revenue in 1998 equaled $17.0 billion. Fast forward 20 years: revenue has more than doubled and encroached $36 billion in 2017. Those dollars ultimately make their way back upstream to backgrounders, stockers and cow/calf operations. That happens only because of increased spending by consumers (both domestic and international).

Second, asserting importers have “[captured] a greater share of our domestic market” is disingenuous. This year’s import contribution to the total beef supply is projected to fall below 9% -- down over 2% from the recent peak in 2015 and below the overall average of 9.3% dating back to 1998. Moreover, an overwhelming proportion of those imports are comprised of lean trimmings -– to be blended with 50-50 trim to make hamburger. Accordingly, the imports actually create value for the beef industry (versus the other way around).

Lastly, some broader perspective here is useful. The Cattlemen’s Beef Board (CBB) portion of the industry has actually declined over time. Total CBB revenue in 2017 was $74.9 million -- down $8.4 million compared to 1998. The checkoff investment in 1998 was equivalent to 0.5% of feedyard revenue; it’s now only 0.2%. In other words, CBB is investing a smaller portion of total industry dollars but all the while advancing the industry’s competitiveness.

The hardest part to understand in all this revolves around R-CALF’s motive. Given the reality of the business, no one really benefits from another round of checkoff litigation -– except the attorneys. All the while, R-CALF’s narrative is a false one.

None of beef’s success happened accidentally. The checkoff has been an instrumental part in helping to ensure the beef industry has more customers, buying more beef, at higher prices.

Just head of Labor Day, Bloomberg ran the following headline: “Americans are grilling more steaks for Labor Day with the economy humming.” The subline noted that, “Consumers snub chicken, pork for more premium beef cuts.” Think back 20 years ago, there wasn’t even a hint of that possibility. There simply is no substitute: Beef –- it’s what’s for dinner.

Subscribe to Our Newsletters
Feedstuffs is the news source for animal agriculture

You May Also Like