Feedstuffs is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

A few minutes with Mack Graves: What does 2019 crystal ball hold?

Mack Graves is perfectly positioned to answer some of the toughest questions. His answers are backed by more than 40 years of work in animal-food protein.

The new year will bring on some of the most troubling times for American agriculture in more than a quarter century, possibly since the desperate dust bowl days of the 1930s. Farm income will continue its near decade long slide, operating expenses will rise and forced or voluntary bankruptcies will starve the heartland of valuable human resources.

Seems like the perfect time to ask Mack Graves about the future of farming.

Mack Graves is perfectly positioned to answer some of the toughest questions. His answers are backed by more than 40 years of work in animal-food protein. He has specialized in corporate strategy, management focus and marketing effectiveness in companies and organizations across the protein chain.

He speaks nationally and internationally on meat and poultry marketing issues, with an emphasis on establishing consumer-trusted brands. Raised on his parent’s ranch, Graves’ hands-on agriculture experience progressed to senior levels at Armour Food Co. and on to senior production and marketing positions at Perdue Farms, and general management positions at Clearwater Fine Foods, USA, Coleman Natural Products, Meyer Natural Angus and Western Grasslands.

In one of the most volatile times in agriculture, asking anyone to talk with certainty about the future is asking them to take some large risks. When I asked Graves to share his thoughts, his first inclination was the answers might be better from someone far above his pay grade. He's much to modest. When it comes to the kind of well-reasoned answers I wanted, very few people are above his pay grade.

Q. Disruptions in trade caused by the rejection of trade agreements have caused some serious problems for American agriculture. During a United States–Mexico–Canada Agreement (USMEF) press conference last month, though, President and CEO Dan Halstrom said, “We continue to see very good momentum on the beef side globally.” He was encouraged by a growing appetite for red meat, particularly in Asia. 

Halstrom said U.S. beef exports were up 6% in volume year-over-year in September and are on a record pace to exceed $8 billion in 2018. The consensus among many observers is those numbers are not sustainable in the coming year. Will the USMEF’s marketing efforts help international beef markets stay healthy next year or is 2018 an anomaly that can’t continue? 

A. If Halstrom’s definition of red meat includes pork, then yes China’s appetite is growing geometrically. In fact, China is the world’s largest consumer of pork. But with the tariffs, it will probably seek to import other country’s pork production. With tariffs on soybeans, the principal hog feed ingredient, China will move elsewhere for soybean meal as well to supply its growing hog feeding operations.  Getting those markets back is going to be tough. 

Just as one hot day doesn’t make a summer, a few months into the new tariffs should not be taken as indicative nor predictive of total foreign beef demand. One can only hope the USMEF’s marketing efforts are effective in stimulating beef demand to at least the same level as recently. With the glut of cattle coming at us, forcing a lowering of prices (at least that’s what my old economics professor taught me), then export markets for beef should not decline.

Q. Let’s talk about the domestic market. How is it holding up?  What about future demand?  

A. Reports of beef’s demise are probably premature.

However, the hue-and-cry of the activists and environmentalists weighs on the beef market. But, like the export market, money talks and a low price will continue to stimulate demand at least thru mid-2019. Beef demand as reported by Glynn Tonsor of Kansas State shows two of the last three quarters with improving beef demand, but since 1990, his beef demand index shows a decline of nearly 10%.

The cattle cycle from trough to trough used to last about 10 years, this has been shortened somewhat and the record high cattle prices of 2014-15 are gone, but it seems that more cows and heifers are being slaughtered which presages a return to higher prices and that means lower demand.

Q. The labor shortage is getting worse as fewer Latinos are crossing the border to find work and there has even been a net outflow in the past few years. Like the international trade issue, it’s being felt across all agriculture, too. How are packers and ranchers being impacted by the labor shortage? What are they doing to manage the issue? 

A. Watch out because the robotics are coming; the robotics are coming! Automation will be the new replacement. Who wants to work where it’s smelly, too cold or too hot, at an almost unsustainably high rate of speed jerking the guts out of animals and then slicing them up into parts for barely a minimum wage? A robot will, but certainly, not the unemployed U.S. worker. 

Our meat industry has always been an immigrant business from the Europeans in the early 20th Century to Koreans in the 1950s to the Vietnamese in the 1970s to the Latin Americans in the 2000s. The Mexican vaqueros may not be as available, but the bucolic cattle rangeland is a siren call to many U.S. cowboys so that labor market will probably easily be filled. However, in the packing plants for the reasons mentioned above, they will have to venture far and wide from plants to find workers and subsequently have to house and pay them more in addition to crafting programs like English as a second language education to attract and keep the best ones. 

Q. The Trump Administration has crafted a new trade agreement. The USMCA has been signed by the heads of the three participating nations but has yet to be ratified by their legislatures. Will our congress ratify USMCA? What about Canada and Mexico? What happens if the agreement fails?

A. I am reminded of the lyrics from an old song, “Everything old is new again.” The differences between the two, North American Free Trade Agreement (NAFTA) and USMCA are minimal at best particularly for agriculture. Sure, the U.S. gets access to 3.6% of the Canada’s dairy market up from 1%, which is slightly above the 3.25% of the TPP level that Trump withdrew from. The class 7 pricing system that had been disadvantaging to U.S. farmers has been eliminated. The U.S. will get access to more of Canada’s chicken, turkey and egg markets. The importation of certain cheeses and wines are eased for all three signatories. 

However, Canada and Mexico are two of our biggest markets for beef and I could find nothing in the new agreement addressing that either increasing it or lowering it. Dispute resolution is eased. All in all, much ado about nothing. You cannot be serious about its failure. Trump just signed it. So, the new USMCA won’t fail at least not for six years when it is to be reviewed versus every 16 years for NAFTA. 

Q. Lab meat, clean meat, whatever you want to call it -- and let’s include veggie-based as well as cell-grown products -- will it become a serious contender in the marketplace?

A. Of course it will. Those of us within the meat and poultry industries may scoff at the bland or dry taste of these meat analogs, but the millennial or Gen Z shopper looking for convenience and, more importantly to them, compatible diet offerings, will drive this market. It will probably rise dramatically year-over-year as a percentage of previous years’ levels are dramatic for any new product until sales level off. But, in my view, these offerings will become more “meat like” in taste, texture and mouth feel to satisfy palette demands and low in caloric content to satisfy the many different diet demands.

TAGS: News
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.