Beef Industry Faces Challenges
Arising From Its Own Structure

FORT WORTH — Variability, predictability and complexity are the challenges facing the beef industry in Texas today, according to Dr. Charles Long, resident director of the Texas A&M agricultural research and extension center at Overton.

While variations in cattle, meat and production management are problems the industry has long wrestled with, predictability is something the industry wants, Long says.

Predictability, he explains, reduces risk and produces an outcome that can be relied upon.

The problem lies with the complexity of the beef production system.

At the Texas Agricultural and Natural Resources Summit Workshop here last month, Long and Dr. Ernie Davis, a Texas A&M agricultural economist, outlined issues they feel the Texas beef industry has to deal with in the future.

Leading their list is low net returns and high production costs.

Increased cost of inputs and production inefficiencies result in low net returns. The cost-effectiveness of managerial options and more efficient operations must increase, the two-man team insists.

They identified what they consider an apparent inability of some producers to effectively manage natural resources and energy and nutrient flow to enhance production. Poor communication between different phases of the production marketing chain is another hurdle the pair identified, along with a a low rate of adopting sound technologies.

The second concern for Long and Davis is product inconsistency.

This goes beyond the variability of beef for the consumer, they said. It includes a lack of predictable cattle performance in the different production phases.

Grass is seven percent of the input into beef, but the pasture and rangelands of Texas are as varied as the state's climates and soils.

There are almost a dozen different regions across the state with different soil types. The average rainfall in the state varies from more than 50 inches along the Sabine River in East Texas to only eight inches annually in parts of West Texas along the Rio Grande.

"The thing about 'average' rainfall," Long said, "is that it doesn't happen every year."

If the rainfall meets the average, livestock may do okay, but during the last few years, it has been below average.

But weather is only one of the variabilities cattlemen face, Long said.

Another variable is the type of cattle.

"There are a lot of different phases of production," Long pointed out. "Seedstock is subject to variability. There's a variation in the type of cattle that are available."

Some of that variation might be justified due to the area of the state and the conditions under which the cattle are raised. Other variations in seedstock, Long said, may not be justified.

"Cow-calf production varies a lot across the state," he conceded.

This variability leads to variability in prices. The range in calf prices was $250 to $400 a head, gross, over the past few years. That translates, for many ranchers, into low returns on investment.

The duo also noted that markets are not value-based. Today's markets do not sufficiently reward sellers whose cattle meet or exceed set criteria, nor do they penalize sellers of less desirable cattle.

The two men said they would like to see value determined by an animal's potential for future use, performance and related characteristics.

While the cattle going through the system have some variability as calves, that variation widens when they hit the feedlot.

The feedlots have to deal with not only the variability of the types of cattle, but also with variations in management by the previous owners.

"Cattle may change ownership a dozen times," Long pointed out.

Each change holds potential problems with regard to health management, growth and recordkeeping.

Ultimately, these variations show up in the carcass.

Internal and external economic forces, they said, impact profitability of all phases of production, including changes in ownership, regional competition, perceptions of value and supply and demand.

Failure of production managers to consider the entire continuum of beef production, and an inability or unwillingness to eliminate contamination have, along with a lack of marketing materials concerning the nutritional properties of lean beef, left consumers with little confidence about the safety and healthfulness of beef.

Another concern the two men have revolves around environmental problems. They found the problem not limited confined animal feeding operations.

Many of these problems are interrelated.

The changes in ownership may mean problems with marketing and competitiveness, but these are also impacted by a diversity of goals.

Profit is the goal of many beef producers, but there are also those who raise cattle as a hobby. This in turn is related to financial returns.

Cyclical prices and negative profit margins are partially due to widely dispersed production units and producers who are not sensitive to losses because they have other motives for producing cattle, Long and Davis said.

The two men contended that increased compatibility of beef production with alternative land uses, such as row crops, wildlife, recreation and eco-tourism, is needed to enhance overall productivity and revenue for landowners.