Cattle Growers Hear Pep Talk,
Insights From Beef End Users

By Colleen Schreiber

FORT WORTH — In announcing the Texas and Southwestern Cattle Raisers Association's "beef information hotline" during the group's recent annual convention here, former TSCRA president Frates Seeligson offered marketing committee members a few quick facts about their product.

For instance, Seeligson said, fat is an essential nutrient needed for energy and the transport of vitamins.

"Consumers need to understand that we don't have the same product in the meat case. We've trimmed the fat off, but we don't want to eliminate the fat entirely, merely regulate it. The nice thing is that beef makes it easy to regulate your fat."

He told listeners that seven beef cuts are comparable to a skinless chicken breast in terms of fat.

"If it’s round or loin, it’s lean beef," Seeligson assured listeners. "So why eat chicken when you can get the skinny out of beef?

He also made note of a statistic which indicates a substantial rise in obesity.

"Beef demand has been declining for the past 20 years, so how can they say it's beef's fault?" he asked. "We don’t exercise enough and there’s been a tremendous increase in sugar since the early 1970s. The consumption of sugar has gone up one cup a day. It's gone up 24 pounds since the beef decline started."

Cholesterol, he noted, is also needed for life.

"It's required for every cell in the body. It gives structure and support to the cells," he said.

Beef is nutrient-dense, meaning that every bite of meat contains a little bit of all necessary nutrients and vitamins.

"Beef is power-packed with ZIP — zinc, iron and protein — and calorie per calorie, beef provides more octane fuel than most foods. Beef is healthy."

An end-user panel also addressed marketing committee participants.

Molly Meade, manager of the cooked meats category for H-E-B Grocery Company, discussed some of the latest developments in her company's marketing programs and plans.

H-E-B, a $7 billion company with a billion in gross meat sales, is primarily located in South Texas.

"We have stores all the way down to the border, as far north as Cleburne and as far west as Midland/Odessa, and we have aggressive plans for expansion," Meade told listeners. The company is planning aggressive expansion in Mexico as well.

H-E-B, she said, is committed to growing their sales and beef sales in particular. She said her company is a strong end-meat user whose biggest seller is the shoulder clod.

"We are proud of our partnership with the beef industry. We are on a crusade for beef just like everyone in this room," Meade told listeners. "We want to see this industry grow; we want to see beef sales grow in our beef case. We are expected to post double-digit sales in our beef department. We’re also growing our meat case every year, and there aren’t many retailers in the nation that can say that. Most are shrinking their fresh meat case."

H-E-B's meat department, Meade said, has what they term "common language."

"It doesn't matter if you are the president of the company or the person who mops the floors, the common language in the meat department is that if it is cut right and cooked right it eats right."

Meade also touched on the responsibility of everyone in the industry to improve the palatability and consistency of the product in the meat case.

"We would like to see a strong emphasis on a beef quality assurance program," she told listeners. "We also want to know that the cattle that were raised will produce a beef that will sell, that they’ve been raised in a manner that will maximize their palatability potential. We look to you to help us do that."

In a question and answer period, Meade fielded a question on H-E-B's line of fully cooked products.

"At Easter, we expected to see a million dollars in sales from our fully cooked brisket. We will actually exceed that by 10 times," Meade said. "More exciting is that not only have we grown our fully cooked brisket sales, but we have also grown raw brisket sales and seasoned and marinated sales. We've actually lifted the entire category because we offered a fully cooked product."

Another of their new fully-cooked items is their seven-minute pot roast.

"Not long after we rolled out this new product we ran our supplier out of production," Meade told the crowd. "It's been a very aggressive mover for us. We expect it to be bigger than the briskets, maybe not in sales but in units moved."

Excel's vice president of quality and training, Dell Allen, told listeners that everyone has their own analysis of why beef demand has slipped in the last 20 years.

"It's related to a lot of things," Allen said, "but one of the biggest things is that this industry has historically been production-driven. We have had the attitude that we have the God-given right to produce beef and put it through the marketing channels and someone is going to eat it, and not only are they going to eat it, but by gosh they’re going to like it.

"That kind of the attitude has been there for a long time. I think that attitude needs to change," he continued. "I do think we are in the process of changing it."

That said, Allen added, "We as a packing company are very definitely volume-driven. We have to produce in volume or our incremental costs go up and we have trouble competing with our competitors."

Excel currently has six beef slaughtering facilities, one in Canada and four beef facilities in the U.S., and four further processing facilities that largely deal with beef products located in California, Nebraska, Iowa and Arkansas. Excel also has three pork facilities in Illinois, Iowa and Missouri and two case-ready facilities, including one in Toronto which provides product for about 300 stores in the Toronto area. Another one, recently opened near Atlanta, supplies beef and pork for about 174 Kroger stores in the area.

"Because of our case-ready facilities, we are becoming closer to the end user of the products," Allen said.

The industry in the last 10 years has done a good job of taking the fat off, but in reality, the packer representative said, that fat has been taken off by a knife much more than through genetics.

"We’ve talked in the last 10 to 15 years a good game of satisfying consumer demand," Allen said. "The talk has been a lot more than the action, however. We’ve been involved with identifying what the consumer wants day in and day out. When you hear what the consumer wants and you relate what they're saying to producers, the initial reaction when you tell producers this is, 'well, we can’t produce that.' There is a big, strong disconnect there."

Allen told listeners that they should be proud of having H-E-B in Texas.

"As Molly Meade indicated, we don't see a lot of retailers increasing their red meat case, much less beef. It is rare to have a retailer that is working to do that and doing it very successfully," he said. "What we've got to do, and you've heard this over and over, is we have to make our product more consumer friendly."

The safety of beef has been brought into question, rightly or wrongly.

"The news media has grabbed ahold of a lot of things and made it an issue in consumers minds', when in reality beef is probably the safest meat, from a pathogenic standpoint, that we have. But, be that as it may, it is in the public’s eye a suspect largely because of E. coli.

"The E. coli bacteria is probably the most highly publicized bacteria we’ve ever had," Allen continued. "This industry has done a very poor job of addressing the problem. I’m talking about everyone in this industry. We've tended to stick our heads in the sand. We have not done a good job in educating our public about the safety of our food product. "There is a tremendous barrier and lack of knowledge about beef in the consuming public today."

Billy Lloyd, director of technical services for the Meat Export Federation, Denver, told listeners what they were hoping to hear about purchase authorization for Russia for the food aid program that USDA and the Foreign Agriculture Service sponsors. The aid package is expected to move about 120,000 metric tons of beef, primarily chucks, livers and a lower percentage of some round product, as well as some beef hearts. Lloyd said 120,000 metric tons relates to about one day's kill per week. Approximately 18 or 19 metric tons or about 40,000 pounds make a load. Lloyd told listeners that he expects the beef to move over about a six-month timeframe.

The European Union, he noted, is another hot topic which will come to a head on May 13. That date brings to an end the 15-month grace period the EU was granted after they lost the World Trade Organization lawsuit filed by the U.S. Canada and Australia. The suit successfully contended that Europe's ban on beef raised using growth promotants is scientifically unfounded and is thus an illegal trade barrier.

The EU was given three options, Lloyd said: "take the ban off, come up with some kind of labeling scenario where we could label our product but still merchandise it in the EU with a quota, or pay us compensation."

USDA, he said, has published a list of products, most of which are ag products, on which the U.S. would impose a 100 percent tariff in retaliation if the EU does not comply. That list, Lloyd told listeners, has about $900 million worth of trade, but he predicts the final list will be squeezed down to about $500 million worth.

"It remains to be seen how our State Department will back us in a trade war," Lloyd commented.

The Asian economic crisis has also had a tremendous impact on the beef industry, particularly in beef hides.

"We're sending a lot of muscle meats into Korea, and it was just announced that they're going to get some relief, but the level going into that country is still not nearly what it was. At one time Korea was our second largest market. Now it’s about our fourth largest market," Lloyd said.

Mexico, he concluded, continues to be a bright spot for the U.S. market.

"That market was probably our biggest home run this year."

Scott Gates, representing Sysco Corporation, the nation's largest food service distributor, rounded out the panel.

Gates told listeners that his company has annual sales of $16 billion, and beef sales account for in excess of a billion of the $16 billion in sales.

"That’s about 12 million pounds of beef a week, or about 28,000 steers every week based on about a 430-pound boneless equivalent," Gates said.

Approximately one-fourth of Sysco's business is in ground beef sales. Sysco has 75 distributors throughout the U.S. and Canada, with 60 of them located in the U.S. Their customers include restaurants and institutions such as schools, hospitals, etc.

Value-added production, Gates told listeners, is a growing market for their company. Last year, with help from the Beef Council, Sysco added 26 new value-added items to their product line.

One of his company's continuing problems with the beef industry, Gates said, deals with cost proportioning.

"We have to get the size and cost of the portions down," he explained.

The other problem, he said, has to do with consistent supply.

"It's very hard to control the supply of beef, which makes it difficult for me because we never know how much we’re going to have, what quality, etc. Poultry has taken care of these problems," Gates told listeners. "With poultry we know that they will have more product year in and year out and that product will be there 52 weeks out of the year. That’s what we need to achieve with beef, a consistent supply with the ability to grow our business every year."