Beef I Indust ustry Issue ues Tri-State Beef Conference August - - PowerPoint PPT Presentation

Beef I Indust ustry Issue ues

Tri-State Beef Conference August 8-9, 2013 Abingdon, VA

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Beef Cow Inventory

2 20000 25000 30000 35000 40000 45000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 1,000 Head

Beef Cows

Data Source: USDA National Agricultural Statistics Service through Livestock Marketing Information Center.

Inventory & Production

3 7.5 8.5 9.5 10.5 11.5 12.5 13.5 20000 25000 30000 35000 40000 45000 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Million Metric Tons 1,000 Head

Beef Cows Production

Data Source: USDA National Agricultural Statistics Service and Foreign Agricultural Service PSD online.

Key Industry Challenges

• Long-term demand challenges

– Increasing relative price disadvantage – Weak consumer incomes – Changing consumer demographics – Greater export dependence

• Maintaining freedom to operate

– Aggressive environmental regulation – Consumer acceptance issues

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MYA Corn Price

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Data Source: USDA National Agricultural Statistics Service.

Persistent Drought

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July 26, 2011 July 24, 2012 July 23, 2013

Retail Beef Prices

7 380 400 420 440 460 480 500 J F M A M J J A S O N D cents/lb 2013 2012 2011

* All Fresh

0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 Retail Price (% of Jan. 2008)

Data Source: USDA Economic Research Service through Livestock Marketing Information Center.

Wholesale Beef & Fed Cattle Prices

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65 75 85 95 105 115 125 135 1 4 7 101316192225283134374043464952 $/cwt Week

• Avg. 2009-11

2012 2013

Choice BBCV Fed Steers

Data Source: USDA Agricultural Marketing Service through Livestock Marketing Information Center.

• MED. & LRG. #1 FEEDER STEER PRICES

700-800 Pounds, Southern Plains, Weekly

95 105 115 125 135 145 155 165

JAN APR JUL OCT

$ Per Cwt. Avg. 2007-11 2012 2013

C-P-49 07/29/13

Livestock Marketing Information Center

Data Source: USDA-AMS, Compiled & Analysis by LMIC

Competing Meat Prices

10 300.0 310.0 320.0 330.0 340.0 350.0 360.0 J F M A M J J A S O N D cents/lb

Pork

2013 2012 2011

155.00 160.00 165.00 170.00 175.00 180.00 185.00 190.00 195.00 200.00 205.00 J F M A M J J A S O N D cents/lb

Broiler

2013 2012 2011 Data Source: USDA Economic Research Service through Livestock Marketing Information Center.

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17,000 18,000 19,000 20,000 21,000 22,000 23,000 24,000 25,000 1 2 3 4 million lbs Quarter

Total Red Meat & Poultry

2011 2012 2013 2014 4,000 4,500 5,000 5,500 6,000 6,500 7,000 1 2 3 4 million lbs Quarter

Beef

2011 2012 2013 2014 4,000 4,500 5,000 5,500 6,000 6,500 7,000 1 2 3 4 million lbs Quarter

Pork

2011 2012 2013 2014 6,500 7,000 7,500 8,000 8,500 9,000 9,500 10,000 10,500 1 2 3 4 million lbs Quarter

Broilers

2011 2012 2013 2014 Data Source: USDA Economic Research Service.

4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 2007.1 2007.2 2007.3 2007.4 2008.1 2008.2 2008.3 2008.4 2009.1 2009.2 2009.3 2009.4 2010.1 2010.2 2010.3 2010.4 2011.1 2011.2 2011.3 2011.4 2012.1 2012.2 2012.3 2012.4 2013.1 2013.2 2013.3 2013.4 2014.1 2014.2 2014.3 2014.4 million lbs. Beef Pork

Quarterly Beef & Pork

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Data Source: USDA Economic Research Service.

Pig Crop

14 25000 26000 27000 28000 29000 30000 31000 Q1 Q2 Q3 Q4 1,000 head 2011 2012 2013

30.1 million head = record quarterly pig crop.

Data Source: USDA National Agricultural Statistics Service through Livestock Marketing Information Center.

Broiler Eggs Set

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160,000 165,000 170,000 175,000 180,000 185,000 190,000 195,000 200,000 205,000 210,000 215,000 1 5 9 13 17 21 25 29 33 37 41 45 49 1,000s Week

• Avg. 2009-11

2012 2013

Data Source: USDA National Agricultural Statistics Service through Livestock Marketing Information Center.

H1 Beef Cow Slaughter

16 40.0 45.0 50.0 55.0 60.0 65.0 70.0 75.0 80.0 85.0 1 4 7 10 13 16 19 22 25 1,000 head Week

• Avg. 2009-11

2012 2013

Data Source: USDA Agricultural Marketing Service through Livestock Marketing Information Center.

Per Capita Meat Consumption

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Data Source: USDA World Agricultural Outlook Board through Livestock Marketing Information Center.

COF Placements and

• Avg. Placement

Weight

18 650 660 670 680 690 700 710 720 730 740 750 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

• Avg. Placement Wgt. (lbs/head)

2012

• Avg. 2009-11

2013 1000 1200 1400 1600 1800 2000 2200 2400 2600 J F M A M J J A S O N D 1,000 head Month

• Avg. 2009-11

2012 2013

Data Source: USDA National Agricultural Statistics Service through Livestock Marketing Information Center.

Disposable Income Growth

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Real PDI annual growth rate <=1% for 4 years.

Changing Consumers

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Meat Exports

21 0% 5% 10% 15% 20% 25% % of production exported Beef Pork Broilers

2012 Export Volumes: Broilers: 7.3 bil. lbs. Pork: 5.4 bil. lbs. Beef: 2.5 bil. lbs.

Data Source: USDA Foreign Agricultural Service.

Freedom to Operate

• Regulatory freedom

– Biggest concern now is probably EPA

• Clean Air Act / Clean Water Act
• Social license to operate

– Animal rights/welfare, food safety, environmental stewardship

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Social License

4 Factors Affecting SLO Level

1.

Institutionalized Trust

2.

Inter-actional Trust

3.

Socio-Political Legitimacy

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Economic Legitimacy

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Levels of Social License to Operate (Boutilier and Thomson, 2011)

How to Respond

• To economic challenges

– Be informed; be creative; be customer-focused

• To regulatory/political challenges

– Be engaged

• To social challenges

– Be transparent; don’t assume everyone knows what you do and why you do it

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