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Focus on quality

The key for the industry is to keep producing beef of the highest-possible quality

ground beef

If you live within driving distance of a Costco store, I recommend you look at its meat case at the back of the store. You will see a limited selection of cuts and ground beef, of high quality at a terrific price. Costco is the best example I know of satisfying the value equation for meat. I buy all my “regular” beef at Costco because of its price-to-quality relationship. Even USDA Prime is priced reasonably enough that I often buy a New York strip or rib-eye steak that I can scarcely afford in a white tablecloth restaurant.

As I perused Costco’s beef selection recently, a couple of thoughts came to mind. First and most important, consumers will keep buying high-quality beef despite its record high price. There are millions of discerning beef eaters in Canada and the U.S. who can afford to buy the best, and they know what they want. The key for the beef industry on both sides of the border is to keep producing beef of the highest-possible quality.

A second thought came after I saw Costco’s large trays of ground beef. They reminded me that ground beef is the primary driver of boxed beef cut-out values and beef sales in the U.S. and probably in Canada as well. Close to 60 per cent of all beef consumed at home or away in the U.S. is in ground beef form. So should the industry shift its focus from feeding steers and heifers large amounts of corn for six months if so much beef goes through the grinder?

My answer is an emphatic “no.” The U.S. industry’s greatest strength is that it is the world’s largest producer of high-quality, grain-fed beef. It must stay that way to satisfy the growing global taste for this beef. The same is true for the Canadian industry, the world’s second-largest producer of that same beef.

Second, even if cuts from high-grading carcasses go through a grinder, the high quality is adding value to domestically produced ground beef. This fits perfectly with the aspirations of hamburger chains like Smashburger and Five Guys to offer a distinctive burger to their customer and to expand their stores in North America.

These points should be enough to encourage the industry to keep its focus on producing even better beef. Quality will always be rewarded, whether the consumer is in New York, Toronto, Dubai or Tokyo. Consumers are prepared to pay for high-quality beef because they realize that a great steak or burger is an unforgettable eating experience. The North American industry should not fret about its beef being price competitive with that of other countries. It should though ensure that its beef is superior to all other beef.

With this in mind, May heralds the start of the annual grilling season in the U.S. and Canada. Our Memorial Day holiday weekend is the biggest beef sales time of the year. May is the best beef-demand month of the year and demand normally increases six per cent from April to May. There are high hopes that consumers will show their preference for high-quality beef and not be put off by historically high prices.

Speaking of which, USDA’s five-area steer price averaged US$146.34 per cwt in the quarter, 16.6 per cent higher than the year-earlier $125.52. Not surprisingly, USDA has now revised its price forecasts for the next three quarters and the year up sharply. Its annual forecast is US$144-$151. A midpoint average would be 17.2 per cent higher than 2013’s $125.89. Who could have imagined that at the start of the year?

About the author


A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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