How the Beef Industry Performed on its 2011-2015 Long Range Plan

by Rick Husted, MBA, Vice President, Strategic Planning and Market Research, National Cattlemen’s Beef Association, a contractor to the Beef Checkoff

Summary 

The beef industry’s 2011-2015 Long Range Plan (LRP) was recently completed and results show areas of strong performance as well as areas in need of further attention. These goals were established by an industry-wide task force to provide focus and guidance based on needs, market trends and indicators. Here is a summary of those outcomes with more detail provided in the Detailed Summary of Results section below.

Background

With the adoption of the industry’s new long range plan at the annual cattle industry convention in San Diego in January, it’s time to look back and see how the industry performed on its previous Long Range Plan covering the years 2011 through 2015. Overall, the industry performed well, achieving most of its goals while falling short on others. As there is still room for improvement, the new long range plan recommends focus in several of these areas over the next five years.  For even more detail, an industry scorecard covering the past five years is also available(2011-2015 LRP Scorecard).

THE 2011-2015 LONG RANGE PLAN OVERALL OBJECTIVE AND OUTCOME – ACHIEVED

The Strategic Intent Statement for the plan was: To achieve a Wholesale Beef Demand index of 110+ by capitalizing on the quality, safety and taste of U.S. beef while communicating the health, nutrition and convenience benefits of beef and beef products to targeted domestic and international markets.

  • Wholesale beef demand grew considerably between 2011 and 2015, ultimately reaching a demand index level of 123, exceeding the goal of 110+ set in 2011. This was one of the highest wholesale demand levels the industry has achieved since 2004 when it reached 121. This demand performance is a good indication of consumers’ continued desire to purchase beef, even in the face of the higher prices experienced over the past several years.

DETAILED SUMMARY OF RESULTS – CORE STRATEGY GOALS AND OUTCOMES

Improve Domestic Consumer Preference for Beef – NOT ACHIEVED

  • The industry’s goal for this core strategy was to increase the percentage of consumers who believe the positives of beef strongly outweigh the negatives, a measure that correlates very strongly with beef consumption. The goal for this core strategy was to have 31 percent of all consumers believe this about beef.
  • This effort came up a little short, achieving 26.5 percent against the goal of 31 percent.  Despite this outcome, it is important to note that during this same period (2011-2015) consumers who said the positives of beef strongly or somewhat outweigh the negatives increased from 76 percent to 79 percent. While missing the specific goal, beef’s overall performance continues to improve as more and more consumers think positively about our product. This measure will continue to be an industry focus and goal in the new long range plan.

Capitalize on Global Growth Opportunities – ACHIEVED

  • The industry’s goal for this core strategy was to increase the value of exports by 25 percent. This was calculated as total export value (less hides) divided by the number of fed cattle slaughtered. That is, export value per head.  At the time the measure was put in place, the goal of increasing export value by 25 percent essentially meant reaching $252 per head.
  • The industry surpassed this goal by growing export value for U.S. beef to $273 per head by the end of 2015. This translates to a percentage increase of just over 35 percent, well over the stated goal.

Strengthen the Image of Beef and the Beef Industry – ACHIEVED

  • The industry’s goal for this core strategy was to increase the percentage of consumers who believe the positives of how cattle are raised for food strongly outweigh the negatives. The goal for this strategy was to achieve a percentage of 20 percent.
  • The industry surpassed its goal for this core strategy by reaching 23 percent of consumers saying the positives of how cattle are raised for food strongly outweigh the negatives. 

Position the U.S. Cow Herd for Growth – PARTIALLY ACHIEVED

  • Because of the production challenges the industry had faced, the previous long range plan task force felt it was important to set goals that would communicate a need for the industry to focus on growth without sacrificing volume. The goals for this core strategy were two-fold.
  • First, increase bred heifer retention from 16.6 percent to 18 percent. The industry succeeded in increasing bred heifer retention to 19.5 percent by year-end 2015.  Exceeding this goal has helped spur recent growth in the U.S. beef cattle herd.
  • Second, stabilize U.S. beef production at a minimum of 26 billion pounds.  Unfortunately, the industry was unable to keep U.S. beef production from dropping below 26 billion pounds, as it fell to 23.8 billion pounds in 2015.

Protect and Enhance our Freedom to Operate – NOT ACHIEVED

  • This core strategy was all about helping the industry remain free from challenging government oversight. To measure performance against this core strategy, a question was included in the Cattlemen’s Beef Board’s annual producer survey that simply asked how much producers agreed with the statement, Regulations imposed on my business make it more and more difficult to operate freely. This benchmark was 76 percent in 2011 and the goal was to reduce the percentage agreeing with the statement to 72 percent by the end of 2015; or put another way, have producers agree that challenging government oversite is being managed more effectively.
  • The industry came up a little short on reaching this goal but managed to reduce the percentage to 74 percent.  A similar goal is included in the new long range plan and will continue to be an area of industry focus.

Improve Industry Trust, Openness and Relationships – ACHIEVED

  • As the long range plan task force considered industry challenges back in 2010, one area they felt needed attention was the perceived lack of trust and openness between stakeholders across the beef supply chain. They recommended two measures to help assess progress in this area; both were included in the Cattlemen’s Beef Board’s annual producer survey.
  • The first was intended to measure how much producers agree that they have open and trusting relationships with those in the beef industry they do business with. A goal of 86 percent was set on a benchmark of 84 percent.
  • The industry achieved this goal with 86 percent of producers feeling positive about the individual relationships they have with others in the industry.
  • The second was to measure how well producers thought the entire industry works together toward growing beef demand.  A goal of 67 percent was set on a benchmark of 63 percent.
  • The industry exceeded this goal and producers are more positive, with 75 percent believing that the entire industry works together, from cattle production to beef marketing.

Additional Resources

  • The beef industry is poised to build on the success of the past five years and has developed a new industry-wide Long Range Plan that will provide continued focus and guidance through 2020.

 

Tags: Beef Issues Quarterly, Research Findings, Spring 2016

March 27, 2016