Changing consumer demands will affect producers long-term, according to Cargill
Growing food awareness amongst consumers is causing producers to shift their strategies for marketing their products, according to Nathan Pike, Cargill strategic marketing and technology leader.
“Sustainability is a much bigger deal than what it used to be,” explains Heather Tansey, Cargill sustainability director.
“When I think of sustainability and where the conversation really began, I think of the 1980s,” she notes. “During this time, we defined sustainability as developing crops to the best of our ability today without compromising our future generations’ ability to do so.”
“Starting in the 1990s, there was a major shift in thinking about sustainability,” she explains. “Instead of defining sustainability as simply preserving land for the future, it became about trade-offs.”
Tansey explains these trade-offs in the modern idea of sustainability include factors such as the environment, health and economics.
“We operate under the question of, how we are going to feed an ever-growing populating going into the future?” says Tansey. “We have to ask ourselves how we progress towards more people than ever and what trade-offs do we sacrifice to do so.”
She notes consumers are considering sustainability now more than ever before.
“Customers want to know where their food came from and at what cost, and as producers, this is something we have to consider,” Tansey notes.
Future of the beef supply
Vice President of Cattle Procurement at Cargill Bill Thoni explained the shift in consumer preferences using data collected from nearly 5,000 American and Canadian consumers.
“We surveyed 2,600 Americans and 2,400 Canadians in regards to how they go about purchasing beef products,” Thoni explains. “Participants in the study couldn’t be involved in the livestock industry, food industry, work for the media or in research.”
Thoni explains beef quality and price consistently ranked as top priorities among the 5,000 surveyed participants.
“When we think about beef sales, we have to remember beef is often a celebratory type meal,” Thoni notes. “People want to buy Prime quality steaks and ribs to celebrate things such as birthdays, promotions and other major life events.”
“Beef quality is as high as it’s ever been,” says Thoni. “Ten years ago, we might have seen one to two percent of cuts grading at Prime and today we see seven to 10 percent of cuts grading Prime.”
He notes improvement of genetics and an overall decrease in corn prices have also contributed to the increased quality of beef we see on the market today.
“While people want quality, they also rank marketing schemes such as grass-fed or antibiotic-free as very important,” according to Thoni. “The ranking of importance of these labels doesn’t coincide with the preference of price considering these programs represent less than five percent of the market.”
“People are more concerned about the learning the ins and outs of the food system now than ever before,” says Pike. “We have to take into account today’s generation is an average of two generations removed from the farm, so this knowledge isn’t common.”
He explains many consumers have begun to associate labels such as antibiotic ‒ and hormone ‒ free as being higher quality.
“Studies have shown consumers rank claims such as antibiotic- and hormone-free as very important,” Pike says. “The problem is, they rank price above these two things but expect these products to be priced the same as conventionally produced products.”
“Basically, what producers are asking for is a specially produced product that is still priced the same, if not better, than a conventionally produced product,” says Pike.
“So, as producers, we have to ask ourselves how we can meet all these consumers wants and needs,” Pike comments.
He explains unconventional production such as grass-fed beef makes up only a fraction of the market, around three percent, but it is growing. These products, however, are priced accordingly.
“Retailers have begun differentiating the supply chain,” Pike explains. “They have this balancing act of appeasing their consumers, as well as their suppliers.”
The new generation
Bridgett Wasser, director of meat science and supply chain outreach at the National Cattlemen’s Beef Association, stresses again how far removed the modern consumer is from the farm in comparison to previous generations of consumers.
“Sustainability is more important to these new consumers than it ever has been in past generations,” says Wasser. “Many consumers report changing their diets to fit the needs of sustainability.”
They also report they are more willing to pay for these benefits than previous generations.
“This is going to be very interesting when this new set of consumers becomes the majority of the market because they are so different than past consumers in that they are willing to pay for sustainability and unconventional production,” says Wasser.
“This trend of really wanting to get to know the food system has the ability to help producers out in the future,” Wasser states.
This panel was featured at the National Cattleman’s Beef Association Cattleman’s College held in New Orleans, La. in late January 2019.
Callie Hanson is the assistant editor of the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.