Increasing quality can be achieved with relatively low cost, according to McCully

In looking at the cost and value of quality, Certified Angus Beef’s Mark McCully says just the use of the term “quality” can mean many things. 

“When we talk about quality, we can talk about wholesomeness, freshness, color and other attributes that shape quality,” he comments. “As a industry, we often talk about beef quality in terms of quality grade ‒ and more specifically marbling.” 

Quality grade is the beef industry’s best predictor of consumer eating satisfaction, and the trait is primarily determined by the intramuscular fat in the carcass. 

Consumer focused

McCully says today’s beef consumer is persnickety.

“They’re pretty finicky, and they want a lot of different things,” he says. “Consumers want to know about how we raised cattle and what we’ve done related to antibiotic use. They also want to know about traceability and more.” 

“The one thing we don’t want to lose sight of, though, is the number one demand driver of beef, which is taste,” McCully emphasizes. “We can’t lose sight of that point.”

As marbling continues to increase, the odds of a great eating experience for consumers increases, he continues. 

“We know when we get into the Premium Choice and Prime categories, the odds of a bad eating experience goes away,” he says. “Consumer satisfaction goes up as we increase marbling and increase quality.” 

Improvement

At the same time consumers demand more in terms of eating experience, McCully says the beef industry has seen tremendous advancements in terms of quality.

“For many years, we didn’t make a lot of progress,” he explains. “As we got into 2008-09, we started seeing some trends.”

McCully continues, “In the last 10 years, we have made enormous progress in the quality of our product. That comes from a lot of different things.”

Genetics, he explains, are the primary reason for improvements. Cattlemen’s diligence in continuing to improve marbling in beef cattle has paid dividends. 

“Until we aligned genetics with our management and mindset and until we learned how to reach the genetic potential of these cattle in the last 10 years, we didn’t see improvement take off,” McCully comments. 

Additionally, camera grading and use of technology in assessing product quality have improved the industry’s ability to consistently grade carcasses.

“We have better tools to use on the genetic side, and ultimately, we have produced a higher quality end product,” McCully says. “As an industry, we need to feel good about that, because it is driving the demand for the product we produce.” 

Production

In 2010, U.S. cattlemen produced nearly 13 million pounds of Prime carcasses each week. By 2018, production reached over 33 million pounds each week, with 158 percent improvement.

“That’s just in eight years, which is incredible when we think about how slow our industry traditionally moves,” McCully says. 

Just over 50 million pounds per week of Premium Choice beef was produced on average in 2010. That number increased to 96 million pounds a week in 2018 ‒ a near doubling from where the industry was less than a decade ago.

These increases come from several areas. First, the beef industry has shifted the percentage of cattle that grade higher. 

“We’re also harvesting more cattle, too,” McCully explains. “We have a couple years where we’ve chewed through a lot of inventory.” 

McCully adds, “The big shift has been on the bottom end, though. We have produced much less of the lower end of our product, from a quality standpoint.” 

Over the last decade, the beef industry is producing 50 million pounds less of Select beef. Additionally, an insignificant amount of Other or Standard beef is produced. 

“This all ties to value,” McCully says. “The real question is what is this improvement worth and what does it cost us.” 

Shifting markets

Despite the fact that the phrase paradigm shift is often overused, McCully comments, “I think we have seen a paradigm shift in our business. We’ve gone from being commodity minded to producing with the consumer in mind.”
“This is a result of a very intentional focus by cattlemen to produce a higher quality end product and respond to signals that have been sent,” he says.

Cost

While value is often emphasized, McCully says the cost side is not often an area of focus.

“Producers know, however, that it’s all about the bottom line and value in relation to the cost,” he explains. “We probably need to have a better understanding of what the cost of increasing quality has been.” 

Recent data provides optimism for the ability to develop high-quality cattle at a relatively low cost. 

Five Rivers Feedyard compared their high-grading pens to low-grading pens. High-grading pens were about 90 percent Choice and Prime, while low-grading pens were 60 percent Choice and Prime. 

“From a feedyard performance standpoint, we found that the high-grading cattle were heavier,” McCully explains, noting the days on feed were similar for cattle. “We also didn’t see any differences in average daily gain or cost of gain.” 

In achieving quality at a low cost, McCully says the beef industry must be careful about overfeeding and management. 

The secret, he says, comes in genetic and breeding decisions.

“We also have to make sure we don’t over-select for leanness and end up with hard-doing cows,” he explains. “It’s a challenge for us to get better, but we can breed cattle and build cattle today that meet consumer satisfaction, produce a high-quality product and do it very efficiently.” 

McCully spoke during the 2019 Cattlemen’s College, held during the National Cattlemen’s Beef Association Cattle Industry Convention and Trade Show.

Saige Albert is managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.