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Fort Collins, Colo. – “When we look at value differentiation today, we have two primary drivers. We have a complex consumer demand, and we have global competition,” stated Leann Saunders, president and founder of Where Food Comes From.

Where Food Comes From is a company that works with third-party verification programs to help producers sell their products through value-added marketing. Saunders shared some of her insight into current consumer trends at the International Livestock Forum in Fort Collins, Colo. on Jan. 9.

Individualization

“We have an extremely complex consumer that restaurants and retailers are trying to address. They say they want food to be healthier, but they want it to be cheaper. They want cleaner labels, but they don’t want to be charged any more,” Saunders explained.

Looking at a McDonald’s menu provides a good example of the variety that consumers are looking for, she said. Twenty years ago, a Big Mac was a burger with special sauce, lettuce, cheese, pickles and onions on a sesame seed bun.

“Ten years later, consumer feedback said people wanted it without pickles or without lettuce or without the Big Mac sauce. Today, McDonald’s is opening up store concepts for build-your-own burgers. That shows the transformation in 20 years of consumers wanting things their own way,” she described.

Worldwide trends

Similar trends in the United States are also seen across the globe, and a wide variety of consumers are looking for products that suit their needs.

“In every single country, there is a consumer who wants the product delivered to them at the lowest price possible. If we are going to feed the people that we’re going to need to feed over the next 50 to 100 years, we are going to have to use whatever we can to bring those people food at the prices they can afford,” she noted.

On the other hand, there is also a segment of consumers that Saunders referred to as the elitist influencer segment that drives a lot of the changes seen in value-added marketing.

“It’s all about consumer choice,” she remarked.

In China, by the year 2020, the luxury consumer base is expected to expand from 80 million people to 180 million people. That market will have global impacts from consumers who are seeking individualized products.

Balance

“The balance of the international consumer and the domestic consumer is so important,” Saunders explained.

For example, a beef tongue sold in the United States translates to an eight-dollar-per-head premium if that same product is exported to Japan. Livers bring a four-dollar premium when they are exported to Egypt, and many other products are exported for a premium as well.

“Being global in our outlook on consumers is critical because it allows our industry to access and sell parts and pieces to where it makes the most sense to optimize value,” she noted.

Between global markets and personalized customer demands, the variety within products continues to grow.

“If we ask food producers today what they’re faced with, it’s increased complexity,” she added.

Science

Research shows that millennials read packaging labels and are more concerned with issues, such as ingredients, genetically modified foods and organic products, than their parents or grandparents have ever been.

Yet, Saunders also said, “Globally, 63 percent of consumers are skeptical about food health claims.”

Another challenge the industry faces is the consumer perception of science. Studies show that many consumers trust their friends and social media more than good science, further complicating the issues.

“We have to continue to figure out ways to convey the messages of science in a way that’s more acceptable,” Saunders remarked. “We have to communicate in a way that resonates with consumers’ personal values.”

Consumers are hungry for information. They want to know where their food comes from and how it is produced.

Yet, Saunders warned, “There is a difference between science and consumer-accepted science. There is a sweet spot between sound science and the science that our consumers are willing to accept.”

Reaching consumers

Connecting with consumers will continue to be a challenge in the food industry, but Saunders believes that by working together, producers, retailers, restaurants and other industry representatives can convey the good things that are happening.

“If we are authentic about sharing information in a way the consumer can understand, they will eat it up. It’s not just the elitist mom who shops at Whole Foods,” she said, explaining that everyone wants the best for their families. “The moms who shop at Whole Foods and the moms who shop at Walmart ask the same questions.”

Saunders added, “We need to be open, honest and transparent into the future.”

Natasha Wheeler is editor of the Wyoming Livestock Roundup and can be contacted at This email address is being protected from spambots. You need JavaScript enabled to view it..

San Diego, Calif. – As energy prices plummeted this year and the profitability of crop prices has been squeezed, CattleFax’s Chad Spearman noted that the same trend is expected over the next few years.

“The question we have to ask ourselves about is weather,” he said. “The key as we look at corn, soybeans and wheat is we have ample supplies coming into this year, and without a major crop production issue, that is going to remain the case and keep pressure on prices through 2016 and into the next year.”

Stocks-to-use

A key marker when looking at prices going forward is the stocks-to-use ratio.

“Stocks-to-use measures total usage relative to the ending stocks at the end of the year is presented on a percentage basis,” Spearman said.

He continued, “Corn stocks-to-use levels are just on top of 25 percent, and they are expected to be flat compared to last year but still elevated compared to tight levels of 2008-12.”

Going back to 2012, stocks-to-use for U.S. corn dropped below six percent resulting in record high corn prices. As stocks-to-use levels are low, prices are high, he explained.

“Since we have moved past that period, at least over the last two years, we have had stocks-to-use levels maintaining above the 12 percent level,” Spearman said.

Spearman added that, through the upcoming year, stocks-to-use ratios will range from 11 to 13 percent.

“That will keep major resistance for stocks of corn around four dollars a bushel and maintain a risk factor of $3.35 to $3.45 going into the spring,” he continued. “When we consider prices in the longer term, trends remain lower. Supplies are ample, so we are going to see that weigh on prices.”

Around the world, the U.S., Argentina, Brazil and Ukraine are the only major corn producers, meaning competition around the world is somewhat limited. However, Spearman also noted that dried corn isn’t as significant a concern as other commodities. Dried corn exports make up a very small portion of the overall crop sales in the U.S.

“We export a lot of things that are derived from corn, but only about 15 percent of the corn crop is dried corn,” he explained. “Cheaper corn prices outside of the U.S. are going to be a limiting factor, though.”

For farmers, increased supply will be a challenge, but livestock producers and feeders will see some relief.

“Feed costs will come down substantially, but we have to separate these three markets when we look at a global economy,” Spearman added.

Protein and energy

“We are looking at cheaper protein and energy feed costs in 2016,” Spearman summarized. “That pressure will continue to weigh on hay prices.”

After 2012, U.S. hay production rebounded sharply, and hay stocks also rebounded over the last year.

“We are seeing those prices come down substantially, and we expect that will be supportive in the cow/calf sector in terms of costs,” he said. “Other hay prices and alfalfa hay prices are expected to decline six and 16 percent, respectively, for the current marketing year ending in April.”

Influence of ethanol

An additional complicating factor in corn markets is the use of corn to make ethanol.

“When we look at the corn market and the changes it has undergone since 2005, the ethanol industry has become established and is not going anywhere,” Spearman said. “We have 35 to 40 percent of the corn market that is tied to energy markets.”

As energy prices have declined, support of the industry through ethanol production should not be expected.

Market forecast

“Corn prices will stay at $3.35 to $3.45, up to $4.10 on the high end in the spring.”

With 89.5 million acres of corn expected to be planted in the 2016-17 marketing year, and forecasted yields of 167 bushels per acre, Spearman commented that the resulting supply of corn is steady or only slightly higher than last year's.

“We do expect usage to grow, especially as supported by livestock production,” he said. “Without a major production issue, we will be limited to a little above four dollars for corn prices.”

Spearman addressed attendees of the 2016 National Cattlemen’s Beef Association Cattle Industry Convention and Trade Show, held in San Diego, Calif. at the end of January.

Saige Albert is managing editor of the Wyoming Livestock Roundup and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

With international beef trade topping concerns for many, and with many new trade agreements recently forged, the position of the United States and North America in the global marketplace is strong, but there are opportunities available to improve trade relationships further.
    To analyze the position of the U.S. in global markets, Rod Bowling of AgriFood Solutions International and Mike Smith of Harris Ranch looked at environment and sustainability, product availability, food safety, foreign animal disease, traceability and labor concerns.
A trading unit
    In looking at global markets, Bowling says he views North America as three cooperating countries, rather than competitors.
    “I don’t see Canada and Mexico as the opposition,” comments Bowling. “They are part of our trading unit. We do more important exports with those two countries than any of the others in the world.”
    Bowling adds that it is important for the U.S. to build and maintain a strong relationship with Mexico and Canada.
Water issues
    “Water is the next oil, in my opinion,” says Bowling. “Our biggest challenge, as far as environment and sustainability, is probably water.”
    Bowling says water use is significant in packing plants, citing that a large packing plant may use 2 million gallons of water each day.
    “We’ve used irrigation and packinghouse water like there was no end, and I think it is incumbent upon us to work things out so we can recycle the water in all of ag – not just in the packing plants,” he says, noting that operations must be careful to also have clean water sources.
    Despite water use, packing plants and the beef industry have been able to maintain an adequate beef supply.
     “We have made some dramatic improvements in genetics and the way we feed cattle, and we have been able to keep a fairly consistent supply,” says Smith.  “My concern is whether we can continue to make sure we have enough product to sell.”
    He notes that the developing countries are seeing an increase in disposable income, and meeting the protein needs of those countries may become more difficult.
Food safety standpoint
    Bowling also criticizes the U.S. tendency to move away from Hazard Analysis and Critical Control Points (HAACP) measures in food safety, saying that current testing strategies would only identify the presence of significant contamination.
    “We are struggling to manage E. coli O157:H7, and the government is stepping up to include another six strains,” he says. “If we can’t manage one, how are we going to manage seven?”
    To solve food safety concerns, Bowling suggests returning to HAACP and moving away from measurement techniques.
    “We can’t sample enough to find the pathogens. We need to use the interventions as they were intended and use testing as it was intended,” he explains. “From a food safety standpoint, I would give the U.S. higher marks than the rest of the world, but we have challenges.”
Diseases and traceability
    The potential for foreign animal diseases to enter the U.S. could decimate export markets, according to Bowling, who states that, 10 years after BSE hit in 2003, the country is only now beginning to recover in terms of credibility, adding that he is concerned the event didn’t trigger more conversations regarding traceability.
    “It was a sentinel event, and we didn’t make it through and get a good traceability system,” he says.    
    Smith also comments on traceability, saying, “For some reason, producers in the U.S. have the inability to make the decision that we need a traceability system.”
    He continues, “We sit down and have meetings, discuss and argue over and over. When we ask the USDA to get involved, we cut their legs out from underneath them. It boggles my mind, and I think we are way behind the ball in terms of developing a traceability system.”    
    Bowling notes that without a system of traceability, locating disease origins would be difficult, if not impossible, in the event of an outbreak. “My biggest fear from a foreign animal disease standpoint is foot-and-mouth disease (FMD).”
    Bowling remarks that FMD hasn’t been seen in the U.S. since 1929, and if it emerges again, he sees a large challenge in getting the disease out again, particularly in feral hog and wildlife populations.
    “FMD is 100 percent infective – if the animal is exposed they will get it, and it can travel up to eight miles in the air,” Bowling explains. “My fear is that we would never get our export credibility back if foot-and-mouth disease came in.”
    He notes that an outbreak would be costly as well, mentioning an outbreak in the United Kingdom cost $8 billion.
    “It’s a problem and I think we need to go beyond where we are with APHIS now,” he says. “I also think we need to try to find a genetic solution to FMD.”
    Smith also says, “I do think we have some protection relative to animal disease, but the question is how good are they?”
Labor force
    Smith also says the presence of an adequate labor force to run operations is dwindling and provides an additional challenge for agriculture.
    “I know that there are bright, aggressive young individuals out there,” says Smith, adding that, for agriculture, some production knowledge is necessary. “Young people who want to get involved should work in internship programs and make sure they gain some background knowledge as far as how and why we traditionally do things.”
    He also says being realistic is important for young people entering the workforce. “It seems like they want to make $60,000, get three weeks of vacation a year, and expect to move rapidly within the organization. That expectation isn’t realistic.”
    Particularly in the ag industry, Smith says finding reliable, capable labor can be tough.
    Opportunities in the U.S. are abundant, however and Smith says to young people in agriculture, “The world is your oyster, and the opportunities are there.”
    Bowling and Smith presented at the 2012 International Livestock Congress on Jan. 10. Saige Albert is editor of the Wyoming Livestock Roundup and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Fort Collins, Colo. – As the beginning of a new presidential administration approaches, those in the agricultural industry around the U.S. wait to see how the Trump administration will impact agricultural exports with their trade policies.

During the International Livestock Forum on Jan. 6-7, U.S. Meat Export Federation Trade Access Senior Vice President Thad Lively gave a summary of what producers can most likely expect under President-elect Donald Trump’s trade policy.

Aggressive approach

“Trump’s priorities for his economic policy are not going to seem that radical – grow the economy, create jobs, reduce the trade deficit and strengthen the U.S. manufacturing base. It’s hard to argue with that,” commented Lively.

However, Trump's plans to achieve priorities are more controversial, said Lively, noting that he does not hesitate to use the term, “America, first.”

“He’s going to pursue 'buy American' and 'hire American' programs. That’s what his industrial policy will be all about,” he explained.

The Trump administration will be aggressive in their use of trade remedy cases.

“There are certain things they can do through the World Trade Organization that allow them to really go after other countries. There are limits to how far they can go within the law, but there are not immediate repercussions for going beyond those limits,” said Lively. “He has brought people with his team who all have a record of being as aggressive in that area as possible.”

Negotiations

Rather than multilateral negotiations, like the Transpacific Partnership (TPP), the Trump administration has talked about using bilateral negotiations between the U.S. and another country.

“He believes that most countries in the world want to export to the U.S. more than we want to export to them,” said Lively. “We’re not an export-driven economy.”

“His view is that when we sit down one-on-one with those countries, we’re in a much stronger position than if we’re just one of 12 or even more, every single one of whom has a vote equal to the United States, the biggest economy in the world. I think there’s some legitimacy to this,” he commented.

Trump has also talked about a trade deficit, meaning that we import more than we export. But, he has said that it will not be resolved by exporting more but rather by changing tax policy, implementing aggressive trade remedies and importing less.

“This is completely new. Again, if we compared this to a policy statement of any recent administration, we would have found the cornerstone of our trade policy was trade globalization,” explained Lively.

Uncertain

“If I had to summarize how I think a Trump administration is going to affect our exports of beef and pork in particular, I’d say the picture is still a little blurry,” said Lively, noting that one possible scenario would be improved access in China and the European Union, while another would be detrimental.

“I can also see a scenario where Trump succeeds with his so-called defensive objectives, but we get caught in the crossfire in Mexico and China and maybe see retaliated against the U.S. because we export so much product to those countries,” warned Lively.

Lively explained that both North American Free Trade Agreement (NAFTA) and the U.S.-Korea Free Trade Agreement have zero tariffs, meaning that no tariffs are paid on beef and pork going into Mexico.

“There’s a potential for us to get lost in the shuffle there because the truth is, that renegotiation is not about agriculture market access,” said Lively. “There’s also the possibility to make some improvements specifically in sanitary issues.”

As China is a major importer of U.S. pork, engaging in a trade war could result in the country retaliating against the pork industry. However, similar to NAFTA, there is the possibility for positive changes.

“If Trump’s strategy works, we might find that our access to pork into China gets better because we’ve got a lot of little issues that we work with the Chinese on every day,” said Lively.

Ag interests

To ensure that the interests and priorities of the agricultural industry remain in the forefront during trade negotiations, Lively stressed that the industry needs to bridge the gap in communication.

“The first thing we’ve got a do is say ‘Look, we support your objectives. We like what we see here,’ but we also need to be sure that President-elect Trump and his people understand how critical exports are to the long-term health of our industry,” said Lively.

“Beyond that, we should look for opportunities to build on this very aggressive approach that he plans to take, specifically in countries like Japan and China,” Lively continued.

It is especially important for the agricultural industry to guard their interests, particularly in China and Mexico, which both have significant agricultural interests, he added.

“We need to guard our interests, so we don’t become collateral damage as Trump pursues his policy,” concluded Lively.

Emilee Gibb is editor of Wyoming Livestock Roundup and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Denver, Colo. – Deputy Under Secretary of Agriculture Chuck Lambert said at the 2009 International Livestock Congress, held in Denver, Colo. in conjunction with the National Western Stock Show, that the USDA has been in transition with the elections, and they’re working with the new administration’s team to make a seamless and painless transition.
    “We’ve made a lot of progress with beef markets, but we also have an unfinished agenda,” he told the crowd. “The wild card is the global financial situation. Everyone is concerned about this and we have people walking away from houses, horses and pets. We’re in a transition in a definite period of uncertainty, but I think we have a good team of appointees in the next administration. However, this will take time to turn around.”
    He said unemployment benefits in the U.S. can be up to $18,000 per year, which will be seven to 10 percent of the economy in the near future. “People will be trading down, trading out and using lower cost alternatives. That will be a reality for around 10 percent of our population and will have an impact on middle meat prices and on overall the beef complex as people trade to lower cost protein sources.”
    In 2008 the U.S. exported $100 to $110 billion total in ag commodities. “As prices and demand go down, export lines will go down too,” said Lambert. “The Grain Inspection Service projects a 24 percent decline in volume for export. If prices come down 30 percent and volume goes down 24 percent, our exports will be less than we had in 2007, in the worst case scenario.”
    However, in the genetics industry the U.S. exported record amounts of shipped semen and embryos, totaling over $100 million for the first time in history, Lambert said.
    “A lot of my time since 2003 has been spent regaining markets,” he said. “Some people say I should retire and write a story about the last five-and-a-half years and how we got to where we are and where I feel we can make some more progress.”
    Breeding cattle will be close to $50 million in exports for the beef and dairy industries combined. “That’s the highest they’ve been since 1996 when we were at $41 million,” said Lambert, comparing the figure to the previous low of $18 million in 1999. “We’ve had a few higher years. In 1989 to 1994 we had a five-year period that ranged from $50 million to $92 million, but we’re close to recoving all-time highs.”
    Lambert said the U.S. is still in discussions with the Andean countries, including Columbia, Peru and Chile. “Argentina was a large market for breeding cattle, as was Brazil prior to BSE. Those governments now say they’ll recognize our BSE status when we recognize their FMD status. It will be a while before we recover markets in those countries.”
    In beef exports, Lambert said the U.S. is going to recover markets at 2003 levels. “Exports account for 10 percent of tonnage and 12 percent of value, so they’re a large and important part of the industry, but the domestic market is the largest driver of overall demand for beef and beef products.”
    He expects this year’s markets to be close to where they were before the BSE incident, but he said $1.5 million will still be left on the table. “Mexico is now the largest single export market at over $1.3 million, and Canada will be somewhere over $700 million as we close out 2008,” he said.
    Both markets are looking at concerns and discussions regarding NAFTA’s renegotiation, said Lambert, adding, “Those two markets account for 40 percent of total 2008 beef exports.”
    “Our goal is to maintain trade relations and to move Mexico to OIE consistency, which is basically that all products of animals of all ages, except for the risky parts, can be exported. How we get there and what it costs us becomes the question,” he said.
    Other successes are based on different product mixes in different countries, noted Lambert. “The Philippines take all products of all ages, and we’re selling only boneless beef under 30 months into Taiwan. Vietnam accepts all products from animals younger than 30 months, and that market has been very successful.”
    However, he said he thinks a lot of Taiwan’s product is probably going into China.
    Egypt’s liver, heart and kidney market accepts $80 to $90 million of product. “That’s a product of low value in the U.S. that would go into cat food, so it’s a high value added market that’s up from nothing in 2004,” he commented.
    This year the U.S. will export $80 to $90 million of product to Russia after its market opened late in 2007. “There are some concerns we need to be aware of with Russia,” he said, indicating the ruble’s decline relative to the dollar. “Russia is dependent on oil and gas revenues and they’ve had a significant decline. They also have protectionist tendencies and last fall’s military confrontation with Georgia did not further policy relations and they may now be more inclined to implement whatever protectionist tendencies they had in the first place.”
    Lambert called Korea the success story of 2008. “We negotiated the opening of that market in April, but in June we found we can over-negotiate and drive countries beyond where their consumers want them to be,” he said of people in the streets of Seoul protesting the opening of U.S. markets. “We still have a negotiated agreement on all products younger than 30 months of age and we started shipping in July.”
    Of the $500 to $600 million market, Lambert said it’s back significantly but not quite to where we were in 2003.
    China, with 350 million middle class consumers, is not open. “We said ‘no thanks’ because they wouldn’t do it our way, but their economy has grown 10 percent each year since we were shut out in 2003,” noted Lambert. “However, a lot of Vietnam’s market is going there, so we’re selling $100 million through the back door. If we could be in that market legitimately it could be on the scale of Korea or Japan, or even Canada and Mexico.”
    Moving forward, Lambert thinks there’s a need for compromise to avoid other ‘Koreas,’ as well as the need for a consistent message.
    Christy Hemken is assistant editor of the Wyoming Livestock Roundup and can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..