Did you know… Small number, BIG impact
By: Larry Corah
Sometimes you are reading emails, see something you realize is not spam—and your only reaction is WOW!
Such was mine as I looked at qualifying numbers for the Certified Angus Beef ® brand for the months of June and July and saw 30.1% for both months. That is 30.1% of all identified black-hided, Angus-type cattle qualified for the CAB brand.
I’ve worked with the company since 1998 and recall entire years at only half that rate. Less than 10 years ago, monthly rates were barely above 13% (see graph).
Of course cattle are grading much better the past few years, so more are reaching the Prime and Premium Choice threshold. And yes, with current cattle prices and cost of gains, feeders are finishing cattle a bit heavier and fatter.
But a qualification rate of 30.1% is impressive. More perspective: In a typical year, 13 to 14 million head of fed cattle are identified at plants as black hided and Angus type, eligible for meeting the 10 quality specs for the CAB brand. Hence, nearly a third are meeting those rigid standards.
Reflecting back nearly 15 years, the American Angus Association Board of Directors identified a series of goals. Since CAB acceptance rates historically averaged 17% to 18% and the brand was opening up new initiatives to grow volume, the Board decided on 30% as a reasonable target by 2020 to insure product would be available for quality minded consumers.
What happened? Well, by 2006 acceptance rates had weeks at less than 13% and managed an all-time annual low of just 14%, so that target of 30% seemed unattainable to some. Fortunately, many Angus breeders responded to grid market premiums and focused on marbling genetics to touch that long-range goal.
Here’s what you likely DID NOT KNOW about the relevance of all this.
Compared to the same months just one year ago, the 2015 summer CAB acceptance rate of 30.1% is 3 percentage points higher. Three points may seem small, but when applied to millions of cattle, a small number gets big. Really big. Let’s do the math.
Just a 1-point increase over a year equates to 130,000 additional cattle qualifying for the brand and generating more than 33 million pounds of product to sell at average utilization.
Millions of pounds? That’s hard to relate to, so think of it as enough tonnage to add more than 500 new licensed grocery stores.
For a producer-owned brand with the mission of adding value to registered Angus cattle, that creates huge opportunities.
Especially true when you consider the backdrop was cowherd liquidation. Over the past 10 years, we have seen beef cow numbers drop by more than 5 million head, producing fewer fed cattle to tap for certification.
The fact that more of that dwindling pool is qualifying has been the key supply driver that allowed growth of more than 350 million pounds in annual sales over the past 10 years. Now that expansion has begun, indications point to continuing growth in premium beef production.
Surprising to many cattlemen is that such a big jump in marbling and quality grade could occur in just one year. We tend to underestimate how quickly progress can be made, unless we think about a widespread genetic selection response to market signals: carcass traits like marbling are fairly heritable.
Consider for example an Arizona rancher who decided back in 2006 to find out how his cattle could grade, so he retained ownership on a load. They only made 50% Choice and zero qualified for the CAB brand…OUCH.
He decided there was no future in producing cattle that earned zero premiums, so he started using high-marbling Angus bulls by artificial insemination (AI), and kept heifers from those matings.
Last year, 150 of his 2013 calves fed in a natural program made 100% Choice with 44% Prime and 80% qualifying for CAB, with simultaneous improvement in feedlot performance. Impressive for a desert herd, but something virtually every other producer in North America could accomplish in less than a decade by simply becoming more consumer focused in their decisions.