Last year ended on a good note, and the 2018 outlook for livestock and poultry sectors is positive overall, according to James Robb, director and senior agricultural livestock economist for the Livestock Marketing Information Center. There are, however, concerns for both markets as uncertainty looms around trade agreements, Robb told workshop attendees at the American Farm Bureau Federation’s 2018 Annual Convention & IDEAg Trade Show.
Demand for meat has increased, and Americans are expected to consume about 219 pounds of red meat and poultry per year. That’s the largest since around 2007, according to Robb.
As demand increases, quality will be more important than ever before.
“Beef sells for well more than other products because consumers are willing to pay a premium,” Robb said. “Consumers don’t care about the cost of production, and they won’t pay the premium for beef if the quality isn’t there.”
Robb noted the pork sector is considering establishing grading guidelines similar to beef.
“Beef product, compared to pork and chicken, has improved dramatically,” he said. “Pork wants to have grading guidelines like beef to improve their product.”
Competition for the customer also factors into prices and marketing.
“How do you get people into traditional grocery stores?” Robb asked. “The meat case, dairy products, fresh fruit drive customers to the store.”
Pet food is also changing the marketplace with the use of animal-based proteins.
“There’s fresh pet food, frozen pet food,” Robb said. “Millennials pay more per pound for pet food than they do for their own food.”
Exports have added value for cattle producers—adding an extra $66 per head.
But uncertainty centers around deals like the North American Free Trade Agreement and the U.S.-Korea Free Trade Agreement.
“We think that number could grow but it’s dependent on things like NAFTA,” Robb said. “A lot went right for cattle prices in 2017, but we’re still marketing calves against larger supplies.”
Financial management is critical, Robb said, and will be more important as the markets change.
“The marketing plan is tied to the cash flow statement,” he said. “If we do have problems while the calf crop is growing, we have to be quicker to the draw and make fast decisions while the market is adjusting.”