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Manage consumer beef costs — eat chicken

One constant in the Canadian food industry is there will always be producers of cattle in Canada. Stock markets may go up or down, generations return to or leave the farm, economies tank or soar, yet some residue of beef production will remain. There is far too much infrastructure investment in productive capacity and non-grain cropland suited for anything else.

But within that framework there will continue to be changes as the entire process from gate to plate keeps evolving to meet inherent consumer quality, health, nutritional and cost expectations.

At this writing calf prices are at or near historic highs and at first blush only the most obdurate curmudgeon would see anything except blinding light at the end of the dark cost/return tunnel the industry has been all but lost in for the past decade. The cost/price squeeze seems to have come to an end.

The salient questions however become:

1. how the consumer will react to inevitable price increases at the counter; and

2. What will beef’s competitors do to increase market share when beef sticker price becomes a major consideration, as it most assuredly will.

Some weeks ago we were honoured to host friends of many years from California. As retired beef producers determined to reinforce our guest’s Marlboro Man image of Alberta cattle ranches, we resolved to do our utmost to meet their high quality expectations of Alberta beef at our table.

We served three evening dinners — one roast beef, one grilled steaks, and one roast chicken. Under these circumstances cost was not a consideration — we hadn’t seen them for 27 years and they came laden with good wines and assorted goodies (as we knew they would) so skimping on our food budget was just not on. Only the best would do and most fortunately each main course met both their and our most fulsome expectations.

Beef price — four to one

On the surface one might say beef producers came off rather well, as indeed they did. But an industry shadow looming in the background represents a potentially serious problem for cattlemen in our future dinners of lesser import. Stripped of dimes the cost per serving was $10.50 per plate for beef and $2.75 for chicken. Each was equally superb in its category.

In summary, four diners were served chicken, and served well, for the price of one beef plate.

When the lowest grade of beef (hamburger) is the only cut at all price competitive with the highest grade of poultry, beef producers face the nub of a major dilemma. Had these folks been here for a two-week holiday or had they brought family members their subsequent menu choices would have included considerably less beef and significantly more chicken.

We almost invariably buy prime rib roasts. A few pot roasts a year for variety, but essentially its prime rib. They are a great dish served hot and wonderful in cold sandwiches. Our custom has been to ask our butcher to kindly “cut a three-rib roast.” Not any more. Three-rib roasts used to run at plus or minus forty bucks at the counter. Now we ask for a $40 roast instead — and get two ribs, not three. In practical terms our roast beef purchases (in pounds) have dropped by one-third even assuming purchase frequency remains unchanged.

It will take one whiz of a marketing program to bridge this huge price gap between beef and chicken on a sustainable basis. We are retired and perhaps less likely to abandon customary cuts than households with multiple family members, but without doubt sticker prices on beef are becoming an increasing consideration on our meat purchases as well. Our generation is not the industry’s target — we don’t eat enough to matter, but for parents with growing families I can see better cuts of beef being increasing penciled off their grocery list unless the industry comes up with some compelling reasons for them to do otherwise.

The beef industry is once again the place to be in agriculture. The challenge for producer organizations will be to keep it there. †

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