1. Industry History

2.  Industry History and Background  Economic Factors  U.S. Imports and Exports  Beef Price Cycles  Beef Production in the U.S. Intro to the Beef Industry

3. Industry History and Background 1400s1500s1600s1700s1800sLate 1800s Cattle reach Texas, California from Mexico Cattle industry emerging in Florida Cattle reach New England/ New York from England, Northern Europe Cattle business thriving; focused west Family owned/managed Produce 4-5 yr. old grass-fed steers; shipped by live train

4.  Chicago/Kansas City epicenter for sorting, distributing cattle via rail  Packers/processors also at rail centers  Refrigerated rail cars  Invented by G.F. Swift  Larger packers operated regional shipping/distribution  New York, Boston, Philadelphia INDUSTRY HISTORY AND BACKGROUND 1800s

5.  Federal Meat Grading System, 1920s  Federal Interstate Highway System, 1950s  No longer dependent on railways  From Carcass to Primal Cuts  Boxed Beef  Led to vacuum packaging  Led to block-ready, boneless, case-ready beef INDUSTRY HISTORY AND BACKGROUND 20 th Century

6.  Economic recession  Beef demand falls  Cattle numbers drop to historic levels  Cattle and beef prices reach record high levels INDUSTRY HISTORY AND BACKGROUND Early 20 th Century

7.  From producer-driven to consumer-driven  Beef demand in rapid decline  “War on Fat”, 1990  “Taste Fat” vs. “Waste Fat”  Revived interest in quality which helped rebuild demand INDUSTRY HISTORY AND BACKGROUND Late 20 th Century

8. ECONOMIC FACTORS Variables Impacting Beef’s Profitability 140,000+ U.S. Farmers and Ranchers Average herd size 42 92.6 million cattle (Jan ‘11) Beef production 26.3 billion lbs. Gross income of cattle $45.3 billion total inventory value $100 billion $74 billion Total consumer expenditures

9. Economic Factors Affecting Supply and Demand Top exporters of beef Top US export market Top US beef supplier

10.  The U.S. has 8% of the world’s cattle and produces 21% of the world’s beef  The U.S. remains the largest importer of beef globally, buying 2.3 billion pounds in 2010 valued at $2.83 billion  80% of the beef imported into the U.S. comes from Canada, Australia and New Zealand; mainly lean grinding beef for fast food hamburgers Imports

11.  The U.S. was the #3 exporter of beef in 2010, behind Brazil (#1) and Australia (#2)  2010 exports were 2.3 billion pounds valued at $3.53 billion  The U.S. currently exports 10-11% of production  Top export markets include: Mexico, South Korea, Japan and Canada (~70% of total beef exports)  The U.S. exported beef to 146 countries in 2010 Exports

12.  Typically peaks in spring and fall when middle meat demand is strongest and cattle supplies are lowest

13.  Bulk of cows used for lean trimmings are marketed in the fall, resulting in lower prices  Tighter supply + grilling demand support prices in spring/summer

14.  Best prices during colder winter months (cooking methods)  Increase in price due to new steak cuts (Flat Iron, Petite Tender, etc.)

15.  Holiday celebrations and summer grilling increase demand and price

16.  Higher prices in spring result of limited supply, especially for Choice

17.  Similar to Chucks; peak during colder months  Prices decline in summer due to increased supply + decreased demand

18.  Family owned/operated industry U.S. Beef Production 80% in same family for 25+ years 10% in same family for 100+ years  Cattle raised in all 50 states  Various cattle breed types and crossbred cattle  Adapt to various conditions

19.  Seedstock Producer, grassland based  “Purebred” segment  Genetic base for breeding stock  Cow/Calf Producer, grassland based  Combine genetic lines to best meet market demand (crossbreeding)  Sells to stocker or feedlots  Stocker  Specialized segment  Use grasslands as natural resource  Sells to feedlots for grain-based finishing  Feedlot  Use higher energy diets to achieve rapid gains to create the world's highest quality beef products U.S. BEEF PRODUCTION At the Ranch

20.  Harvest finished cattle  Fabricate carcasses into subprimal cuts  Sort and “box” beef  Market to purveyors, processors U.S. BEEF PRODUCTION From Packer to Market to Table  Fabricate boxes of subprimal cuts  Sell to foodservice operators, retailers  Present product to consumer PackersPurveyors/ Processors Foodservice Operators/Retailers

21.  Not more than “minimally processed”  Label must explain “natural”  i.e., no added colorings or artificial ingredients LABELING CLAIMS Natural Beef

22.  Cattle MUST:  Be raised separately  Have access to pasture, though many are feedlot finished  Be fed 100% organically-grown feed (grains and forage)  Be treated when sick  When treated with antibiotics, must be removed from program  Cattle MAY:  Be provided certain vitamin and mineral supplements  Cattle MAY NOT:  Be given antibiotics or enhancers for any reason (or must be removed from program) LABELING CLAIMS Certified Organic

23.  Prohibited:  Synthetic pesticides on pastures  Sewage sludge for fertilization of feedstuffs  Irradiation on beef products  Producers must be certified through USDA’s Agricultural Marketing Service (AMS) LABELING CLAIMS Certified Organic

24.  Feeding regimen for livestock raised on  Grass, green or range pasture, forage  Shall be 80% or more of the primary energy source throughout animal’s life LABELING CLAIMS Grass-Finished Beef

25.  Single most sustainable, renewable form of agriculture that produces an amazingly nutrient-dense source of protein  American beef industry dates back to 1500s  Railroads, federal highways revolutionized industry  Federal regulation began in 1920s  Focus moved from producers to consumers in late 20 th century  Tough to manage supply and demand for beef  Industry is major contributor to U.S. economy  U.S. a top importer and exporter of beef  Beef cuts experience seasonal shifts in price/demand  Specialty beef requires special labeling Beef Industry Summary