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The top 10 cattle feeders in America have a 30% share of the feeding industry in the US. JBS, Cargill and Tyson are among the main feedlots and factories there. They are large-scale and very central. One of Tyson's factories has the capacity to slaughter 29,000 head/day, which is equivalent to the Irish weekly cattle kill.
"The meat packers produce a very uniform carcase and then sell as boxed beef and sub-primals such as striploins etc," said US analyst Kevin Grier. "They have very defined specifications in terms of fat content, age and marbling. If you want to compete in North America, you are up against a pretty established and efficient industry."
Grier, from Market Analysis and Consulting Inc, was speaking at Bord Bia's meat prospects seminar in Kildare last Friday, 8 January.
Listen to an interview with Kevin Grier in our podcast below:
The American beef market is primarily a corn-fed industry with four main parts as identified by Grier:
1. Cow-calf operator.
2. Cattle feeder.
3. Cattle packer.
4. Retail and food service.
Grier complimented the cattle feeding system used to finish stock. He said it is the most efficient way to convert grain to beef.
“Call it a factory if you will; I call it a very very efficient production unit," said Grier. "These guys are professional at what they do, converting grain to beef.”
The suckler cow herd in the US has been declining for 15 years now, providing a gap in the market for Irish produce. Since the US market opened to Irish beef in February 2015, shipments worth €11m have been exported.
US beef herd finally building again
"There was a modest increase [in herd size] in 2015 but nothing is more important to a packer or cattle feeder than the fact that the herd is so small year after year," said Grier. While the herd is finally starting to build again, due to the retention of heifers for breeding, prices are not expected to remain at such high levels.
"The great bull market of 2014/15 is over. Prices will stay very good but not at the incredible level seen lately," said Grier. "The quarterly returns of Tyson fell in 2015 but the cow-calf operator enjoyed good prices."
The record tight supplies in 2014 and 2015 will remain tight, but with some slight growth. Grier does not "expect to see 2013 slaughter levels until 2020".
From 2008 to 2014 consumer demand has been stable. Positive news stories about dietary benefits of meat has helped increase demand and while the price of beef was high in the US last year, " Americans stepped up to the plate and ate more."
However, if Ireland is to successfully export to the US, Grier warned that Americans have very specific taste requirements and need to be educated about the benefits of grass-fed beef. American consumers have developed a taste for grain-fed beef due to marbling and tenderness.
Border control
The Mexican and Canadian borders with the US are relatively thin. Some 80% of exports from Canada go to the US. American cattle feeders want and depend on Mexican feeder cattle and it is also an important market for certain cuts.
Ireland is the sixth-largest beef exporter in the world
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