In today’s Beef Buzz, Senior Farm and Ranch Broadcaster Ron Hays continues his conversation from yesterday with Industry Consultant Dr. Nevil Speer, who emphasized that the strength of the cattle industry continues to rest on the consumer’s willingness to pay for beef. “Not only has the consumer not deserted us, they keep rewarding us. It’s just been an amazing story that we’ve seen.” He noted that for over a decade, producers have been asking when the consumer would finally back away because of high prices, yet “they never have. Here they are rewarding us with record high prices.” According to Speer, this reflects both unprecedented demand and the industry’s ability to deliver “the very best product they’ve ever been able to purchase.”
According to recent reports, USDA Prime accounts for 12.6% of carcasses today, with combined USDA Choice and Prime reaching 84%. While higher quality cattle flood the market, the Select supply continues to drop. Despite inflation, consumers continue to prioritize taste and freshness over price, reinforcing the value of high-quality beef, delivering record returns back to cattle producers.
Speer underlined that profitability in the cattle business ultimately flows directly from the customer. “That’s exactly right. Otherwise the cattle don’t have any value. So consumers, my favorite phrase is, consumers are the business, and we have to continue to remind ourselves of that.” For him, the “payday” only exists because the consumer chooses beef, and that choice sustains the entire industry.
The discussion turned toward quality improvements and carcass makeup. Speer highlighted how far the industry has advanced in genetics and quality grading. “We’re generating the same number of cattle that grade prime as we do select. Way back when, 20 years ago, 40% of the slaughter mix was select. It’s now down to 13, and we’re bumping up against that in terms of prime.” He also stressed that while much attention goes to the choice-select spread, “if you look at the prime-choice spread, it’s twice as big. And really that’s where we need to be focused, because that’s where the dollars are.”
According to Speer, consumers’ willingness to pay for higher-end products keeps driving this momentum. “It’s the quality and then the consistency of that product. And you know, when you spend a lot of money for a product, you want it to eat right. And that’s what Prime delivers.” He sees this premium demand as a reward for industry efforts to continually improve beef quality and consistency.
Looking ahead, Speer cautioned about the stress test that could come as supplies tighten with more heifers being held back. “That’s when this market really takes off, right? We’ve seen a great market, but when we start really shrinking fed beef production, that’s when cattle prices… go to the moon.” He warned this will raise the key question of “who’s going to eat the margin?” Some of that cost “is going to have to get transferred to consumer dollars,” which could risk “some demand destruction.” He concluded that pressure would first hit “the consumer at the margin that doesn’t have extra cash flow,” before testing how far the upper end of the market can go.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
