Herd Expansion in 2016

(Bob) Don’t be a Chicken Little. That’s CattleFax’s advice to producers when it comes to cattle prices. (Zimmerman) And really every single expansion we went through in the 80s, 90s and the limited one we had in the 2000s came as demand was declining. This is the first time we have an opportunity to expand the beef cow herd in an increasing demand environment really the first time since the 70s. That’s a little foreign to producers. A lot of us don’t remember what happened in the 70s. So reminding them that prices are going to make a correction, but that doesn’t mean that the sky is falling. We don’t need to be Chicken Little. We don’t need to panic. What we need to do is look for the opportunity that’s there. (Bob) Much has changed since the last expansion phase, and that bodes well for everybody in the beef community. (Zimmerman) We’re producing the highest quality grade that we have since the early 90s. And one of our big focuses as a beef industry today is who’s that next consumer? Who’s that next beef consumer? And today it’s the millennials. If you think about a millennial being born from 1980 to the mid-90s that means that they are sitting here today eating the highest quality beef that they’ve ever had in their lifetime and that presents a lot of great demand opportunities for us going forward. (Bob) And what if all cattlemen and women aim for even higher quality? Even better for the future, says Zimmerman. (Zimmerman) We’re not going to saturate the high quality market. I don’t think that’s possible. What it’s going to do is it’s going to buy us more opportunities. It’s going to give us a consumer that’s going to be more willing to pay at a price point that’s $5-$6 a pound where maybe in the past they’d of balked at that because we didn’t have the quality return that necessitated paying that higher price. (Bob) This is a case where success begets success, he says. I’m Bob Cervera.

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