“With some notable exceptions, not many cattle producers have a direct relationship with consumers”
Better communication among cattle industry partners and consumers is needed to strengthen the industry, says Rich Smith, general manager of Alberta Beef Producers (ABP).
“With some notable exceptions, not many cattle producers have a direct relationship with consumers,” told the Agriculture and Food Council forum here last month. “This can create issues. One of the reasons for the lack of connection in the relationship is because ranchers and farmers produce cattle and consumers eat beef.”
Many consumers do not recognize the connection between the beef they consume and the cattle that are raised in the province, Smith said, adding that the relationship between producers and consumers becomes even more complicated by the people in between, such as processors, retailers, distributors, service and industry personnel and government.
“We face the constant challenge of communication, not only between producers and consumers, but also between the various people and steps in the chain,” said Smith. “The cattle industry is particularly weak at communicating among the sectors in the industry,” he said
Smith describes the relationship between producers and consumers as an “exaggerated hourglass.” At one end, there are the 20,000 cattle producers in the province, several hundred feedlots and two large processors. They are linked to millions of consumers worldwide.
Smith believes the relationships in the various sectors are often overly competitive and adversarial rather than collaborative.
SLOW MARKET RESPONSE
Due to the communication challenges, market signals became confused and are often distorted for producers. This results in delayed responses to trends.
Smith emphasized producers do respond to market signals but are extremely limited by their ability to respond quickly.
“In the cattle industry, you’re basically looking at three years from conception to consumption,” he said. “Producers responding to market signals will require even more time, like four or five or six years in a production cycle.”
Smith noted that producers have been impacted a series of problems including BSE, the global recession and H1N1 flu. “BSE provided politicians with justifications for a lot of trade actions around the world,” he said. “Our industry is still suffering from some of these trade activities.” He said H1N1 was also used to justify trade actions in other countries, and has resulted in a reduced demand for beef because there is a flood of pork in the North American market.
BEEF AND WEALTH CONNECTED
The global recession has affected consumer choices, since people choose to consume more beef when they have more money, said Smith. He said consumers are also constantly bombarded by information which may not be accurate, and producers are now trying to figure out what consumers want and trying to adapt to the changing needs. Consumers still want safe, healthy, affordable, high-quality and ethically raised food. All of these create pressures on an industry that is highly dependent on exports, Smith said.
Many consumers are still buying food based on price and do not seem to realize that their demands and desires may require additional costs.
“Meeting these demands and keeping the product affordable creates pressure on producers” Smith said. He also said it is important to realize that producers cannot have an impact on every factor demanded by consumers.
Brand differentiation and new marketing initiatives may encourage consumers to pay more for food, Smith said. He stressed the need for co-operation and communication between producers, governments and consumers to build and strengthen the cattle industry.