- Agronomic: corn, wheat, grass (misc. perennial), hay
- Animals: bovine
- Animal Production: feed/forage, feed rations, grazing management, livestock breeding
- Crop Production: food product quality/safety
- Education and Training: on-farm/ranch research
- Farm Business Management: market study, risk management, value added, whole farm planning
- Sustainable Communities: local and regional food systems, partnerships, sustainability measures
As the most valuable agricultural commodity in the U.S., beef is both an economic and cultural foundation of modern American agriculture. Uniting core perspectives from economic, environmental, and agri-food sociology, I examined ongoing transitions in the beef industry that illuminate the factors shaping the structure of the industry and their implications for different industry actors. Stemming heavily from the global value chains tradition, yet also drawing new connections from the value chain literature and natural disasters and food regime research, I provided a close analysis of how the rise of private standards, extreme drought, and generational transition form a crucible of pressures reshaping the landscape of American agriculture. As a highly fragmented industry, the beef value chain provides an excellent opportunity to understand how exchanges between distinct segments of the chain — cow-calf producers, feedlots, processors, and retailers — are governed. My findings underscore the variation that exists within a particular value chain segment and show that a single firm can participate in numerous governance arrangements simultaneously — even with the same exchange partner. The expansion of private standards within the beef industry influences these governance types but with uneven effects for producers depending on the nature of the standard (collective versus individual), and thus, the degree to which the standard can “lock” upstream producers into particular relationships with particular buyers. In particular, the degree of information exchange between segments of the chain shapes the benefits captured by beef producers.
For most of the post-World War II period, beef was a mass-produced commodity. The product was generally undifferentiated, and competition within each segment of the chain was based primarily on price. In fact, beef was a virtually paradigmatic example of classic market governance: transactions between links in the value chain were governed by price, and given the absence of other details, or specifications regarding the product, little other information was relevant. “Traditionally, the transaction price as cattle move through the supply chain is the only information exchanged between participants” (Mulrony and Chaddad 2005: 19). However, price-based market governance has come under pressure from a variety of trends, including changes in consumer preferences and retail strategies and increasing consolidation within particular segments of the chain.
Among the developments buffeting beef producers in recent decades is the growing concern among consumers about the health concerns of red meat consumption. Consequently, the beef industry overall faces increased competition from other proteins for the consumer’s dollar. In response, industry actors are actively searching for new ways to “de-commoditize” beef – even though for most of its history, beef has been regarded as a commodity product (Gereffi and Lowe 2009). Via its check-off program, the Cattlemen’s Association Beef Board has for several decades been working to create demand for beef among consumers, but recent efforts focus not just on cultivating demand for beef vis-à-vis other proteins, but rather promoting particular kinds of beef. This is a particular concern for grocery stores and other food retailers driving the emergence of private standard initiatives (PSIs). These standards are sometimes aimed at creating higher “value-added” beef products that are supposed to be superior in some way to their conventional counterparts, in terms of taste, health, quality, or nature of production (e.g. environmentally-friendly, humanely-raised). At other times, PSIs amount to what are essentially marketing initiatives that aim to brand basic beef products (e.g. the Safeway Select label). The implications of PSIs for the beef value chain, especially for value chain governance, vary significantly depending on the type of PSI and the degree to which it necessitates activities that are different from those found in the typical value chain for conventional beef products.
The beef industry remains highly fragmented, with a supply chain organized into distinct segments. Yet within particular segments, significant consolidation has occurred. Mulrony and Chaddad (2000) note that there has been a decline in the number of producers at virtually every link the chain, and that, in this sense, the entire supply chain has experienced consolidation. However, consolidation has been most extensive and important at the processing and feedlot segments of the chain. The retail links in the chain remain far less consolidated, particularly in the food service and restaurant segment, although there is some consolidation there as well (e.g. Walmart). Furthermore, there has been some (albeit still modest) backward integration by the largest processors, who have invested in feedlots.
What is the upshot of these developments? Some industry observers suggest that we are seeing increased cooperation and alignment along the chain. For example, Mulrony and Chaddad (2005: 18) note that “concentration in food retailing and changes in consumer preferences and buying habits are affecting business practices, resulting in tighter linkages and coordination between segments of the beef supply chain”: 2005: 18. Salin (2000: 1099), on the other hand, hypothesizes that we may be witnessing the emergence of a “two-tiered system: chain alliances for premium beef, open markets for lower quality hamburger meat.” These assessments raise a number of interesting questions about value chain governance. To what degree are these changes requiring tighter coordination among distinct segments of the chain? How widespread is this trend? Perhaps most importantly in terms of the preceding discussion of governance, even if more tightly integrated alliances are becoming important, how are these linkages being governed?
The objectives of this project include:
1) Increase information exchange between segments of the beef supply chain.
- Discover the types of information regarding beef quality and production practices most helpful to each segment.
- Identify barriers to information exchange.
- Create protocols for information exchange tailored to each segment.
2) Refine knowledge on successful feed strategies during periods of drought.
- Improve mechanisms for feedback on relationship between feed and quality.
- Build inter-segment strategies for mitigating increased feed costs concentrated among ranchers, backgrounders, and feeders.
3) Increase the availability of quality beef for processors and retailers.
- Generate greater consistency in the quality of beef produced along the chain.
- Align production with desires of downstream segments (processors and retailers).
- Provide guidelines to beef producers on mitigating rising production costs to assist in the future expansion of the U.S. herd size.