Information flows along the beef supply chain: Information exchange as a strategy for mitigating increased costs and maximizing producer profits.

View the project final report

Commodities

• Agronomic: corn, wheat, grass (misc. perennial), hay
• Animals: bovine

Practices

• 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

This project has been developed in collaboration with producers throughout the beef supply chain in order to examine how increased information exchange among chain segments can alleviate price pressures caused by recent spikes in feed costs. Extended drought has led to an enormous rise in the cost of feed, in turn encouraging beef producers to reduce herd size and retailers to raise prices. In response to these economic hardships, producers test new feed strategies, yet no communication system exists to identify feed strategies that produce high quality beef with lower production costs. Thus, increasing information exchange throughout the beef supply chain is a priority in order to ensure the future economic success and sustainability of the U.S. beef industry. Given the significant challenges facing beef producers, this project aims to develop guidelines for information exchange that will: 1) alleviate the costs of increased feed prices throughout the supply chain to facilitate the economic sustainability of all segments; 2) create a stable supply of quality cattle available to processors to ensure their continued success, and; 3) improve feed and drought management strategies. The beef supply chain contains significant information asymmetry, in which certain segments of the chain control valuable information regarding quality, price and sales. In particular, processors maintain a privileged position given that they know detailed information regarding the harvest of cattle and pricing and sales from retailers. Historically, processors benefited by withholding information regarding beef quality in order to exert leverage over suppliers. However in today’s beef industry, the transfer of information to other beef producers may help processors, especially given that processors struggle to obtain ample supplies of quality cattle from the smallest beef cattle herd since the 1950s. With greater information exchange, producers can improve feed strategies, alleviate rising input costs up the chain and produce higher volumes of quality beef for processors and consumers. Despite the recent economic hardships throughout the beef industry, preliminary data reveals that no organized efforts exist to address these problems. In particular, in-depth interviews with producers throughout the supply chain revealed that no mechanism exists for communicating information regarding beef quality from processors to ranchers, backgrounders and feeders further up the chain. Information from processors regarding issues of quality such as fat content, grading of various cuts and presence of bruising or abscesses would greatly aid producers in monitoring what feed strategies yield higher quality beef and in turn draw higher profits. This project explores this “information asymmetry” characterizing the beef supply chain and seeks to develop strategies to facilitate information sharing on beef quality up the supply chain in order to improve the economic sustainability of all beef producers.

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.