Cattlemen Hurting : What’s the Beef? Fewer Meat Eaters

The frozen banks of Goose Lake are a familiar sight to 63-year-old Carrol Cloud, whose great-grandfather homesteaded a cattle ranch there in 1869.

But something is missing that once was as much a part of the Cloud ranch as the cold.

The cattle are gone.

One morning in October, the Production Livestock Credit Assn. rounded up the last 300 head of cattle and shipped them to auction to pay off some of Cloud’s debts. Cloud hopes he can salvage his finances by raising hay and leasing his pasture to fatten other ranchers’ cattle.

But just how many other cattle ranchers will remain in business a year from now in northeastern California, the heartland of the state’s calf production, is in doubt.

Shift in Habits

Thousands of cattlemen in California and throughout the country are threatened by economic change and a shift in American eating patterns toward poultry and fish and away from red meat.

In a last-ditch effort, cattlemen nationwide are joining forces to advertise and market beef in new ways. They are attempting to develop new beef products--including entrees that are precooked and those that are suitable for microwave ovens--products geared to the burgeoning population of singles and two-worker households.

And the industry is spreading word of its beef’s nutritional value and it has hired academicians to research solutions that, among other things, suggest a switch to raising leaner breeds of cattle.

All these efforts, however, are in their infancy and aren’t expected to give immediate relief to the cattle ranchers, feeders and packers currently fighting for survival.

“We have been through five hellaciously tough years,” said John W. Ross, the new executive vice president of the California Cattlemen’s Assn. During most of 1985, he said, the cattle industry nationally sustained losses of as much as $1 billion a month.

Real Estate Inflation

The cattlemen who are hurting the most are those who--like others in agriculture--tried to take advantage of spiraling real estate inflation in the 1970s by mortgaging their ranches to buy more land or new equipment.

“For 20 years, we had an inflating land market that covered a multitude of sins--bad weather, bad commodities markets, bad judgment,” said Gordon Dick, a leading ranch broker in Modoc County. But since 1980, Dick said, the trend has reversed. “Better quality ranches (in the northeastern part of California) have depreciated by 50%,” he said, “and some (ranches of lower quality) by as much as 70%.”

But perhaps more damaging than a collapsing real estate market are changes in the American life style and eating habits.

Shoppers concerned about calories, fat and cholesterol are more and more choosing poultry over beef, which the cattle industry contends has gotten a “bad rap” from misinformed physicians and health advocates.

The U.S. Department of Agriculture says each American ate 78.7 pounds of beef and 69.8 pounds of poultry in 1985, compared with an average of 94.4 pounds of beef and 51.9 pounds of poultry in 1976.

And the trend continues. “We think poultry production will exceed beef production by 1988,” said Bob Price, an economist with the Western Livestock Marketing Information Project in Denver.

Beef industry analysts say Americans, though partial to beef, are unwilling to pay prices that are high enough to make cattle raising profitable.

John Ikerd, head of extension agriculture in the economics department of the University of Georgia, said that from 1979 through 1984 retail beef prices dropped by almost 30% after adjustment for inflation.

In the past, the cattle industry has revived drooping prices by cutting herds and making the supply of retail beef more expensive.

The number of calf-producing beef cows has declined by 5.3 million head in the last four years, dropping from 39.2 million head in January, 1982, to 33.6 million head in January, according to Cattle-Fax, a private market analysis service for the beef industry.

But this time herd reduction doesn’t seem to be enough.

Many cattlemen and economists say they are convinced that the future of their industry instead will depend on a marketing revolution. They believe they must come up with new and more convenient products to attract an American public that has less time or inclination to cook and is more concerned about health and physical fitness.

Brand Identification

John Allen, a marketing specialist at the Michigan State University Food Industry Institute, recommends that beef packers follow in the footsteps of their poultry competitors like Tyson Foods Inc., Holly Farms and Foster Farms, which have sought to develop brand identification and quality consistency for their products.

Several beef slaughterhouses, including the nation’s largest, Iowa Beef Processors Inc.--based in Dakota City, Neb., and a subsidiary of Occidental Petroleum Corp.--have long-range plans to provide supermarkets with counter-ready trays of fresh meat that will display their brand labels.

Some beef packers are beginning to research and test-market partially and fully precooked beef dishes that can be popped into the microwave by working wives who don’t have time to wait for roasts to cook. Among the items being considered are everything from small roasts to steaks and short ribs that have been pre-cut and cooked at the packinghouses and sealed in packages that have a shelf life of about two weeks.

John Harris, owner of Harris Ranch Beef Co., said his packinghouse in Selma, Calif., will offer a precooked line to supermarkets within the next year.

And Jim Leonard, group vice president of beef for Monfort Inc., a Colorado packer, said that early this year Monfort will start market-testing precooked entrees “tailored to the two-person family.”

Kroger Co. in Cincinnati, which operates 1,190 supermarkets in the Midwest, is already test-marketing precooked beef and other meats. Bill Parker, Kroger’s vice president of meat merchandising, said the company decided there was a market for ready-to-eat, precooked meat in supermarkets when it noticed that “30% to 40% of food bought in fast-food restaurants is through carry-out windows.”

Convenience Packaging

“If the beef industry is going to survive, the key word is convenience, “ said Gary Bales, director of meat operations for King Soopers, a Kroger-owned supermarket chain in Colorado that has put chefs in its meat departments to prepare ready-to-go items such as a 12-ounce serving of beef Wellington for $5.50 that can be heated in a microwave oven.

The cattle industry’s greatest nemesis, marketing experts say, is the public perception that red meat is bad for health. “There is really a lot of misconception” about beef, said Russell Cross, a meat scientist at Texas A&M; University. He said beef has more iron and B vitamins and not appreciably more cholesterol or calories than poultry--if all the fatty trim is cut away.

Cross said a national study of consumer preferences by Texas A&M; prepared for several beef industry groups discovered that what discredits beef most in the public eye is the visible fat around the edges. And while that fat can be cut away with a dinner knife, he argues, “there is no reason to put it there in the first place.”

U.S. Department of Agriculture nutritionist John Weihrauch said that over the last 10 years the amount of fat in beef has been been reduced by about 10%.

Still, according to USDA data, trimmed cooked beef today averages 10.24% fat, compared with 7.4% for skinless baked chicken.

Most significantly, Weihrauch said, more of the fat in beef than in chicken--50% compared with 30%--is saturated fat, which is associated with hardening of the arteries.

Leaner Breeds

Cross advocates raising leaner breeds of beef cattle. He said that switching to such breeds, which consume less grain, could have the added virtue of saving “$150 million a year in feed costs just in Texas.”

In an effort to revive their industry, cattlemen’s organizations last year successfully lobbied for a farm bill provision that establishes a $1-a-head assessment on all cattle sold in the country. The tax is expected to raise about $70 million annually. The money will be used for beef marketing research and promotion by state beef councils and by a newly formed national marketing board to be appointed by the secretary of Agriculture.

Before the farm bill, most all cattle-raising states individually had levied voluntary or mandatory assessments on cattle sales for beef promotion, with California leading the pack by collecting $1 each time a head of beef is sold.

Still, some in the cattle industry, who note that the nation’s cattlemen twice before voted down such a nationwide mandatory tax, complain that until now most cattlemen have been blind to the importance of marketing.

“We have done a very poor job of promoting our product,” said Gil Aguirre, senior vice president of ranch operations for Reata Cattle Co., a large cattle operation based in San Juan Capistrano. “The cowboy image has sold everything from cigarettes to chewing gum . . . everything but beef.”

Growing Competition

The decline of the cattle business in California--the nation’s sixth-largest cattle state--has been accelerated by the growing concentration of cattle feeding and slaughtering facilities in the Texas Panhandle and the High Plains states of Kansas, Colorado and Nebraska. Price, of the Western Livestock Marketing Information Project, predicts that California’s role in the nation’s cattle industry will continue to shrink because it is more economical to raise cattle near the cheaper sources of grain in the Midwest.

Also, California’s slaughterhouses have lost market share over the last 15 years to much larger and more modern High Plains operations that pioneered the concept of shipping carved and boxed beef, rather than whole carcasses, to supermarkets. California packers argue that they have been handicapped by higher labor costs and less plentiful nearby supplies of cattle.

Since 1973 the number of cattle-slaughtering plants in California has dropped to 20 from 100, the number of feed yards where range cattle are fattened has declined to 65 from 175 and the population of cattle in those yards has shrunk from 1 million to about 500,000 head, according to Fran Simpson, manager of the California Cattle Feeders Assn.

The Imperial Valley--which in the 1930s gave birth to the nation’s first large commercial feedlots--and the Vernon section of Los Angeles--once the hub of a thriving packinghouse industry--today are shadows of their former selves.

Bank Foreclosures

And in Modoc County--where the economy hinges on cattle--the Bank of America has become the largest private landowner during the last 18 months, acquiring 25,000 acres in lieu of loan payments, according to Bob Burns, manager of Modoc Title Co.

Burns predicts that “a year from now the second-largest landowner will be the FHA (Federal Home Administration) or the PCA,” as still more loans turn sour.

“Everyone’s going broke,” said Ellington Peek, owner of the Shasta Livestock Auction near Redding. The walls at the auction house, where cattle are sold each Friday for shipment to feed yards and slaughterhouses, are hung with pictures of generations of local cowboys. The lines etched in those faces give testimony to the hard work of cattle ranching, which has never provided easy financial rewards.

But no one here seems to remember any time since the 1920s that have been as desperate.

Some cattle ranchers and feedlot operators say they hope to survive the shakeout by carefully controlling their costs and employing a variety of modern business techniques--ranging from hedging on the futures market to using computers for tasks such as managing their books and measuring out the most nutritional feed rations.

“You have to admit the romance in the cattle business is gone,” said 37-year-old Clyde Edgar, manager and minority owner of the West Way feed yard in the Imperial Valley. “I don’t even like to pet a horse. I am a businessman.”