Cattlemen Feel Pinch of Change

California cattle ranchers, facing an uncertain market for beef, need to devise creative plans to attract consumers, according to industry experts.

About 100 major cattle ranchers who attended a conference called by the California Farm Bureau Federation recently said it is increasingly difficult to maintain an adequate profit margin in beef production.

Consequently, ranchers must be willing to adapt quickly to market changes to survive.

“We’re all survivors,” said Gordon Rasmussen of Pleasanton. “That’s why we’re here.”

Rasmussen says ranchers “must have cattle for sale every two months . . . rather than depend on the grass and sell them on time, in June, when you’re at the mercy of the buyer.”

“If you get up in the morning and you have to decide what you’re going to do that day, you’re already too late as far as I’m concerned,” added Colusa County rancher Ken Stegall. “You’ve got to plan ahead.”

California’s 10,000 full-time cattle ranchers have been buffeted in recent years by two powerful forces--concerns by health-conscious consumers about beef and instability caused by a federal program that flooded the beef market with dairy cows in an attempt to limit milk production.

Currently, a rancher gets about $62 for a 600-pound steer sold to a feed lot. The lot fattens the animal to perhaps 1,000 pounds or more, then sells it to the slaughterhouse, which in turn distributes it to wholesalers, then to retailers. Finally, the beef reaches the consumer who pays about $1 to $5 per pound, depending on cut and quality.

Most cattle ranchers raise steers for the feed lot, while some nurture the steers until they reach the slaughterhouse. Either way, ranchers say the cost of feed and other overhead whittles profits sharply.

Last year, the ranchers’ price plummeted to $40 per animal, as the U.S. Department of Agriculture, seeking to curb a glut of milk production, “allowed dairy cattle to flood the market in California,” said Sheila Massey, a spokeswoman for the California Cattlemen’s Assn.

Federal officials “didn’t provide for an orderly progression,” she said. “Hundreds of thousands of (cattle) hit the market right when the market was at a peak.”

She said the ranchers hope to obtain congressional approval of legislation this year to reimburse cattle producers.

California has been below the national average in the frequency with which households consume beef, according to statistics provided by the California Beef Council, an industry marketing organization supported by a $1-per-steer levy paid by ranchers.

“Since 1981, we discovered, in terms of relative frequency during a two-week period, that 91% of all homes in the U.S. used beef, but only 79% in California used beef,” said Jane Anderson, the council’s executive director in San Francisco. During the two-week period, beef entered the household 5.1 times on the national average. In California, the frequency was 4.2 times, she said.

“After five years of promotion, the national average is about 90%, while California’s is up to 87%,” Anderson added. In California last year, households used beef an average of 4.6 times, contrasted with 4.8 times nationally.

Light Eaters on Rise

She also said the council’s research shows “that there is a swing toward the light use of beef. That’s where we are directing our market. To reach those who use it more often in smaller portions will help our industry enormously.”

Ranchers described the California beef consumer as fickle and demanding, requiring cuts with minimal fat. In addition, many buyers were lured away from red meat to poultry because of concerns about chemicals that are used in some cattle to add weight.

“Consumers want the choice grade. A lot of cattle produce a heavy layer of fat, and it has to be trimmed off,” Stegall said. “The consumer is very concerned, very conscious of what’s going into the cattle.”

“We in the cattle business are not paying attention to the consumer,” Rasmussen added. “We better wise up.”