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Beef Checkoff Seeing Shrinking Dollars, Higher Demand

We continue our coverage of the NAFB Convention with the Cattlemen’s Beef Board chair, Andy Bishop of Kentucky, who joins Jesse Allen for a conversation.

Q: To start, I know there was a recent ROI study, and I think that could help us set up this conversation a little bit for folks who maybe aren’t familiar. Can you give us a little background on that ROI study?

AB: We send out RFPs every five years for people to do an ROI study for us. Dr. Harry Kaiser at Cornell was awarded that study this time. Those results came back a few months ago, and we were obviously pleased. $13.41 return. So, a lot of people ask us, Jesse, why? Why do you do an ROI study?

Well, just like any business. I think it’s important that we look at what we’re doing, whether it’s working or not, and if it is, how effective is it? And so, the ROI study breaks that down and says, hey, here’s what you’re doing, here’s how it works. Here’s the impact that not only that it has on those checkoff dollars, but also on the industry in general and the macro economy even further. Some of those results (showed) $13.41 return on investment. Last one we did was $11.92.

So we’re up from that. Keep in mind, Jesse, that dollars are shrinking, and so we’ve got less dollars to go around. Inflation has caused that dollar to be worth less money, and yet we’re still getting a higher rate of return. I think that speaks volumes to the efficiency that we’re doing with those dollars at the checkoff level.

Q: When I think about that efficiency, this is something that we have talked about before, reaching consumers in many different ways.

And I know it’s been a big mission of the checkoff to (via) social media and different avenues, to reach parents and make sure to keep beef on the plate. It’s some of those different things that maybe hasn’t been done before in terms of domestic outreach, I would say. Would you agree with that?

AB: I think the latest information that I got was that millennial age parents are spending seven to eight hours a day on social media. So if I’m marketing to those millennial mothers, where do I want to spend my time? On social media.

And so I think we’ve seen a trend towards promotion in that space. The other thing is it’s probably the cheapest way that we can market to those millennial mothers right now and we can spread those dollars out further.

Q: I know as well, in terms of the checkoff, there’s been attacks against the Checkoff. Looking out ahead here to 2025, let’s crystal ball this a little bit. What are some things that you envision as being challenges for the checkoff? And then we’ll talk opportunities after that. But on the challenges side, what’s on your mind? What are some headwinds?

AB: Our biggest challenge is shrinking dollars, and I kind of talked about that a little bit earlier. We are trending towards the all-time low on checkoff receipts because of cattle numbers being where they are. The other thing is a lot of the industry has changed and those cattle aren’t changing hands as much, they are retaining ownership a little bit longer, maybe even all the way through the feedlot. And so we’re not collecting as many dollars.

That original dollar in 1985 is now worth 32 cents of buying power. We’ve got less dollars to go around, we’ve got less buying power, and that trend is continuing. Jesse, I just recently wrote an article and carcass weights were up 28 pounds this year over last year. And so what does that mean as far as the checkoff’s concerned?

Well, if you trend that across the amount of head that we process each year annually, that means we need about a million head less cattle because we’re making those carcasses bigger. That trend is year over year, those carcasses are getting bigger because we’re good at what we do, right? We spend a lot of time on genetics, making sure that we’re providing the cattle that those packers want, and ultimately that the consumer wants. We’re kind of a victim of our own success in that aspect. But when those dollars are shrinking and the cow herd is shrinking, and really no end in sight for that – will we ever get back to 32 million head?

Those are the questions that kind of keep me up at night when we talk about checkoff and the issues that we face is how are we going to continue to get even more efficient than we already are with that checkoff dollar? Or is the industry going to step up and say, hey, it’s time that we do something and try to generate more check off revenue?

Q: On the flip side, what about opportunities? What are some things you envision as being big wins coming ahead for the beef checkoff?

AB: Well, I think we’ve seen that coming out of COVID beef demand was at an all-time high. Retail prices were an all-time high as well.

But beef demand has continued to grow. We’ve kind of established our presence in the marketplace and established our dominance as king of the proteins. Whether it’s from a taste standpoint, or whether it’s a safety and the belief that our product is wholesome, nutritious and good for their family and that they’re willing to pay a higher price for that.  That demand’s been strong, and I think we can continue to build on that.

Obviously, export numbers are down just a little bit, and so that’s been a little bit of an issue this year. But even though export numbers are down, total revenue from an export standpoint is up.

And so it’s not only our domestic consumers that see value in our product, but it’s our international customers as well.

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