Let the market work
4/9/2007
Steve Cornett
Last week’s court ruling on voluntary BSE testing is worthy of consideration. This reporter is on record as supporting voluntary testing for the same reason the government allows natural and organic claims.
There is no consumer benefit, but, then the government allows marketers a lot of leeway in health claims. It makes no sense to this reporter that the same government that allows all that silliness one runs into in health food stores would want to ban BSE testing.
That said, USDA has some strong arguments. (Duh, you might say. You mean USDA is as smart as some magazine dude?)
But let me say up front that I am coming from here: In Houston this week at a Central Market, I saw beef being sold for $26 a pound. They said it was Angus and they said it was natural. I dunno it’s true. That’s what the sign said.
And on the plane enroute, I read most of “The Long Tail” which deals with this new world of niches. An interesting point the author makes: The TV show “I Love Lucy” captured 74% of the American audience back in the 50’s.
The end of the world would be lucky to get those ratings today. We live in a world of options. From leisure viewing to grocery choices.
That said, voluntary testing would open a can of night crawlers for the industry. The chances of Creekstone--handling young cattle--ever finding a bonafide case of BSE are virtually nil. The chances of their testing labs finding a “potential positive” are higher, however.
It’s surprising that the most virulent packer haters among us are so enthusiastic about a program that would allow a packer to be the first one to know there was a BSE suspect about the be announced.
Even this reporter is CME-savvy enough to turn that sort of inside knowledge into a few bucks.
One, at least one who has been around long enough to notice how spin operates in the cattle industry, suspects the reason R-CALF and their fellows are so happy to see the court rule against USDA is because they think voluntary testing would give small packers an advantage over larger packers.
True, they argue that it’s because they believe in free competition, but it’s the only issue this reporter can think of where they’ve come down on the side of freedom for packers. At any rate, the big packers can test just as cheaply—more cheaply, probably, like they do everything else more cheaply—as do the smaller packers.
If there is a market for BSE-tested beef, the big boys will take the lion’s share of it, too.
But the USDA—and most of the clearer-thinking cattle industry folks I know—think that voluntary testing will, overall, hurt the beef business. They’re got some strong arguments:
1. The cost of tests will be added to the price of beef or subtracted from the price of cattle. If the former, it will be a cost competing proteins won’t bear. If one assumes packers are pricing beef as high as they can vs. competing meats, then that cost would have to come off cattle. While we can argue that it would add value for people who are scared of BSE,
2. They point out that none of the governments restricting U.S. beef have offered to take tested product because it is testing. The argument that Japan offered that is nothing more than an urban myth. Ok. Rural myth. My argument is fine, but this isn’t about government-to=-government. It’s about giving packers another marketing tool for consumers.
3. If Company A decided to market beef as “BSE free” or “BSE tested” it would lead consumers to think other beef was not safe. I can’t argue with that logic, and it’s the same argument many of us made for years about natural and “no hormones added” and such. But we crossed that bridge with those angel dust promises and found they haven’t hurt our markets, really. In fact, they’ve probably helped. Again, I saw beef like that in Houston for $26 per pound.
It’s a selling point, such claims. My suspicion is that it adds panache to the already panache-rich beef category. If you can tell your guests they’re eating $26 beef, that means several things: You’re pretty flush these days; the guest is special; and you do things like shop at Central Market or Whole Foods so your choice in hairstyles can be safely mimicked.
Anyhow, it’s always dangerous to argue with people smarter than you, but in this case your reporter things USDA and the establishment side of the industry have it wrong. Let the free market work.
Printer-friendly version
4/9/2007
Steve Cornett
Last week’s court ruling on voluntary BSE testing is worthy of consideration. This reporter is on record as supporting voluntary testing for the same reason the government allows natural and organic claims.
There is no consumer benefit, but, then the government allows marketers a lot of leeway in health claims. It makes no sense to this reporter that the same government that allows all that silliness one runs into in health food stores would want to ban BSE testing.
That said, USDA has some strong arguments. (Duh, you might say. You mean USDA is as smart as some magazine dude?)
But let me say up front that I am coming from here: In Houston this week at a Central Market, I saw beef being sold for $26 a pound. They said it was Angus and they said it was natural. I dunno it’s true. That’s what the sign said.
And on the plane enroute, I read most of “The Long Tail” which deals with this new world of niches. An interesting point the author makes: The TV show “I Love Lucy” captured 74% of the American audience back in the 50’s.
The end of the world would be lucky to get those ratings today. We live in a world of options. From leisure viewing to grocery choices.
That said, voluntary testing would open a can of night crawlers for the industry. The chances of Creekstone--handling young cattle--ever finding a bonafide case of BSE are virtually nil. The chances of their testing labs finding a “potential positive” are higher, however.
It’s surprising that the most virulent packer haters among us are so enthusiastic about a program that would allow a packer to be the first one to know there was a BSE suspect about the be announced.
Even this reporter is CME-savvy enough to turn that sort of inside knowledge into a few bucks.
One, at least one who has been around long enough to notice how spin operates in the cattle industry, suspects the reason R-CALF and their fellows are so happy to see the court rule against USDA is because they think voluntary testing would give small packers an advantage over larger packers.
True, they argue that it’s because they believe in free competition, but it’s the only issue this reporter can think of where they’ve come down on the side of freedom for packers. At any rate, the big packers can test just as cheaply—more cheaply, probably, like they do everything else more cheaply—as do the smaller packers.
If there is a market for BSE-tested beef, the big boys will take the lion’s share of it, too.
But the USDA—and most of the clearer-thinking cattle industry folks I know—think that voluntary testing will, overall, hurt the beef business. They’re got some strong arguments:
1. The cost of tests will be added to the price of beef or subtracted from the price of cattle. If the former, it will be a cost competing proteins won’t bear. If one assumes packers are pricing beef as high as they can vs. competing meats, then that cost would have to come off cattle. While we can argue that it would add value for people who are scared of BSE,
2. They point out that none of the governments restricting U.S. beef have offered to take tested product because it is testing. The argument that Japan offered that is nothing more than an urban myth. Ok. Rural myth. My argument is fine, but this isn’t about government-to=-government. It’s about giving packers another marketing tool for consumers.
3. If Company A decided to market beef as “BSE free” or “BSE tested” it would lead consumers to think other beef was not safe. I can’t argue with that logic, and it’s the same argument many of us made for years about natural and “no hormones added” and such. But we crossed that bridge with those angel dust promises and found they haven’t hurt our markets, really. In fact, they’ve probably helped. Again, I saw beef like that in Houston for $26 per pound.
It’s a selling point, such claims. My suspicion is that it adds panache to the already panache-rich beef category. If you can tell your guests they’re eating $26 beef, that means several things: You’re pretty flush these days; the guest is special; and you do things like shop at Central Market or Whole Foods so your choice in hairstyles can be safely mimicked.
Anyhow, it’s always dangerous to argue with people smarter than you, but in this case your reporter things USDA and the establishment side of the industry have it wrong. Let the free market work.
Printer-friendly version