CAB® and the High Quality Beef Market

Certified Angus Beef LLC

Outline

• Overview of the Certified Angus Beef® brand and defining “high quality”

• Production trends in high quality beef• Best practices for targeting a high quality

beef market

Certified Angus Beef LLC• Not-for-profit subsidiary of the American Angus

Association• Specifications evaluated by third party

(USDA/CBGA)• Never own cattle or product – only the brand• Licensing allows brand use to partnering

companies• Sole revenue generated through commissions

applied to the brand sales of licensed packers and value-added processors

STEP 1 to become CAB® Live animal specification

• Must be “Angus-type”– At least 51% black hide OR– AngusSource® tagged

In 2011, approximately 63.5% of all fed cattle met this specification.

Imitation- The most sincere form of flattery?

• As of May 2012:– 132- USDA Certified Programs – 96- Have “Angus” in their name

• These range in quality from Prime to cull cows

• Certified Angus Beef® brand is still the only program owned and operated by the members of the American Angus Association

• All “Angus beef” is not created equal

STEP 2 to become CAB®Ten Carcass Specifications

• Superior flavor, juiciness, and tenderness– Modest or higher degree of marbling (most critical spec

for eating quality and the hardest to hit for cattle producers)

– Medium or fine marbling texture– “A” maturity– No hump on the neck exceeding 2-inch height

• Consistent sizing – 10-16 in2 REA; < 1000 lb HCW; <1.0 in BF

• Desirable appearance and plate presentation– Moderately thick or thicker muscling characteristics– Practically devoid of internal hemorrhages– No dark cutting characteristics

10 Carcass Specification

s

CAB® Brand Supply Chain

Carcasses Certified for the Certified Angus Beef® Brand

'95'96'97'98'99'00'01'02'03'04'05'06'07 08 09 10 110

0.51

1.52

2.53

3.54

Fiscal Year

Mill

ion

Head

>65,000 hd/wk

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20100

100200300400500600700800900 807 M

Annual Sales of the Certified Angus Beef ® Brand

Fiscal Year

Mill

ion

Poun

ds

$100

$110

$120

$130

$140

$150

$160

$170

$180

$190

$200

CA

B®

Cut

out V

alue

($/

cwt)

Pounds Sold (millions)

2001-02

2003-06

2007-09

Certified Angus Beef ® Brand Demand

Source: Urner Barry and CAB LLC

2011

2010

Defining High Quality Beef

Slight00 Small00

Modest00

Moderate00 Slightly Abundant00

Market Signals for Quality

Slight00 Small00

Modest00

Moderate00 Slightly Abundant00

Base +$$$$+$$+$$-$$$

1/5/

091/

29/0

92/

22/0

93/

18/0

94/

11/0

95/

5/09

5/29

/09

6/22

/09

7/16

/09

8/9/

099/

2/09

9/26

/09

10/2

0/09

11/1

3/09

12/7

/09

12/3

1/09

1/24

/10

2/17

/10

3/13

/10

4/6/

104/

30/1

05/

24/1

06/

17/1

07/

11/1

08/

4/10

8/28

/10

9/21

/10

10/1

5/10

11/8

/10

12/2

/10

12/2

6/10

1/19

/11

2/12

/11

3/8/

114/

1/11

4/25

/11

5/19

/11

6/12

/11

7/6/

117/

30/1

18/

23/1

19/

16/1

110

/10/

1111

/3/1

1

-40.00

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

Premiums and Discounts Related to Marbling

Prime PremiumCAB® PremiumSelect DiscountStandard Discount

$/cw

t

Source: USDA LM_CT 169

=$160 =$450

Source: USDA

Trends in Quality Grading

Source: USDA

Why the improvement?

• Increased Angus genetics and improved genetics for marbling

• Camera grading implementation• More heifers being harvested• Overall better management focus on quality grade

– Nutrition– Health– Handling

CAB® Best Practices Manuals

How does a cattleman market through the CAB® brand?

• Use registered Angus bulls with superior marbling• Incorporate a health and nutrition program that protects

marbling potential• Market calves in a way that captures value

– Pool calves with other producers– Build a relationship with a feedlot– Retained ownership through feedlot– Sell fed cattle on a grid

For more info on Certified Angus Beef®

brand…

Please visit:www.CABpartners.com