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Part 2: McDonald's USA beef buyer visits with Agriculture Online

(Part 1 of this series can be found in the Agriculture Online Markets section.)

Following a recent interview with McDonald's USA's beef buyer and a company spokesperson, Agriculture Online presents the final segment of a two-part series on how U.S. cattle producers should view the company's 2006 sales strategy, which highlights chicken, as well as other impacts to U.S. beef interests.

Agriculture Online spoke recently with Robert Cannell, McDonald's USA's director of supply chain and leading beef buyer. Joining Cannell in a question-and-answer session is Danya Proud, McDonald's USA spokesperson.

Q: McDonald's has a huge influence on the U.S. cattle industry based on the amount of your purchases. For example, because you are such a huge beef buyer, if you support source verification it would behoove the cattle industry to comply. Does source verification have enough value to McDonald's USA? And how much would you be willing to pay per pound for source verified beef?

Cannell: Source verification is very important to us. We are out there actively working with the cattle industry, the government, all the players that have a stake in the game. It's more important for the U.S. beef industry than for McDonald's specifically. You mentioned we are a big beef buyer and that's true. But, what affects the beef industry effects us. Our perspective is this, source verification, animal ID, is an important tool in the future so the beef industry can protect itself from whatever the next issue that might come up would be. We look at source verification more as a need for the industry than a need for McDonald's.

Q: Though U.S. beef production from year to year is staying steady, producers are seeing prices for beef products stay relatively high. Chicken production is going up, but the prices of chicken products are going down. If the U.S. cattlemen raise more beef, will they see the value of their products decline?

Cannell: That's a lot of speculation when you have to rely on cattle cycles and such. Knowing where things will go is a crystal ball I wish I had.

Q: What can a U.S. cattle producer do to get more of their product sold through McDonald's USA? Should they produce more lean beef, niche beef products? What advice do you have for them?

Cannell: The bottom line is, U.S. beef is the highest quality and safest beef of any other in the world. I think U.S. producers are doing a fantastic job of producing the type of beef that either the typical U.S. consumer or our export customers are looking for. Producing beef specifically for McDonald's may not be the best proposition for anyone. We use a lot of beef, but the steaks and the roasts and what the consumer is looking for is there as well. For me to say the U.S. producer needs to be making any changes is not fair from my perspective.

Q: Statements from McDonald's on U.S. BSE firewalls has concerned the cattle industry, calling into question the safety of U.S. beef supply. The company statements may have been sparked by activists concerns, according to one cattle industry spokesman. How does McDonald's balance sound science on BSE in responding to consumers' concerns and activists' concerns?

Cannell: Responding to concerns of consumers is always going to be top priority for us. Responding to others, that is not an activity in which we are going to partake. We still consider the U.S. beef supply to be of the highest quality and the safest in the world.

Q: Are you comfortable with the relationship McDonald's USA has with the U.S. cattle industry?

Cannell: I visit with a lot of cattlemen's groups across the country. Certainly, they have questions and concerns, but I think our relationship probably has never been better. The fact we are out there talking with them, having open conversations with them is building a stronger relationship.

Q: You mentioned McDonald's USA is making an effort to meet with more cattle groups across the country. Is there a theme to their concerns or their questions?

Cannell: You are bringing up many of them. When they hear us talk about a focus on chicken, they want to know about that. They ask us about our stance on animal ID and traceability. We're not shying away from their questions and answering them honestly.

In 2006, McDonald's USA plans on purchasing 1.0 billion pounds of beef (25% of that total will be foreign beef), and 600 million pounds of chicken, as noted in the first installment of this interview.

On Tuesday, McDonald's kept to their word of growing the menu by announcing the addition of a spicy chicken sandwich.

(Part 1 of this series can be found in the Agriculture Online Markets section.)

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