Beef Demand Strengthened in 2004, but Likely to Slow This Year

March 9, 2005 — U.S. beef demand continued to climb in 2004, but after several strong years, growth in domestic demand is likely to slow this year, a Kansas State University (K-State) agricultural economist said.

“Beef demand index calculations indicate U.S. beef demand during 2004 increased 7.6% above demand in 2003,” said James Mintert, livestock marketing specialist with K-State Research and Extension. “Since 1998, when domestic beef demand bottomed out, Choice [grade] retail beef demand has increased approximately 25%.”

Mintert attributed shoppers’ hearty appetites for beef since the late 1990s to such factors as growth in consumer income; the introduction of new, high-quality beef products “that meet the needs of time-strapped consumers”; and less emphasis on negative health information as it relates to beef consumption.

“It’s become increasingly clear that consumer interest in low-carbohydrate diets also provided a welcome boost to beef demand in recent years,” he said. “Some survey data suggest, however, that interest in low-carbohydrate diets has peaked and is actually starting to wane.”

Mintert said that 2004 beef demand growth was strongest in the first nine months of the year, with demand for Choice beef up 10.9%, 9.3% and 8.9% in the first, second and third quarters, respectively.

“The strong year-to-year growth during the first nine months of 2004 was a continuation of the extraordinary demand growth that took place during the last six months of 2003,” the economist said. “It’s difficult to sustain dramatic demand growth like what we saw during late 2003 and the first three quarters of 2004. Sure enough, domestic beef demand growth slowed appreciably during the fall (2004).”

Mintert noted that beef demand held strong even as news circulated of a case of bovine spongiform encephalopathy (BSE) in late 2003.

“In fact, strong domestic demand — particularly during the first half of 2004 — helped the beef industry weather the dramatic decline in export demand that occurred during 2004,” he said.

Per capita retail beef consumption in the United States during 2004 totaled 66.1 pounds (lb.), an increase of 1.8% compared to 2003’s total. The increase occurred despite declining domestic beef production of 6.4% from the prior year, he said.

“The primary reason that domestic consumption increased at the same time that production declined was that U.S. beef exports during 2004 fell 82% below 2003, and beef imports rose 22% — a situation brought about by the BSE case,” Mintert said.

Part of the increase in imports were due to Canada’s ability to export boxed beef from animals less than 30 months of age to the United States throughout 2004, compared to that country’s partial access during 2003, he said.

Despite the modest rise in beef supplies for U.S. consumers, the inflation-adjusted price of Choice retail beef during 2004 was 5.7% higher than in 2003. Thus, because U.S. consumers were willing to both pay a higher price and to eat a larger quantity of beef, the figures for domestic beef demand increased, compared to 2003.

This story was written by Mary Lou Peter of K-State Research and Extension, which supplied this article.

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