News Update
March 26, 2012
Taking a Look at Beef Production and Consumer Demand Trends
While beef production has dropped to its lowest level since 1952 with 90.8 million head nationally, beef production is up 2.2% to 1.1 million head in Michigan. According to the USDA WASDE Report, beef consumption in the United States continues to decline. Per capita consumption was 59.6 pounds (lb.) in 2010 and is projected to drop to 54.8 lb. in 2012. The Midwest region of the country is the largest consumer of beef.
Eighty-seven percent of households consume beef, and the usage is consistent across all income levels. Men older than 55 consume beef more frequently than others, and women younger than 25 consume the least amount of beef. Ground beef is the type of beef most often consumed and is served in 39% of homes at least once a week. Families with children are the biggest users of ground beef.
Beef prices have increased from an average price per lb. of $4.40 for Choice retail beef in 2010 to the current price for Choice retail beef of $5.09 per lb. Consumers are sensitive to the price increase and are modifying their purchasing habits. According to research by the National Cattleman's Beef Association (NCBA), consumers are buying less beef, buying less-expensive cuts, and buying beef on sale and freezing it for later use. Consumers are also switching to less-expensive options, such as chicken or meatless meals.
In addition to price, consumers have health and nutrition concerns about saturated fat and cholesterol. Research shows that consumers are willing to pay more for extra-lean beef. A study by NCBA demonstrated that 27% of shoppers are willing to pay up to $1 per lb. more, 13% are willing to pay $1.50-$2.00 per lb. more, 11% will pay $2.50-$3.00 per lb. more, and 10% will pay a premium of $3.50-$4.00 per lb. This demonstrates an opportunity for farmers in producing leaner beef.
Grass-fed beef has been identified as being lower in fat and saturated fat. These attributes are likely to be contributing to the increasing popularity of grass-fed beef. It has been identified as a growing trend by major consumer research firms like Mintel and the Hartman Group. Research by the National Restaurant Association also has identified grass-fed beef as one of the top trends in the foodservice industry.
Beef producers who are interested in learning more about developing beef products to meet the changing needs of consumers may contact the MSU Product Center for assistance. The Product Center can assist with developing a business plan for marketing a differentiated beef product.
Premiums for Quality Beef Grow as Packers Seek Cattle
Beef feeders can look for continued payment of quality-grid premiums from packing plants, said a University of Missouri (MU) Extension economist.
"This only happens because they really need quality cattle," said Scott Brown, an agricultural economist who follows the beef markets. "With high demand and short supplies of quality beef, packers are more willing to share."
Brown's advice for cattlemen seeking to capture quality-grid premiums: "Shoot for Prime. That's where the money is. Don't stop at Choice grade. Choice-Select spreads are attractive at times, but Prime premiums are more consistent over time. Now, Prime premiums are increasing faster."
Packers are paying grid premiums of more than $35 per hundredweight (cwt.) for Prime-quality carcasses because of the demand for high-quality beef, Brown told those gathered at an educational event for members of the Missouri Beef Industry Council.
He said he expects premiums for USDA Prime beef to continue to rise as the economy recovers.
Demand comes from U.S. consumers, but especially from global buyers. U.S. beef producers should be excited about the continued opening of new trade agreements, such as one just confirmed with South Korea, Brown said.
Even in the recession, U.S. consumers increased their shopping for Choice and Prime cuts, he said. "Consumers will pay for Prime. They want a quality eating experience."
Consumers pay for quality, and not just in beef, Brown said. "Who would think we'd pay over $2 a cup for a Grande Starbucks coffee? We could make a cup of coffee at home for 15¢ or 20¢."
With rising demand and shrinking beef supply, consumers may face higher prices at the meatcase.
"I don't know if we will meet consumer price resistance," Brown said. "I'm not a great believer that higher meat prices cause demand destruction. Consumers send signals about the meat they want through prices."
Brown said an early indicator of the general economic recovery came from the restaurant index, which gauges optimism of foodservice operators.
"Restaurants took a real hit in 2009, in the depth of the recession," Brown said. "But the index grew by 1.1% in the February report after a strong January. Sustained growth will show consumer confidence and create more demand pull."
Producing Prime calves doesn't happen by chance, Brown told farmers. Prime quality can be reached by using protocols developed at MU Thompson Farm. Dave Patterson, MU Extension beef specialist, has proven that Prime becomes possible on a regular basis by using proven, high-accuracy sires by artificial insemination (AI). Using timed-AI results in uniform lots of calves sought by feedyards and packing plants. Buyers pay more for groups of uniform calves of the same quality.
"The Show-Me-Select Replacement Heifer Program brought better genetics to the state of Missouri," Brown said. "It shows how to get high-quality calves. The program not only produces quality replacement heifers, but steer mates are worth more at the packing plant."
Brown is a member of the Department of Agricultural and Applied Economics in the MU College of Agriculture, Food and Natural Resources, Columbia.
February Red Meat Production Up 3% from 2011
Commercial red meat production for the United States totaled 3.91 billion lb. in February, up 3% from the 3.81 billion lb. produced in February 2011.
Beef production, at 2.01 billion lb., was 1% below the previous year. Cattle slaughter totaled 2.56 million head, down 2% from February 2011. The average live weight was up 21 lb. from the previous year, at 1,307 lb.
Veal production totaled 9.8 million lb., 6% below February a year ago. Calf slaughter totaled 60,200 head, down 13% from February 2011. The average live weight was up 12 lb. from last year, at 276 lb.
Pork production totaled 1.88 billion lb., up 6% from the previous year. Hog slaughter totaled 9.04 million head, up 6% from February 2011. The average live weight was up 1 lb. from the previous year, at 278 lb.
Lamb and mutton production, at 12.3 million lb., was up 13% from February 2011. Sheep slaughter totaled 165,400 head, 7% above last year. The average live weight was 149 lb., up 8 lb. from February a year ago.
January to February 2012 commercial red meat production was 8.04 billion lb., up 2% from 2011. Accumulated beef production was down slightly from last year, veal was down 5%, pork was up 6% from last year, and lamb and mutton production was up 10%.
February 2011 contained 20 weekdays (including 1 holiday) and 4 Saturdays.
February 2012 contained 21 weekdays (including 1 holiday) and 4 Saturdays.
Nebraska Global Water for Food Conference Opens May 30
The fourth global Water for Food Conference, May 30-June 1, will bring together international experts to explore how advances in science, technology and policy can help rainfed and irrigated agriculture feed the world.
"Blue Water, Green Water and the Future of Agriculture" is the theme of this year's conference, hosted by the Robert B. Daugherty Water for Food Institute at the University of Nebraska and the Bill & Melinda Gates Foundation, at the Cornhusker Hotel in Lincoln, Neb.
The conference fosters international dialogue on key issues related to the use of water for agriculture and provides opportunities to learn from speakers with extensive experience and perspectives from diverse cultures. Last year's conference drew more than 450 participants from 24 nations, including representatives from universities, agriculture, industry, government and nongovernmental organizations worldwide.
Registration is $250, which includes all conference events, materials and meals. Online registration and more information are available at the conference website at www.waterforfood.nebraska.edu/wff2012.
For the full press release describing this event, and to review other upcoming events, visit the "Calendar of Upcoming Events" in the API Virtual Library, available at
http://www.api-virtuallibrary.com/meetings_other_calendar.html.
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