DENVER, Colo. – The cattle industry can trace many of its woes to declining beef demand, says a Purdue University researcher.
Beef demand is half what it was in 1980, and consumers continue to turn away from it despite some recovery in 2004, James Mintert told the recent International Livestock Congress held in Denver.
Researchers used 1980 as a base year, setting the demand index at 100.
“The beef demand index captures the impact of quantity and changes in price after that price has been adjusted for inflation,” said Mintert.
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A change in the domestic market occurred around 1980, resulting in a steady decline in demand at the retail level.
Demand was at its worst in 1998 when the index value was 50. An uptick occurred in 2004 and demand increased to 63.
“It is hard to make money in an industry when demand is declining that fast,” Mintert said.
Demand began declining again three years ago, and the index value reached 54 last year.
Mintert blamed food safety, competing meat, falling consumer income and health concerns.
Consumers pay attention to major food recalls and tend to avoid certain products for about six months afterward.
There was a spike in beef recalls in 2007 and demand fell three percent.
Mintert’s research found that demand drops by .2 percent over the next two quarters for every 10 percent increase in food recalls.
“It doesn’t look like food recalls have a big impact on beef demand, but what you have to realize is when those recalls jump, it does have a big impact,” he said.
The medical connection between eating red meat and a higher risk of heart disease also hurts beef demand.
Medical journals and news articles connected heart disease with red meat consumption between the early 1980s and 2002.
“Consumers’ concerns over this issue gave us about a nine percent decline in beef demand,” he said.
“That information is still out there and being communicated and it is having a negative impact.”
Mintert said the beef industry needs to promote beef as a good source of zinc, iron and protein because health professionals and consumers respond to positive nutritional information.
A 10 percent increase in articles about positive dietary properties was correlated to a .25 percent increase in beef demand and accounted for a seven percent im-provement in demand since the 1980s.
Convenience is hard to measure, but research showed that a drop in demand is connected to the percentage of women working outside the home since the early 1980s in Canada and the United States.
Women had less time to prepare meals and sought more convenience. They often selected chicken because of the wide range of easy to prepare products and because it is deemed a healthier protein.
Families also ate more meals away from home, even though it is more expensive than cooking from scratch.
Fifty-four percent of Canadian women had outside employment in 2007, with Alberta having the highest percentage at 65 percent and Newfoundland having the lowest at 48 percent.
Aging baby boomers will also affect future demand. Forty-four million Americans are on social security and in 20 years 77 million will be pensioners. This trend is also occurring in Canada, Europe and Japan.
North Americans may be turning away from beef, but Paul Clayton of the U.S. Meat Export Federation sees positive demand signals from foreign customers.
Russia, India and China are the markets of the future and will buy higher value goods, including more beef , as their gross domestic product improves.
“We can imagine over the next 30 years both of those things will start moving up and those are the countries where we have economic opportunity,” Clayton said.
He predicted that Australia and North and South America will emerge as the world’s major beef suppliers.
Clayton said U.S. beef exports should return to 2003 levels of 1.2 million tonnes per year by 2013 as more market access is gained and 1.4 million tonnes by 2015.
Individuals in those markets are not likely to consume more on a per pound basis, but a larger global population will eat more overall.
