Demand indexes for January-March 2004 show pork demand up 5.8%, beef demand up 6.2% and broiler demand up 5.8% from the same period last year. Note that this is a demand index, not merely a measure of consumption. Consumption (or quantity in economics parlance) is just one of the variables that define demand. The other is price. Demand index includes both.
Meyer says pork and chicken's performance isn't real surprising given both species have higher production, higher per capita domestic availability and much higher prices thus far this year. Beef, however, is a whole different story.
"While beef prices have been higher than a year ago, beef production has been significantly below last year due to the lack of Canadian fed cattle and cows in the U.S. slaughter mix," Meyer says. "However, export suspensions have caused per capita beef availability to be 4% or so higher this year. Higher prices and higher availability (which means higher consumption) means beef demand must be higher as well!"
While Meyer admits three months of data is just a snapshot of the year, he calls such demand performance "remarkable."
"These numbers are huge in demand index terms. Seldom have beef or pork seen more than a 3% shift for an entire year," Meyer says. "Should the current numbers stand for the entire year, it will mark the first time since 1978 that all three species' demand index has increased. It's significant that this last occurred before health, fat and cholesterol issues became huge for consumers in the in the 1980s."
Meyer says stronger pork demand and strong pork exports combined to pull live hog demand up by 11.6% vs. the first quarter of 2003. He contrasts that to live cattle demand, which (despite much stronger domestic beef demand), is down 6.1% from 2003 due to much lower beef exports caused by the trade ramifications of BSE.
Meyer says the curious item in the demand picture is turkey, which is down 4.2% domestically in the first quarter. Turkey was a huge beneficiary of the health situation of the 1980s when the industry developed a number of lower-fat products that mimicked meat products already on the market, he says.
"It appears turkey is suffering from the same kind of underexposure in higher-end foodservice that used to cause pork so many problems," Meyer says. "Whatever it is, the data clearly show the turkey industry hasn't benefited from record strong protein demand in 2004."