Events in Europe over the past 20 years indicate that consumer perceptions and fears of disease could have a substantial impact on U.S. beef production
The European Union (EU), which now includes 27 member counties with nearly 500 million people, is a unique region in regard to beef production and consumption. On the supply side, the EU produces about 7.5 Million metric tons (mmt) annually. This makes the EU the fourth-largest producer of beef in the world, behind the U.S. (11.5 mmt), Brazil (9.5 mmt), and China (8 mmt). However, in the past 10 years, EU beef production has declined nearly 15% while the U.S. has been relatively flat and Brazil and China have both increased over 60%.
Interestingly, the decline in EU beef production has occurred due to decreased consumer demand – primarily because of animal disease issues – at a time when Europeans have been financially secure. Major changes have occurred in EU beef production in the last 20 years, primarily due to the widespread outbreak of Bovine Spongiform Encephalopathy (BSE) and its subsequent affect on consumer confidence. The resulting changes that occurred in Europe may help to shed light on the U.S. beef production industry, including the potential power that consumers’ posses both at the retail case and through legislation.
Historical EU Beef Production
Europe had been an exporter of beef. This was partially due to economic incentives (i.e. governmental subsidies) that encouraged production during the 1980s. However, BSE outbreaks in the United Kingdom (in 1986) and the rest of Europe (in 1989) led to major erosion in consumer demand and confidence in the EU beef supply. In total, from 1986 to today there have been over 180,000 BSE cases in the U.K. and over 5,000 throughout the rest of Europe.
Decreased consumer demand for beef led to reduced beef prices and ultimately declining beef production for a sustained period. As a result, the EU actually became a net importer of beef in 2003 when demand began to rebound but production was inadequate.
Post-BSE Beef Production in the EU
Today, about two-thirds of the beef produced in the EU is from bull calves originating from the dairy industry. However, since the dairy industry has been in a long-term contraction mode (due to the “decoupling” of subsidy payments from milk production), Europe’s “suckle cow” or cow/calf industry is growing as a result of increasing consumer demand for beef.
Due to Europe’s BSE catastrophe, today’s EU consumers are much more demanding about the beef that they purchase, including how it was produced. In many cases these demands are conveyed to cattle producers via government involvement, EU laws, and financial incentives to regulate European beef production (including animal nutrition, meat hygiene, animal handling, etc.).
For instance, the EU banned meat and bone meal and the release of specified risk material (SRM), which was also done by the U.S. However, the EU went further and initiated traceability systems that included mandatory animal identification and product labeling. Strict animal welfare regulations that address animal handling (electric cattle prods are strictly outlawed in the EU) and management were also adopted. One such regulation requires that cows have access to a structure with 3 walls and a roof during inclement weather. Further, several management practices common in the U.S. are not done and/or allowed including castration, dehorning, and branding.
Environmental laws and incentives also are in-place via direct regulation or subsidies. For instance, spreading manure on pastures is banned until after all the snow has melted in the spring to avoid possible run-off into wetlands or waterways.
European consumers have clearly conveyed that they want to be assured by a third party (i.e the EU) that their beef was produced in an environmentally-sustainable manner in wide-open spaces from healthy animals. And, they want beef from those animals to be clean, safe, natural, and organic with an emphasis on traceability and food safety – to which the EU has responded.
The EU uses regulations and/or subsidies to enforce these documented consumer demands. To accomplish this, consumers provide funding and political support to the EU more through their taxes than via purchasing decisions and spending at retail (which seems to be more common among U.S. consumers).
Limited Emphasis on Quality
Interestingly, European consumers seem less interested in the eating quality of the beef they purchase compared to how it was raised. Beef produced in the EU is not “high quality” compared to U.S. beef, at least in regard to its marbling content or eating quality (tenderness, juiciness, and flavor). Carcass grading throughout Europe focuses solely on the production of muscle and pounds of meat. Carcasses are never ribbed (to expose the ribeye), and grades are applied based only on the amount of muscling in the shoulder, rib/loin, and round.
Since marbling is not encouraged, diets are primarily forage-based. In some areas of the EU (particularly Ireland and the United Kingdom, and the mountainous regions), there is more grazing and grass finishing of cattle. Similarly, the more northern areas (e.g. Scandinavia) feed primarily harvested forages. In contrast, the hotter regions that produce more cereal grains (central and southern Europe) tend to feed less forage and more grain, but not nearly to the extent of the U.S.
Agricultural production in the EU cannot be discussed without mentioning subsidies. Without question, substantial payments are provided to livestock producers by the EU. In many cases, these payments are the only method for a producer to be profitable. And, these payments also provide incentives for producers to follow EU principles in regard to beef production (environmental impact, humane treatment, etc.)
Subsidies are also provided to help maintain and strengthen the economies of rural areas. In fact, they actually enable young people to enter the beef production industry when they otherwise would be unable to. And, amazingly, a specific subsidy is provided to enable a farmer to take 2 vacation days per month. An EU-employed worker is actually provided free-of-charge when a farmer goes out of town for vacation, meetings, etc.
Ultimately, the EU’s subsidy policies – which fall under the EU’s Common Agricultural Policy – are intended to reduce dependence on imported food, such as beef. Citizens of the EU are trying to avoid food shortages that occurred during World War II, but are also trying to utilize the payments to encourage the production of agricultural products in what they believe to be a more “extensive” and sustainable manner.
The Bottom Line
Due to disease problems such as BSE, European consumers have a completely different view about meat production than U.S. consumers, and as a result demand more from their governments to provide regulation. This being the case, it’s unlikely that the EU will be much of a market for U.S. beef exports anytime soon. However, the substantial ‘power’ conveyed by consumers to livestock producers is something for U.S. beef producers to recognize and understand, particularly in regard to the future of beef production.
In Europe, it is interesting to see how consumers have had a major influence on how their food is produced, particularly when faced with evidence of an unsafe food supply. Historically, the U.S. has focused almost exclusively on the eating quality of beef we produce (highly marbled and grain fed), but little on the methods used to produce it. Up to now, U.S. consumers have sent minimal signals to beef producers related to how beef should be produced.
In just the past year the U.S. has experienced growing fears of foreign animal disease outbreaks, publicly-documented issues with animal welfare and handling, and other consumer fears. These could easily translate into increased governmental regulation based on what has happened in the EU over the past 20 years. It’s probably in the U.S. beef industry’s best interest to be proactive in these areas and to respond to consumer demands more seriously.
Dr. Jason Ahola is an Extension beef specialist with the University of Idaho. Contact him at firstname.lastname@example.org or 208-454-7654.