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Beef Demand Study Provides An Industry Wakeup

I recommend that everyone takes a look at the recent checkoff-funded research study entitled “U.S. Beef Demand Drivers and Enhancement Opportunities” (see “Consumers Seek Convenience, Nutrition, Safety” elsewhere in this issue). It was conducted by Kansas State University’s James Mintert and Ted Schroeder, and Michigan State University’s Glynn Tonsor.

Looking at the Retail Choice Beef Demand Index, beef demand has been declining since its peak in 2004, which saw us climb back to the demand levels of the early 1990s. While the success has been rightly heralded, it’s also a stark reminder just how bad things were; beef demand in 2008 is just 56% of what it was in 1980.The exciting thing about that is it does represent an incredible opportunity for the beef industry to increase profitability and expand the size of our industry. Rebuilding demand by just 10% would dramatically alter our industry economics.

Without question it will take the entire production system to build demand. We also face challenges, what with the global economy in recession and both the purchasing power of checkoff dollars and actual checkoff dollars decreasing.

But while disposable income plays a large role in beef demand, there are other factors we can control. One area is food safety. Mintert says food safety recalls in 2007 caused beef demand to fall by 2.6%! With the loss of markets caused by BSE and with the humiliating animal-handling debacles at Hallmark/Westland in Chino, CA, it’s probably a positive that beef demand hasn’t declined more precipitously. We can’t afford to have any food-safety concerns regarding beef.

Not surprisingly, the study also indicated the importance of telling beef’s story and raising beef’s image. Telling the positive story about beef as it relates to nutrition will continue to be a priority.

Convenience is also growing in importance as lifestyle changes continue to lead to less meal preparation time, and more meals consumed away from the home.

This report should be a wakeup call to all of us that while beef demand has stagnated or declined, it continues to grow for poultry and even pork. For every new beef product introduced in the marketplace, the poultry industry is introducing 1.6 new products.

There’s no doubt that the beef industry’s muscle-profiling project has been a huge success, but a lot more is needed.