Drovers/CattleNetwork news source | Updated: 02/20/2013
Agriculture Secretary Tom Vilsack made the following statement about notification received today from the Scientific Commission for the World Organization for Animal Health (OIE) recommending that the United States’ risk classification for bovine spongiform encephalopathy (BSE) be upgraded to negligible risk:
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The 1st session of the 2013 YCLC has been set for February 26 & 27. Young cattle producers from across Arkansas will converge on Little Rock for an intense 2 day training centered around the regulatory and legislative functions of our industry.
Producers will be immersed in the regulatory bodies that our industry works with on a daily basis. The tour includes Arkansas Agriculture Department, Livestock & Poultry Commission and Plant Board. Discussions will include the regulation and laws regarding how our industry is governed and the rule-making process for the individual boards and commissions.
The second day will include a trip to the Arkansas Legislature and visits with legislative committees. Producers will have the opportunity to interact with the Ag Committee and the representatives that make up one of the most important committees our industry focuses on. Participants will also have the chance to visit with their respective legislators and help promote the beef industry in Arkansas.
The Young Cattlemen’s Leadership Class (YCLC) is a program of the Arkansas Cattlemen’s Association and is funded by grants from the Arkansas Cattlemen’s Foundation and the Arkansas Agriculture Department. For more information on the YCLC and the programs we have, contact Adam McClung at the Arkansas Cattlemen’s Association, (501) 224-2114.
What’s Next for Beef Demand?
Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist
There is understandably a lot of concern in the beef industry about beef demand in the coming months. The expected decrease in beef production in 2013 will likely represent a 3.3 percent decrease in domestic per capita supplies. The decrease could be even sharper in 2014 with consumers potentially facing another 5 percent decrease in domestic per capita beef supplies. The pressure for higher wholesale and retail beef prices will continue to grow at through 2014. The question often posed to me is “will beef be priced so high that consumers will quit buying beef?
I don’t believe there is much danger that consumer will entirely quit eating beef. Beef includes many different specific products and the question is more one of how consumers will adjust the mix of products and total expenditure on beef. One of the ongoing concerns is the slow recovery of beef demand from the 2009-2010 recession. Middle meat demand was weakened the most as consumers switched from steaks to hamburger and other value cuts. In that process, a higher percent of total carcass value was borne by the end meats, i.e. Chuck and Round portions of the carcass. In 2011 and 2012, middle meat values advanced along with end meat values, thus maintaining the relatively large contribution of end meats to total value. Though it has been very slow, beef demand has recovered from the recession. The All Fresh beef demand index provided by the Livestock Marketing Information Center (LMIC) shows significant recovery in the index from the 2010 lows. The 2012 annual beef demand index level is near levels not seen since 2008. The beef demand index for the fourth quarter of 2012 posted a sharp jump to the highest levels since the fourth quarter of 2007.
While beef demand is increasing, it is very likely not increasing fast enough relative to price pressure from falling beef supplies in 2013 and 2014. Retail beef prices will undoubtedly push to new record levels in the next two years. Several factors will influence exactly how those price increases will be manifest in various beef markets in the coming months. The availability and price of pork and poultry will impact beef price increases. Both the pork and poultry industries have been resistant to production cutbacks. Production of both pork and poultry are currently forecast to be on either side of unchanged year over year in 2013. Relatively large supplies of pork and poultry will temper beef price increases to some extent.
International beef trade will also impact domestic beef markets by changing both the net available supply of beef in the U.S. but also by changing the mix of products in the U.S. market. Strong hamburger demand and higher prices in the U.S. market will likely support increased beef imports, especially from Australia and New Zealand who are major suppliers of processing beef. Beef imports from Mexico, Brazil and Uruguay were also up in 2012. On the export side, the recent Russian ban on U.S. beef and pork could hurt 2013 exports to that market if a resolution is not found. The recent opening of the Japanese market to meat from animals up to 30 months of age will increase access to that market, certainly over time, and may provide valuable support for middle meats as it did in 2010 and 2011. However, high U.S. prices combined with recent devaluation of the Japanese Yen, which makes U.S. beef even more expensive, may temper the pace of expanded beef exports to Japan in 2013.
U.S. beef consumers will continue to adjust beef expenditures by adjusting the mix of products consumed. Consumers are likely to continue adjusting the frequency and quantity of consumption of expensive middle meats. This process is being aided by increasing indications that some restaurants are reducing portion sizes in an attempt to reduce product cost and thus maintain margins with fewer menu price increases. There is concern that beef demand, especially steak demand, is becoming more of a “special occasion” meal rather than a regular part of beef consumption. Though this seems to part of the consumer response since the recession it is not clear whether consumer preferences have changed permanently. One thing is very clear; with steaks carrying a premium price the next two years or more, it is imperative that the beef industry do everything possible to ensure premium quality as well. Beef has always been significantly more expensive than pork and poultry because it enjoys strong preferences for the flavor and tenderness of beef. Beef does not have to be the cheapest meat but it does need to provide the best value relative to price in order to preserve beef demand at record price levels.