Will beef demand keep up with cowherd expansion?

A Handbook for Ranch ManagersThat would be the $64,000 question if price is to hold. — jtl, 419

by via Beef Magazine

Beef demand has remained strong as cattle numbers declined. What’s ahead?

Product demand—that complex intersection between available supplies of a given product and its price—is never as straightforward as most of us would like. But a broader understanding of true beef demand could go a long way in helping maintain the price of beef as supplies of beef increase.

“ Planned Grazing: A Study Guide and Reference Manual For a variety of reasons, we do not believe beef demand will grow sufficiently in the next few years to fully offset the expected rate of growing supplies,” say Ted Schroeder and Glynn Tonsor, agricultural economists at Kansas State University, in their recently published Beef Demand Prioritization. “In other words, we expect lower fed cattle and beef prices than recently observed. However, that does not suggest strategies designed to strengthen beef demand are not worthy investments. In fact, striving to grow demand as supplies increase is immensely important to industry profitability.”

Environmental & Natural Resource Economics: The Austrian ViewThe Beef Industry Long Range Plan Task Force said as much when it highlighted priorities that are part of the 2016-2020 Beef Industry Long Range Plan.

The task force agreed the single most important strategic objective the industry should pursue is increasing beef demand. They established a specific objective to increase the wholesale beef demand index by 2% annually over the next five years.

Combat Shooter's Handbook Reconnaissance Marine MCI 03.32f: Marine Corps Institute The Betrayed: On Warriors, Cowboys and Other MisfitsIn a fact sheet, Tonsor and Schroeder describe key areas that merit industry focus for prioritizing beef demand efforts. Those areas are:

Support expanded information regarding demand concepts

The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)“Any assessment of available information on beef demand must start by clarifying what beef demand is, and what it is not,” Tonsor and Schroeder say. “Building overall understanding of demand concepts is necessary for informed, collective decision making and investment prioritization effort. To effectively prioritize demand growth strategies requires a well-grounded understanding of what demand is as well as how and why it changes.”

Assess international demand prospects and identify target countries and regions

“Attracting new consumers to the market demanding U.S. beef is one of the most effective and rapid ways to build overall demand,” Tonsor and Schroeder explain. “What is notably less well understood is exactly which countries or regions present the best opportunities…We strongly recommend concerted efforts be made in first identifying the most fertile markets for international beef export demand growth.”

Assess implications of changes in composition of U.S. households

Along with recognized long-term trends, such as population growth, median age and the growth of households with more than one non-family member, Schroder and Tonsor share related insights from the 2015 Power of Meat report published by the Food Marketing Institute including:

  • Millennials place much higher importance on preparation knowledge, time and ease while shoppers over 65 years of age place much more importance on price and appearance.
  • Lower income households are more focused on price while higher income households focus more on nutrition and appearance.
  • The role of preparation knowledge has increased substantially in decisions to buy fresh meat. This likely reflects a broader change in the food cooking and preparation habits and skills of today’s U.S. residents that is likely impacted by underlying household composition changes.
  • The choice of market channel increasingly matters as supercenter meat shoppers place less emphasis on appearance, nutrition, and preparation time and knowledge and extra emphasis on total package price compared with supermarket channel meat shoppers.

“Moreover, what is not thoroughly understood are subsequent implications on what strategies make most sense to position the beef industry to realize beef demand growth, given these ongoing population and household composition adjustments,” Schroeder and Tonsor say. “Certainly, positioning the industry and tailoring products to fit highly diverse lifestyles and preferences of modern consumers does not have simple single-dimensional solutions.”

Improve perceived food safety and product quality profile of U.S. beef

According to previous research conducted by Schroeder, Tonsor, and Jim Mintert at Purdue University, food safety and product quality rank highest in terms of demand drivers relative to realized demand and the ability of the industry to influence demand.

“Many consumers have lingering doubts or uncertainty regarding beef product food safety,” Tonsor and Schroeder say. “…the general consuming public does not have the time or expertise to sort facts from confusing, wrong, or undocumented claims. Such consumer perceptions and preferences are driving major food processors, food retailers, food service, and policy makers to impose major changes in how food, including beef, is produced, processed, and marketed. Helping consumers sort out fact from fiction through very visible information campaigns, being part of the leadership in board rooms as major food companies develop supplier expectations and requirements, and being a leader working with producers to bridge the gap between producer and consumer interests are valuable initiatives.”

Assess determinants of recent demand strength

“Understanding if and how determinants of recent demand strength differ from insights offered from assessments of demand patterns in the past could be very instructive in identifying industry direction for beef demand investments going forward,” Schroeder and Tonsor say. “Not only are consumers and consumer perceptions and preferences evolving, so many changes are taking place in beef production, processing, retailing, and food service that what we have learned in the past about beef demand needs continual reassessment to best adjust demand enhancement strategies going forward.”

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Planned Grazing: A Study Guide and Reference ManualPlanned Grazing: A Study Guide and Reference Manual. This is the ideal squeal to A Handbook for Ranch Managers.  Although the ecological principles remain the same, what was originally known as “The Savory Grazing Method” now answers to a multitude of different names: ranching for profit, holistic management, managed grazing, mob grazing, management intensive grazing, etc. Land & Livestock International, Inc. uses “Restoration Grazing” under its “Managing the Ranch as a Business” program.” No mater what you call it, this summary and synopsis will guide you step by step through the process and teach you how to use it as it was originally intended. No more excuses for failing to complete your grazing plans.

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About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
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