Behind fluctuating beef demand

After many years of strong, growing retail beef demand in America's supermarkets and restaurants, 2005 saw beef demand decline by 2.5%, 2006 by 6.6%, while 2007 was up 1.75%.

Traditionally, the U.S. beef industry sells all it produces. The declines in 2005 and 2006 are a function of reduced production by the beef industry, not necessarily a drop in consumer's desire to purchase beef. They bought all that was available.

Drought and other natural disasters, high grain prices caused by corn being diverted to make ethanol for gasoline, and other lesser reasons have stalled the increase in the nation's beef cowherd. In fact, it's dropped. There are fewer cows, and therefore fewer calves being born.

This is not an altogether negative situation for the beef industry. In a supply and demand market, a shortage of supply increases prices received for what is available. That's happened for beef cattle until recently, and made retail prices for beef more expensive too. At the same time, over-production in beef's main competing meats, chicken and pork, has made them much less expensive than beef. This has made tough competition in the meatcase for the more expensive beef.

Should American cattlemen panic? Hardly. Most market factors are very positive and bode well for the future. The tight supply of beef, and shrinking national cowherd alone, foretell an upswing for the cattle business.

Raw statistics don't tell the whole story.