All industries suffer in tough economic times
It's time for the beef industry to move forward, past the current recession.
Domestic beef retail sales are down. No surprise. House sales, auto sales and just about everything-else sales are down. It's the economy, right? "What I tell beef producers is, 'Don't feel like the Lone Ranger,' " said James Mintert, a Kansas State University agricultural economist. "This is being experienced by every producer, whether it's trucks or beef."
But Mintert and other ag economists are also telling the beef industry not to use the economy as an excuse for demand decline and to look beyond the current macroeconomic conditions.
"Much of what's happened recently is out of the industry's control," Mintert said. "But there are things it can do to help itself and be ready for when the economy recovers."
Mintert, K-State colleague Ted Schroeder and Michigan State University ag economist Glynn Tonsor recently completed a study on U.S. consumer beef demand.
The report cited three areas that are within the industry's control: food safety, new products that are convenient to prepare and nutritional information.
"You can't just pick one and ignore the others," Schroeder said, "or you'll miss opportunities."
"If we quit putting resources toward these things, we lose consumers," said Todd Johnson, executive director of the Kansas Beef Council, a marketing arm for the industry.
The Cattleman's Beef Board, a national organization that allocates funds from the beef checkoff program for research and marketing, did an online survey of 2,000 consumers that asked what limited their beef purchases.
Not surprisingly, 50 percent said price was the chief factor. But after that, the reasons were split evenly between food safety (37 percent), convenience (36 percent) and nutrition (35 percent).
Johnson noted the industry is addressing the three areas.
He said, for example, "Ten years ago, if you went to a ready-to-eat section at the grocery store, you wouldn't find many beef products. That's changed."
But beef has a lot of ground to make up.
To assess the domestic decline in beef demand, the report used an aggregate index.
The index started with 100 points in 1980, then saw the demand plummet to 50 by 1998.
Schroeder said that meant that if the industry wanted U.S. consumers to eat the same amount of beef as they did in 1980, it would have to sell beef at half the 1980 price in 1998.
The Atkins low-carbohydrate diet was the driving factor in pushing the index to 63 in 2004, Schroeder said. Beef is low in carbs.
Popularity of the Atkins diet has since waned, and the index was down to 56 in 2008.
"A fad is not a predictable product-demand strategy," Schroeder said.
Other factors kicked beef's share of the meat market in the shins.
Beef food safety recalls jumped from 18 in 2006 to 38 in 2007, contributing significantly to a 2.6 percent drop in domestic retail beef demand, the report said.
The recalls returned to a more normal level in 2008 with about 20.
"But it takes awhile to restore consumer confidence," Schroeder said. "Food safety is a significant influence."
John Niemann, head of sales, marketing and business development for Cargill Beef in Wichita, said Cargill has spent $1 billion over the past 10 years on food safety for all of its meat products.
"The U.S. still has the world's safest food supply," he said.
To read the entire article, which continues on with new products that the beef industry could utilize to increase profits, link to the Wichita Eagle.