Work at Kansas State recently showed demand for USDA Choice beef increased 20% from 2002 to 2010, but that was outpaced by a premium Choice brand. Consumers want quality. Taste panel after taste panel proves what people have been saying with their wallets all along.
The headline reads, “Beef prices skyrocket.” A little more information comes with, “Wholesale beef prices at record levels.” Another adds, “Beef exports up 7% in two months.”
The articles that follow those zingers all explain different facets of the supply and demand equation. Beef prices are up because of a shrinking cowherd, accelerated by drought. Cattle prices are 25% higher than this same time a year ago, but can they stay there? That all depends on whether the consumer is willing to pay.
Of course, if the American customer won't shell out the dollars, there are more buyers overseas. They are cashing in on a weaker U.S. dollar.
Perhaps the most telling article related to beef demand was posted by Oklahoma State's Darrell Peel at the beginning of the year: “Beef Demand is the Key to Cattle Prices In 2012.” He suggests, “Cattle and beef prices will be higher in 2012, but just how much higher depends on consumer demand.”
Although many brilliant ag economists have devoted countless hours of study to it, beef demand will never be an exact science. There are too many factors at work, but one thing is for certain, true demand increases aren't simply selling more product or even higher retail prices. Demand only moves up when volume times price moves up.
So what can individual farmers and ranchers do to move that needle?
Listen to consumer preferences.
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