— Diane Henderson, Beef Board
Price, food safety and product quality are the most important demand drivers on which the beef industry should focus to have the most compelling effects on beef demand in the long term. Other key drivers include health, nutrition, social aspects and sustainability.
This statement is a result of "Beef Demand: Recent Determinants and Future Drivers," a newly released study commissioned by the Beef Checkoff Program to summarize the current knowledge of consumer demand for beef and identify the best opportunities for the industry to influence demand positively.
"Consumer demand for beef is one of the most important and widely discussed, yet poorly understood, concepts affecting the beef and cattle industry," the report notes. "It is imperative that the beef industry recognize what drives consumer demand, what expectations are for the future, and assess the industry’s ability to adjust practices to target evolving consumer preferences or to influence important demand determinants."
Authors of the report include Dr. Ted Schroeder, professor of livestock marketing, and Dr. Glynn Tonsor, associate professor of livestock marketing, both at Kansas State University, in addition to Dr. James Mintert, assistant director of Extension for Agriculture and Natural Resources at Purdue University, who prepared the report at the request of the checkoff.
"The information gathered and analyzed for this comprehensive report is almost invaluable to the beef industry, in general, and to the Beef Checkoff Program, in particular," said cattleman Ted Greidanus, a member of the Cattlemen’s Beef Board and chairman of the Joint Evaluation Committee that commissioned the research for the checkoff.
"Not only does it have the ability to help more producers understand the true meaning of strong beef demand – which has the potential to improve their bottom lines – but it provides a detailed road map for checkoff leaders in identifying how to leverage every checkoff dollar to its most effective and meaningful degree possible," Greidanus said. "Members of the Cattlemen’s Beef Board and directors of the Federation of State Beef Councils will be asked to use the information in this report in making decisions about how to invest checkoff dollars in Fiscal Year 2014 and beyond."
Understanding beef demand
While recognizing that understanding beef demand and how to affect it is a daunting task, the report’s authors note that it also is critical to the industry’s long-term viability.
One very important point in developing strategies to grow beef demand will be clarification about the role of per capita consumption in beef demand. Per capita consumption is, in effect, per capita availability of beef, so it offers little information regarding beef demand when considered independently of prices, the economists note. Demand, on the other hand, effectively refers to the quantity of beef that consumers will purchase at one given price, with all other factors held constant. (Chapter 5 of the report explains beef demand concepts in detail.)
"While it is tempting to focus on market share, per capita consumption, or other product volume flows to monitor demand, this can be very misleading," Dr. Tonsor said. "Demand can only be accurately measured by assessing the combination of price and quantity. Demand is a key component of economic signals (prices) sent throughout the entire supply chain. "