Beefing Up the World’s Platter
Oct 06, 2009
By Steve Cornett
Dairy Today Editor Jim Dickrell’s blog last week on stable milk consumption and the need to export la leche got me pondering about the future of the beef business in a world where 96% of humans live outside the U.S. and U.S. beef consumption isn’t just stable, but declining.
Jim’s column, which you can read by clicking here, cites Penn State economist Jim Dunn, who says that Americans are drinking all the milk they want and dairy cow productivity is increasing.
Thus, “It is apparent that production per cow is growing faster than the population. As a result, …each year fewer cows would be needed to provide the milk than the domestic market would require,” writes Dunn. “It is the major reason that if the industry is going to maintain or grow, it must export milk.”
The case is more so for beef. From USDA’s Economic Research Service:
Total U.S. beef consumption:
2002: 27.9 billion pounds
2003: 27.0 billion pounds
2004: 27.8 billion pounds
2005: 27.8 billion pounds
2006: 28.0 billion pounds
2007: 28.1 billion pounds
2008: 27.3 billion pounds
So, beef consumption—despite population growth spurred by brisk immigration and what was a robust economy through that period—has declined. Per capita beef consumption, during that era of high living, declined slightly. That’s an improvement over the quick declines in beef demand measured in past decades, but not the growth it would have required to keep cow herds stable.
During that same period, the beef cow herd declined. Some people went out of business and others reduced the size of their herds. That, for the edification of small farm advocates, came primarily at the expense of smaller producers. Some of the medium size guys got big and the big guys got bigger. Attrition doesn’t happen at the top.
The result was that if you figure per cow productivity based on USDA numbers of cows and beef production, you find that per beast slaughtered in the U.S., beef production increased from 758 to 772 lbs.
Figure it on per-cow inventories, and production per cow increased from 281.9 lobs in 2002 to 299 lbs. last year—an increase of almost exactly 1% a year.
So give that some more thought if it isn’t clear. The population grows at 1%—again, spurred by that robust economy sucking in immigrants. The per-cow productivity grows at 1%. Per capita beef consumption goes backwards—despite that robust economy that kept the steak houses humming.
So, if you have 100 cows today and want to still have 100 cows 10 years from now, what are the options? Reduce productivity per cow, thus adding to costs? Grow the population faster to offset declining per capita demand?
It’s one of those or it’s fewer cows or more sales overseas.
Let me admit that the BSE dilemma has given me pause on my free trade predilection. If you get dependent on exports, you’re subject to the whimsy of trade sanctions. That one lousy BSE cow has cost the domestic industry millions. We’re working our way out of it—note the recent USMEF release at http://www.usmef.org/ —but there are other vulnerabilities. Foot and Mouth scares me worst.
I’ll even admit to you protectionists that if we stopped imports it would give us a one-time boost in demand and prices. But it would be one-time and it would erode as the domestic industry quickly built its way back into depression. And I do mean “quickly,” because imports account for such a small amount of domestic supply.
No. Long-term growth and profitability for U.S. cattle producers will require access to the 96% of the world’s population that want—need—more beef.
Which brings us to Jim’s ending paragraph upon which we shall borrow:
“Per cow productivity will continue to improve. Restricting imports creates more problems than it solves. And participation in the global economy is essential to the future vitality of the industry.”
Steve Cornett is editor emeritus at Beef Today. You can reach him via e-mail at firstname.lastname@example.org.
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