WEST LAFAYETTE, Ind. — The nation’s beef herd continues to decline.
Due to several years of financial difficulty, producers have little interest in rebuilding their herds. As a result other animals are gaining a larger market share and the cost of beef will remain high, according to a Purdue University economist.
Decline
The USDA estimates beef cow numbers, as of July 1, dropped to 31.7 million head, a decline of 2 percent from a year ago. Milk cow numbers were down 1 percent.
Producers also reported they were retaining 2 percent fewer beef heifers to go back into the herds.
“Low calf prices and large losses in cattle feeding since 2007 have continued to discourage beef cow expansion,” said Purdue University Extension economist Chris Hurt.
“In fact, the poor returns that were driven by much higher feed prices starting in late 2006, and culminating in the recessionary economy in 2009, resulted in an aborted beef expansion cycle.”
Long cycles
According to Hurt, the expansion phase of the beef cycle normally takes about six years. But in a period where there should be growth, the number of beef cows have been declining. Since 2006, beef cow numbers have dropped by 5 percent.
Other meats are going to absorb some of beef’s market share. Pork availability per person will be down by 5 percent this year, but herd expansions is expected to begin late 2010 and into early 2011. This means 2011 pork availability will be up 1 to 2 percent.
Total meat and poultry consumption in the United States fell from 222 pounds per person in 2006 to 208 pounds in 2009. The drop in pork consumption was 5 percent, chicken consumption was down 8 percent, but beef lead the decline with a 10 percent reduction.
“Chicken production will expand this year and next, and pork will be in expansion next year,” Hurt said. “This leaves only the beef industry with declining numbers and no expansion in sight.”
Slow expansion
Seeing the beef industry expand slowly is not a new concept. The beef cycle normally takes at least 10 years, and sometimes stretches to 15.
“Unless feed prices return to much lower levels, it is likely that consumers will eat less red meat and poultry than at the peak in 2006,” Hurt said. “In order to eventually pass the higher feed prices on to consumers, the animal industry had to suffer large losses and eventually reduce the size of their herds.
“Once supplies are cut sufficiently, consumers have to pay higher prices for meat and poultry. Given these higher prices, consumers will eat less of these.”
Limited growth
If the long period of increasing consumption of meat and poultry ends, the U.S. market will have limited growth potential in coming years.
If that is the case, the domestic market may only grow at the same rate as the U.S. population.
Exports to developing countries will likely provide the biggest growth for the meat and poultry industry.
