Consumer Drivers

Beef Demand Creating Huge Opportunity

Victoria G Myers
By  Victoria G. Myers , Progressive Farmer Senior Editor
As demand increases, consumers are also asking more questions about where and how the beef they buy is produced. (DTN/Progressive Farmer photo by Jim Patrico)

America's animal protein producers are in "an incredibly opportunistic position at this point in history." That's according to Don Close, who reports beef, pork and poultry are all expected to see increased domestic per-capita consumption this year by a total of 1.3%.

Close, Rabobank protein analyst, stresses this strong demand environment, combined with the quality and food safety for which U.S. product is known, will drive the beef, pork and poultry markets throughout 2018.

"In addition, there is an abundant feed grain supply on hand that makes us very price competitive," he notes. "In the case of beef specifically, North America is collectively the single source globally for quality and ultrahigh-quality product. Supply of Choice and Prime cattle here is over 80%."

POULTRY. Expect continued growth in this segment, but not without some production challenges as the industry responds to consumer preference. Rabobank's "Global Animal Protein Outlook 2018" projects 1.8% year-over-year growth in slaughter levels for the U.S., slightly below historical trends.

Close notes three drivers here. One, the number of poultry grown without antibiotics is slowing production. Two, there is a pushback from consumers against large birds, and, as the industry addresses this, it's holding down average carcass weights. Three, consumers want a more natural process, which equals slower growth.

"All three of these factors affect production," Close says. "We have more birds in the pipeline, but the output is lower."

U.S. poultry per-capita consumption for 2018 is projected to increase around 1%.

PORK. Expansion continues for the fifth straight year. New slaughter capacity in the industry gives producers a reason to expand, leading to a Rabobank projection of 3.85% more hog production this year. Some 30% of U.S. pork goes to NAFTA-related (North American Free Trade Agreement) markets, so any renegotiation could change the outlook.

U.S. pork per-capita consumption this year is expected to grow 1%.

BEEF. Demand for beef continues to drive expansion and return positive prices for producers. Close believes the key to continued opportunity is centered around traceability and documentation.

"Consumers want, are demanding, to know where their food came from. That is not going to go away, it will only intensify," Close explains. "Beef's ability to delivery that story, that confirmation that the product is what it is labeled to be, will only be accomplished with full traceability.

"Do I want to advocate any more legal requirements or mandates? No," he continues. "But in this one, specific case, if that is what is required to move the beef industry forward, I'd be willing to go there and at least consider it."

U.S. beef per-capita consumption for 2018 is projected to climb 2%.

Victoria Myers