BIRMINGHAM, Ala. (DTN) -- Record-high meat prices over the last several years pushed more than a few consumers away from grocery store meat counters. That trend is beginning to reverse now, as falling prices bring buyers back and build per capita protein consumption.
A new report from Rabobank Food and Agribusiness Research and Advisory group, "Chickens, Cows, and Pigs ... Oh My!", described 2015 as a "momentous" year for the livestock industry, with the largest increase in U.S. meat consumption seen since the 1970s, at 5% per capita. Going forward, the group projected 1.2% to 1.5% average per annnum growth in U.S. meat consumption. This follows a 9% drop from 2005 through 2014. During that time, beef showed the largest decline at 18%, pork at 10% and chicken at 1.4%.
USDA reported earlier this year total per capita disappearance at the retail level of red meat and poultry totaled 210.9 pounds. For 2016, the agency forecast that figure to go to 214 pounds. Of that, 54.5 pounds was projected to be beef, 50.1 pounds pork, 90.4 pounds chicken (broilers) and 16.4 pounds turkey.
Hitting the 200-pound per capita consumption level was once thought impossible for protein. Derrell Peel, Oklahoma State University's beef marketing specialist, said that barrier was first breached in 1988. Since then the level only dipped below the 200-pound mark twice, in 1989 and in 1990.
If price is key to consumption, Rabobank's retail price projections build a strong case for increased purchases. In its report the group expected U.S. retail meat prices to decline by 14% by 2018 (from 2015 levels, on a consumption-weighted basis). Beef prices would see the biggest drop, going from an average of $6.29/lb to $4.94/lb (minus 22%). Next on the downturn, pork prices would fall from $3.85/lb to $3.56/lb (minus 7%); and chicken from $1.97/lb to $1.87/lb (minus 5%).
Underlying the price drops were supply increases across the board for all proteins, and a more challenging trade environment. Trade issues were closely tied to the strength of the U.S. dollar, which Rabobank said continued to make it difficult to sell product in many of America's best markets abroad. The Rabobank report explained the U.S. dollar index increased by 18% the last two years, and the dollar strengthened significantly against some of its most important protein trade customers including Mexico, Canada and Japan.
On the supply side of the equation, strong growth was projected to continue. The pork sector was reported to be adding four new plants, boosting U.S. packing capacity by the end of next year by 6% to 7%.
Poultry was also said to be adding plant capacity, with four or five new plants and expansion at older ones.
Rabobank expected U.S. chicken production to grow by 2.5% per annum through 2018, due to more capacity and increased bird weights.
As for beef, where herd rebuilding has been a focus of the industry for the last three to five years, it was expected to see a 4% increase in production by 2017, with that growth expected to continue through 2020.
Vicki Myers can be reached at email@example.com
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