Meat demand has cooled some this year, although it remains strong in the long-term context, ag economists say.
University of Missouri ag economist Scott Brown says higher meat prices and higher food prices in general are part of the slowing of meat demand. Also, COVID stimulus funds from the government boosted consumer spending in 2021 and 2022, but those programs have expired.
He says demand is still in a good place, even if it is no longer at historic highs.
“’21 and ’22 were incredibly strong demand growth periods,” Brown says. “What we’re seeing today is a resetting us back to what we were are the start of COVID.”
He says it is important to understand the previous two years were historic, high-demand years, so slowing down from them is not necessarily cause for alarm.
University of Tennessee ag economist Andrew Griffith says for any year before the pandemic, this year’s beef demand would be considered good.
“Prior to coronavirus, we would’ve said beef demand was fairly strong,” he says.
Griffith says the COVID years showed how much people wanted beef and were willing to spend on it.
“That was one of the highlights, or one of the things we learned, was how strong beef demand really was,” he says.
Griffith says wholesale beef prices are starting to feel the impact of high retail prices, where grocery stores and restaurants are seeing some pushback from consumers.
“You have to recognize that there are some struggles that folks are going through monetarily,” he says. “Because of that, we’re going to see some slowdown in beef markets.”
Griffith adds that consumers have not cut back on beef purchases much, and many of them have shown they prioritize good eating experiences.
“That’s what beef is, it’s become an eating experience,” he says.
Iowa State University ag economist Lee Schulz says demand has declined the last four quarters for beef, and the last three quarters for pork.
“We’re starting to see demand wane a bit compared to year-ago levels,” he says. “But the good news is, in historical perspective, for beef and pork, demand remains strong.”
Although economic conditions are affecting meat demand, Schulz says, “We’re seeing better demand than during the last recession we had.”
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As for international demand, Brown says pork exports have started the year ahead of 2022’s pace. Beef exports “have been a little less positive,” seeing less purchasing from China.
Overall, he is optimistic demand will pick up.
“I’m still hopeful we’re going to get a little stronger demand going into the second half of the year,” Brown says.
Griffith says there has not been a lot of substituting beef for cheaper types of meat, although some consumers do use cheaper cuts of the same kind of meat at times.
Schulz says beef prices have remained reasonable compared with pork prices.
“You haven’t seen beef prices get as wide of a gap with pork prices as we would’ve thought,” he says. “It’s still competitive with pork.”
As for demand’s familiar counterpart, supply, economists are expecting a gradual rebuild of the national cattle herd from the liquidation in recent years due to widespread drought.
“I think it’s a longer period of rebuilding this time,” Brown says.
Dry conditions persist in many parts of the Midwest and High Plains, which limit efforts to start rebuilding. Also, Brown says profitability is not as high as the national herd rebuild of 2015 and 2016, meaning there is less incentive.
“I think profitability matters here,” he says. “… Although we have record prices, we don’t have record profitability.”
Griffith says many cattle producers are waiting to see what this year’s hay crop looks like before going ahead full steam on rebuilding.
“We had such low hay stocks, using them through the winter, no one wanted to retain heifers until we knew what kind of hay crop we’d have this year,” he says.
Schulz says beef producers need strong demand ahead to help offset the cost of building the national cattle herd. He adds it takes time to save heifers, have them grow up and have a calf, and then for that calf to hit the market.
“Even if we started expansion today, it’s going to be several years before we realize that, just because of the biology,” Schulz says.
He says pork producers are facing tough times right now, and the key to getting out of those is simple.
“Demand, demand and more demand for pork,” Schulz says. “We need strong demand for pork to pull us out of it.”
Overall, he expects long-term demand to be good, although producers may face some choppy waters along the way. “I’m long-term bullish, but short term, especially with the pork industry, there are some bearish tones, and also some for beef,” Schulz says.