March 26, 2004

 

 

US 2003 Beef Consumption Falls As Prices Rise

 

Beef consumption in the United States shrank last year, but the beef industry still profited from record prices as higher consumer spending offset a 4 percent decline in consumption, according to the Centennial-based National Cattlemen's Beef Association and the U.S. Department of Agriculture.

 

Not even the discovery of a lone case of mad cow disease in December in Washington state has dampened the market, the cattlemen's group said, citing an industry-paid survey showing that consumer confidence in beef remains high.

 

The mad-cow case decimated U.S. beef export markets. About 65 countries shut their borders to American beef shipments, and most remain closed.

 

But domestic demand, accounting for 90 percent of all U.S. beef production, is strong, especially for pricier steaks and loins.

 

Mad cow has been a boon for Denver's Marczyk Fine Foods, which buys from natural-meat purveyors Niman Ranch and Coleman Natural Meats.

 

It has certainly raised people's awareness, said store co-owner Pete Marczyk. When people think about their own health being affected, they tend to really focus on where their beef is coming from and how it's been raised.

 

Beef analysts said the loss of exports is producing a glut of lower-priced beef cuts and organ meats, items that are popular in foreign markets. That could lead to an easing of ground beef prices.

 

But steaks -- few of which are exported -- have shown little or no price reductions.

 

Protein-hungry consumers spent a record $67.3 billion on beef last year, up from $65.2 billion in 2002.

 

Previous cyclical booms in the beef business have benefited meatpackers and retailers while leaving ranchers with little additional benefit.

 

But the current strong market has worked its way down to the ranch, giving cattle producers higher profit margins after several years of low prices.

 

It's been a good year, said Claricy Rusk, a Custer County cattle rancher. I don't think we could complain. We were happy with the prices we got for our steers. Retail beef prices rose to a record average of $3.31 per pound last year, up 9 percent over the previous year.

 

The National Cattlemen's Beef Association said its consumer-demand index -- a measure of per capita consumption and consumer spending -- rose 5 percent last year. Higher spending more than offset lower consumption to produce the higher index rating.

 

Cattle industry officials attributed the increase to the popularity of high-protein diets, a rise in the introduction of easy-to-cook packaged beef products, and increasing consumer awareness of lean beef's nutritional attributes.

 

The drop in consumption was caused by limited supplies and high prices -- not because consumers weren't hungry for beef, said Dave Weaber, director of research for Centennial-based Cattle-Fax, a beef-industry research firm.

 

NCBA chief economist Gregg Doud said tighter regulations on beef processing after the mad-cow case will cost the industry an estimated $182 million to $277 million a year, or about $5 to $8 per head.

 

Canadian investigators last week said they have identified 68 British cattle imported by Canada that may be responsible for the two North American mad-cow cases discovered last year in Washington and Alberta, Canada.

 

The investigators' conclusion has fueled speculation that more cases may be found.