May 17, 2006

Meat producers experience changing fortunes as diet fads fade
 

As diet trends strive towards a more balanced approach, American consumers are slowly tiring of the once trendy Atkins diet which emphasised low-carb and high protein diets.

As trends change, protein demand is slowly waning, adding to the woes of the meat industry buffeted by high energy costs and low export demand due to animal diseases.

Benchmark wholesale prices for beef and pork are down 8 percent on-year and 20 percent for chicken, according to the Livestock Marketing Information Centre.

While prices of all other foods are rising 2 to 3 percent this year, meat prices would remain stable or even drop one percent this year, according to the USDA.

Agricultural economists dismiss these developments as part of the normal business cycle. A boom in 2004 and 2005 tempted farmers and agribusiness companies to raise production faster than demand. However, the industry is now heading towards the weaker part of the cycle.

While meat production is increasing, diet trends favouring meats are fading away, said Ronald Plain, professor of agricultural economics at the University of Missouri in Columbia.

The largest meat processors such as Tyson, Pilgrim's Pride and Smithfield are all incurring losses for the oversupply situation. .

Diseases such as bird flu in overseas markets have also had its effect on exports, with many Asian countries shunning poultry due to the prevalence of the disease there.