Beef Demand versus Consumption, Explained
Contact: Melissa Sandfort, 402-856-2097; email@example.com
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Suggested Lead: Polly Ruhland, Cattlemen’s Beef Board CEO, says building demand for beef clearly is one of the goals of the checkoff, but that goal often is misunderstood. Ruhland gives us an overview of beef consumption.
Ruhland: “Demand is not consumption. Now I’m no economist – that’s the disclaimer right up front – but I will tell you beef demand is commonly confused with beef consumption, although the two are very different. And here’s what I like to say: simply put, you can’t eat what you don’t make. So consumption is a measure of what we eat – it’s a measure of inventory in our business. Domestic production and imported supply of beef and beef products divided by the number of people eating. So if that’s the definition of consumption, what happens when supply decreases?” (:49 seconds)
Ruhland goes on to explain beef demand in a low supply situation.
Ruhland: “In demand, prices adjust to clear the market, whatever the supply. So if consumers are willing to pay more, the market reflects that in demand regardless of what the supply is doing. Does that make sense? Price adjusts to clear the market. So even when volume is low, as it is now, and through the next year or two at least we expect, demand and strength (strength of demand) can grow. Demand can grow when supply is low and that’s what we’re seeing right now. I understand demand is up 2 percent even though prices are up – because prices are up- in a low supply situation.” (:47 seconds)
So why does the checkoff care so much about demand rather than beef consumption?
Ruhland: “The key about demand is that it’s all about the consumer, right? Beef demand goes beyond a simple quantity and measures consumer desirability and consumer preference. Those are two things the checkoff knows very, very well – beef desirability and consumer preference for our product. The economy plays a factor – we can’t control the economy, we probably can’t control disposable income, but we can influence consumer’s desire to pay more for our product, thereby supporting and maybe even growing demand in a time when we have little product to offer them and prices are high.” (:45 seconds)
Be sure to visit the MyBeefCheckoffMeeting blog to find more information about the revised joint committee structure and how those committees address beef demand drivers.
Reporting for the beef checkoff, I’m Melissa Slagle. For more about your beef checkoff investment, visit MyBeefCheckoff.com.
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The Beef Checkoff Program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. States retain up to 50 cents on the dollar and forward the other 50 cents per head to the Cattlemen's Beef Promotion and Research Board, which administers the national checkoff program, subject to USDA approval.