Please note: Each story has a separate audio file for download.
Suggested Lead: Dr.
Glynn Tonsor, professor of livestock marketing at Kansas State University, was one of the authors who prepared the “Assessing Beef Demand Determinants” report at the request of the beef checkoff.
(Audio clip #1 -- 0:40) “There’s a long history before 2013 of the beef checkoff commissioning demand assessment studies.
The exact purpose and the methods used, and the data information underneath those methods, has varied over time, and that’s important because the information that’s available for analysts varies over time, yet the value from an economics perspective of understanding beef demand has persisted over time.
So, it has been a critical need for the industry to understand what beef demand is: Is it strong today as compared to the past? What has made it strong today or not? Those kinds of basic questions have been of importance to the beef checkoff for a very long time.”
Tonsor explains what beef demand means to beef producers.
(Audio clip #2 -- 0:26) “If beef demand is strong, then higher prices are being paid for beef than would otherwise be the case.
That’s because higher prices being paid for beef, whether it is at your local restaurant or grocery store, it doesn’t matter the channel, that in turn leads to higher wholesale beef, higher fed cattle and higher feeder cattle prices, and most producers recognize that benefit in the form of higher cattle prices.”
The newly released study identifies the best opportunities for the industry to influence demand positively.
(Audio clip #3 -- 0:43) “One of the things we did was to update elasticity estimates.
And what an elasticity is, is how sensitive we think purchasing behavior is to prices.
So, if the price goes up by one percent, how many fewer pounds are purchased.
And yet the estimate for that needs to be updated over time and maybe consumer sensitivity to prices changes over time.
So, one of the things we did in this study was, do that.
Provide that update.
And the key finding was U.S.
consumers are less sensitive to beef prices than they used to be.
That does not mean price doesn’t matter (of course people pay attention to price), but a one percent increase in price has a smaller impact on beef consumption than it used to.”
Tonsor highlights other factors that affect beef demand.
(Audio clip #4 -- 0:42) “Another thing that matters less than in the past that’s important – it doesn’t get talked about – is the competing meat effect.
So, the impact of pork and chicken prices on beef demand is also small compared to other things.
Consumer incomes – so their economic well-being – has become more important.
So, we’ve always known that beef, being a more expensive protein item, is sensitive to consumer incomes.
We tend to have better demand when the U.S.
economy is growing, when U.S.
wages are growing and those kinds of things – we’ve known that for some time.
But the marginal impact of that has grown over time.
So, a one percent increase in income has a bigger impact on beef demand today than it used to.
That means it’s even more important that the beef industry monitor where we’re at in the economic cycle and so forth.”
Tonsor says beef quality issues such as taste, appearance and freshness, have grown more important over time.
Also, the impact of competing meat prices on beef demand is small compared to other factors.
This reflects a reduction in consumers substituting beef, pork and chicken products for price reasons.
(Audio clip #5 -- 1:41) “One of the other analyses we did was focus on ‘hot topics’ – or topical issues.
What we did was we quantified general media attention and medical journal article attention to 12 different topics.
And some of the punch lines of what we concluded in terms of impact at the end of the day on beef demand are which topics are ‘hot,’ or top of mind, change over time.
We actually found six topics that were important and had notable press on them in the 2008-2017 period that were not really even on the radar in the 10 years before that.
The reason that’s important is, which topic is important for the industry to monitor changes over time.
That can be a challenge, but the point there is it’s dynamic what topics are top-of-mind.
The second thing that fell out of this study that’s intriguing is that the impact of some of those discussions or hot topic coverage in the media or medical journals changes.
So let’s use the Atkins example.
In 2004, there was a notable increase in beef demand in part because of the Atkins craze.
So Atkins discussion in the media has been good for beef demand for some time and remains good in our study.
But the marginal benefit of that has declined.
It remains an area of strength, but it’s not the core area of strength like it once was.
Conversely, discussions around fat and the role of beef in the diet have changed in tone and impact on beef demand.
So 10 years or so ago, when there were discussions in the media and medical journals about fat and beef consumption, we saw that led to adverse impacts on beef demand (so more discussion was bad for beef demand).
Conversely in the more recent period, it’s actually turned into a positive catalyst for beef demand.”
“Assessing Beef Demand Determinants” is available on MyBeefCheckoff.com.
For more information about your checkoff investment, visit MyBeefCheckoff.com.