Review: As part of some of the discussion around camera grading (i.e. debunking the claim it’s all a “farce” – of which I’m still shaking my head in disbelief), I included some sales data from 210 Analytics (Anne-Marie Roerink). I summarized the data like this:
Total meat sales [52-weeks] through April are up $2.21 B…beef sales increased $2.28 B…That is, beef (function of both higher volume and price) accounts for all the meat case’s growth (even compensating for some of the categorical losers). And all the while, consumers are especially cranky about food inflation thus providing them every reason, excuse, and/or opportunity to trade down.
Bigger Picture: The data inherently lends itself to a broader review of total trade dollars (domestic and export) over time. Most significant, it hearkens back to some discussion last summer regarding the Checkoff (see Not Even Close).
The OFF Act supporters, in an attempt to denigrate the Checkoff, were claiming the chicken industry had surpassed the beef industry “without the help of USDA commodity checkoff programs.” Their argument being based on “consumption” data (for more, see The OFF Boondoggle).
Pre-1998: It’s not consumption that matters – it’s dollars that make a difference! So, let’s dive into the beef v chicken comparison from that perspective (domestic spending plus exports). The beef industry’s advantage (versus chicken) in 1980 was ~$31B. By 1998 (when beef demand bottomed out), that advantage had withered to just ~$20B.
That’s because between 1980-and-1998 per capita domestic beef spending grew by just $6. And given it was a period plagued by high inflation, real spending was actually going backwards; revenue generation was lagging inflation by a wide margin. Meanwhile, the chicken industry grew spending by $73. Beef’s annual growth rate trailed chicken by nearly 5%.
Post-1998: However, as highlighted several weeks ago in this column, the beef industry was hard at work trying to turn the Titanic. It takes time, but in 1999, the Beef Checkoff’s emphasis on consumers began to take hold. (see first graph). Since that time the race hasn’t even been close. The table below details pre- versus post-1998 data across the two industries.
And with respect to total dollars, it’s important to note the discussion here is in BILLIONS – versus investment in the Checkoff that’s measured in millions. CBB revenue in 2023 was ~$42M; the equivalent of just ¼-penny of every industry dollar (another story for another day).
ne Common Thread: It’s no accident the fed market just marked another new record – all the while fed beef production through May is the third highest on record (just slightly behind only ’21 and ’22 – see second graph) – and June is following right in line. Bigger production, higher prices – that all stems from better demand.
Once you get behind, it’s hard for even small, nimble companies to turn around let alone a segmented, fragmented, heavyweight business – comprised of hundreds of thousands of participants (for many of whom the business is NOT even a primary interest). And yet the story since 1998 is nothing short of incredible – it makes for a unique and compelling business case study.
How did the industry get jumpstarted? And what’s helped fuel the beef industry’s growth along the way? Across the breadth of the business, and time, there’s one common thread…the Checkoff.
