No, Beef Demand is Not Shrinking
Despite higher retail prices the past two years, consumer demand for beef remains at a high level. The June beef demand index, for instance, stood at 85.5 on a scale of 100. That’s down slightly from a year earlier, yet considered strong in the face of inflation. The resilience of demand can be attributed to quality improvements the beef industry has made the past two decades.
There remain, however, zealous efforts to convince you that beef demand is in decline and paint that as a failure of your Beef Checkoff. Those checkoff deniers lean on the industry’s most misinterpreted statistic – per capita beef consumption. Indeed, this summer multiple authors have used per capita consumption data to make the argument the U.S. Congress should attach the Opportunities for Fairness in Farming (OFF) Act as a rider to the next farm bill.
Proponents of the OFF Act claim they are only seeking transparency and wish to prevent rampant corruption funded by producer checkoff dollars, though they offer little evidence of the latter. The OFF Act is a wide net that would snare not just the Beef Checkoff, but every producer-funded checkoff currently in operation.
Our focus here is not on the broad impact adoption of the OFF Act would create, but the misrepresentation of per capita consumption. For instance, checkoff deniers point to how per capita beef consumption has declined from 76.4 pounds in 1980 to 58.9 pounds in 2021. Indeed, that’s a decline of 23%, but ignores the fact the U.S. population has grown from 223 million in 1980 to 338 million in 2021.
Beef production? “America produces approximately the same amount of beef today as it did in 1975 with one-third fewer cows,” says Sterling Marketing president John Nalivka.
But using declining per capita consumption data to claim demand is in decline, as some checkoff critics are doing, is an attempt at gaslighting producers. Let’s revisit the work of a leader who helped rescue your industry in the late 1990s, Virginia Tech ag economist Wayne Purcell. In 1998 he authored “A Primer on Beef Demand,” or “To fix it You Have to Understand It.” We’ll focus on the understand part.
“Per-capita consumption is seen as synonymous with demand,” Purcell wrote 25 years ago. “Nothing could be further from the truth. Per-capita consumption is calculated by the USDA using an accounting approach to measure beginning beef stocks, production, and ending stocks. A ‘disappearance’ measure is then generated and converted to a per-capita basis. If per-capita consumption measures anything directly, it measures per-capita supply. It certainly does not measure demand.”
Purcell, who retired in 2008 and died in 2018, said, “You can sell a quantity of anything at some price! And in the case of beef, a perishable product, we consume essentially all we have. It is price that does the adjusting.”
Due to a smaller national herd, beef production will be down this year and next, guaranteeing per capita consumption will further shrink. But don’t be misled, that’s not an indication of shrinking demand.
For more on per capita consumption vs. actual demand, see:
Speer: Beef Checkoff Changed the Game
