Beef demand versus consumption, explained

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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.

Click here for the full audio.

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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Boondoggled    
Colorado  |  February, 21, 2013 at 01:32 PM

Ruhland was right about one thing: he's no economist. Certainly not. Man, what a muddled load of jumbled nonsense about supply and demand. I bet he knows how to squirt through the beef checkoff $$$ and take credit for bonanza times he had absolutely nothing to do with creating or sustaining.

maxine    
SD  |  February, 25, 2013 at 07:59 PM

Hmmmm. I've never heard of a man named "Polly". Ms. Polly Ruhland has NO control of Beef Checkoff money. She is an employee. She also is highly respected for the quality of her work. It might serve you well to learn more about the Beef Checkoff, since you fail to understand the difference between beef demand and beef consumption. They are NOT the same thing. Consumption is a measurement of how much beef we produce, and eat. Demand measures how much a consumer is willing to pay to get the beef cut he/she wants. Remember, all the beef produced has to sell, or it will smell!


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