Hank the town dog here. I’ve been hounding your editor (pun intended) for several weeks asking when I would be allowed to write another editorial. After all, I argued, I’m 13 years old — that’s 91 in dog years — and if I’m going to make my journalistic mark, it needs to be soon.
I guess that argument worked, because this week he threw some papers on the floor next to my dish and told me to study up on beef demand. He said it’s a subject that needs to be explored in an editorial since there’s been some misinformation thrown around at a few cowboy meetings. Some folks are focusing on per capita consumption as a measure of demand. He said I was just the one to sniff out the truth.
Some of what I discovered really shocked me. For instance, you humans ate 65.6 pounds of beef last year. Why, that’s not quite 3 ounces a day! I get nearly that much in scraps at your editor’s house every day, and I know I could eat a pound a day, easy.
But your editor reminds me that human beef demand is more compli-cated — it’s a function of supply and price. And that’s where some cowboys are likely to misinterpret the data.
One of the reports I read challenged claims by supporters of the beef checkoff who say that $1-per-head investment has added as much as $200 per head to the value of a feeder calf. That’s a pretty hefty claim, and a lot of folks wonder why, if true, it took the checkoff nearly 20 years to add that $200.
The report also questioned claims by the Cattlemen’s Beef Board that beef demand is rising while per capita beef consumption actually dropped more than a pound since 1998.
Both questions are fair, but don’t expect the answer to be simple. Lacking in the formal-schooling department, I pawed over this demand stuff for a while and decided I needed an expert to help me sort it out. I turned to Wayne Purcell, the economist from Virginia Tech.
Dr. Purcell says we must first understand what demand is and isn’t. Beef demand is not a measure of per capita consumption. “Per capita consumption is simply beef production divided by population,” he says. Evaluating per capita consumption without evaluating price says very little about demand.
For instance, we have seen a decrease in per capita consumption in years we have seen an increase in beef demand. The decrease in per capita consumption is due to a decrease in beef production, or an increase in population, or both. But measuring demand is more complex.
Beef Demand Index calculations, conducted by independent economic and industry experts using USDA per capita beef-consumption data and USDA Choice retail beef prices adjusted for inflation, show an increase of approximately 25 percent since 1998, and that includes an increase of 7.6 percent during 2004.
So, demand is a function of how much consumers are willing to pay for the available supply of beef. But that doesn’t explain how the checkoff helped improve demand. The short answer, Dr. Purcell says, is that the checkoff was always intended to be a long-term project.
“In the early 1990s, we had a product problem,” Dr. Purcell says. “We just had three products: steaks, roasts and hamburgers, and consumer research told us that at least one out of every four eating experiences was unsatisfactory.
“We changed that situation, and checkoff dollars helped fund the research that gave us literally hundreds of new products, and helped us improve the quality of our herds so that our product offering was more appealing to consumers. That’s how we increased beef demand.”
Now as you might expect, Dr. Purcell can lull a good dog to sleep with a discussion of how the Beef Demand Index is calculated. But I grasped enough of it to tell you that those touting recent per capita consumption numbers as proof of the checkoff’s failure are trying to mislead you.