Short beef supplies in the coming years will likely cut beef consumption and a solution is more than two years away according to a university beef economist.
Darrell R. Mark, Adjunct Professor of Economics at South Dakota State University, says beef consumption is forecasted to fall about five percent next year to average 53 pounds per person, with another drop the following year to 52 pounds each.
The decline in consumption is a result of tighter quantities and continued demand resulting in higher beef prices. Cheap feed costs and record beef and cattle prices have producers retaining heifers in the years ahead, further shrinking beef production next year.
Mark says even if beef cow numbers are modestly higher at the beginning of 2014, beef production resulting in more beef consumption won’t be expected until 2016. In the meantime, analysts wonder if continually higher beef prices could price consumers out of the market.
Consumers have been willing to spend more for beef so far in 2013. Mark says a review of this year’s market shows beef demand has been better than would have been expected, but he considered a list of factors affecting demand in 2014.
"A number of factors will determine the demand for beef in the year to come, including consumer tastes and preferences, consumer disposable income, prices of competing meats, general economic conditions in the U.S. and around the globe, and foreign exchange rates," he said in a release.
Despite potential setbacks, strong domestic and global demand for U.S. beef portrays an optimistic outlook for the industry next year. Mark noted the three percent rise in demand for all fresh beef in the first three quarters of 2013 compared to a year earlier and an increase in restaurant traffic, where 40-50% of beef is purchased.