Contact:	(303) 220-9890	beefboard@beef.org

Need to Increase Beef Demand Forms Foundation for Industry Efforts -- October 1, 2001

DENVER, Colo. (September 28, 2001) -- It sounds like a trick question: What is beef demand, and why is it important to cattle producers?

But for years cattlemen have struggled with how to measure consumer demand for beef, and what it means to their bottom line.  It`s an especially important question because beef producers financially support efforts to increase beef demand through their $1-per-head checkoff program, which is administered by the Cattlemen`s Beef Board.  The program was started in 1986.

According to Dan Hammond, a beef producer from American Falls, Idaho, and chairman of the Beef Board, cattlemen first began to get their hands around the beef demand picture in 1998, when a group of leading independent economists and other experts created the Beef Demand Index.  The index utilized USDA per capita beef consumption data, USDA Choice retail beef prices adjusted for inflation and other pertinent information to calculate what was happening with demand.

The Index indicated that consumer demand first started showing signs of stabilizing in late 1998 after a 20 year decline, with the rate of decline actually beginning to stabilize in 1996 (see chart).   The first significant increase was in the second quarter of 1999, when the Index showed beef demand increased 4.39 percent over the same period of the previous year.

By the end of the second quarter of 2001, beef demand had increased 10 of the past 12 quarters, compared with corresponding quarters to the previous year.

"It`s encouraging, and the direction this industry needs to maintain," said Hammond, who also formerly chaired the joint industry evaluation committee that called for creation of the Beef Index.  "The willingness of the consumer to purchase beef is important to how well we ultimately do as cattle producers."

Increased beef demand has occurred at the same time beef supplies have been at record highs.  Despite the increased beef supply to consumers, average retail prices increased 15 cents per pound from 1999 to 2001, signaling a true turn-around in demand.

In addition, some of it has happened during a time of troubling signs for the U.S. economy -- which usually signals weaker demand for beef. 

The Producer`s Stake

But what does it mean to cattle producers?  According to Cattle-Fax, a research, education and information service for agribusiness, increased beef demand over the past three years has meant an additional $100 to the price of fed cattle.  It has also meant an additional $16-18 per hundredweight to the price of a 500-pound feeder steer.

Possible reasons for the increase include:

Stronger beef exports during the latter part of the 1990s.  Total beef exports through September 2000 were up 12.6 percent in volume and 17.6 percent in value, compared to the same time in 1999.  While exports in 2001 were declining due to the strong dollar, they still represented nearly 13 percent of U.S. beef production.  The value of beef exports in 2000 was more than $3.5 billion, compared to less than $1 billion in 1986.

Increasing consumer confidence in the safety of beef.  Despite significant publicity about Bovine Spongiform Encephalopathy (BSE) and Foot-and-Mouth Disease, consumer confidence in beef rose from 82 percent in December, 2000, to 87 percent in February, 2001.  Coordinated, aggressive public relations efforts by the beef industry through the beef checkoff and the U.S. government were factors in gaining consumer awareness of the facts behind these foreign animal diseases.

New, consumer-friendly beef products.  Four years ago, through their beef checkoff, beef producers embarked on an effort to support the introduction of more convenient beef products into the marketplace.  Both manufacturers and consumers responded, and in the last three years sales of these types of products have increased more than 40 percent.

Greater awareness of the contributions of beef to a nutritious diet.  Health misperceptions about beef are being improved through an industry campaign targeted to both consumers and health professionals.  Research shows that the proportion of women ages 25-54 who said they feel better about beef`s nutritional value increased from 23 percent in 1999 to 29 percent in 2000.

"Beef demand remains the benchmark for all of our efforts," said Hammond.  "Cattlemen see a stronger industry when consumers have confidence in, and demand for, the end products.  That`s why the Beef Board exists."

Research shows that beef producers support efforts to increase demand through the beef checkoff.  In an independent study conducted in the summer of 2001, 72 percent

of beef producers supported the checkoff, the highest support in eight years.  All producers, including dairymen, were part of this statistically-representative survey.

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Producer-directed and consumer-focused, the National Cattlemen`s Beef Association is the  trade association of America’s cattle farmers and ranchers, and the  marketing organization for the largest segment of the nation’s food and fiber industry.