July 2013 Articles

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Per Capita U.S. Supplies of Red Meat and Poultry Declining

Per Capita U.S. Supplies of Red Meat and Poultry Declining Ross Pruitt, Department of Agricultural Economics and Agribusiness
In thirteen of the past sixteen years, the U.S. beef cattle inventory has declined, and in all likelihood will experience another decline this year into next. During this time frame, total beef production has increased in all but six of those years. While beef production levels for 2012 are still far from final, this year will be the seventh time in sixteen years beef production has decreased. Improved genetics and production and processing technologies have masked the decline in the U.S. beef herd, but increased carcass weights will not be able to overcome the effects of fewer animals slaughtered as expansion begins.
Lowered domestic production results in fewer pounds of beef available for U.S. consumers on a per capita basis. Even in years where increases in total production occurs, there can still be fewer pounds available to the U.S. consumer if the increase in production does not rise faster than the population growth rate (e.g. 2005, 2007, 2008, and 2010). While the U.S. population accounts for some of the decrease in per capita U.S. beef supplies, increased levels of U.S. beef exports contribute to the decline in per capita supplies. U.S. beef exports accounted for 10.6% of domestic production in 2011, returning exports to the path they were on prior to the discovery of BSE in late 2003. Not every year will be a record year, but beef exports that are 9% to 10% of domestic beef production could occur in the next few years.
These factors are driving the decline in beef supplies at the retail level from near 70 pounds per capita in the early 2000s to a forecasted 53 pounds in 2014. Beef is not the only protein source experiencing the decline in per capita supplies as those involved in the pork and broiler chicken industries have also experienced increased costs of production and lower margins which contribute to lower production, and ultimately, lower per capita supplies. One of the major differences between U.S. pork and chicken production compared to U.S. beef production is that exports account for a greater percentage of domestic production, around 20%, in recent years. Last year, the U.S. exported approximately 17% of total domestic red meat and poultry production. The increase in exports as a percent of total production has been positively impacted by a weak U.S. dollar in recent years.
Tighter U.S. red meat and poultry supplies results in higher prices, not only at the retail level, but also at the farm level. As the table below indicates, this is going to continue for the next few years, most notably for beef and total red meat and poultry. This will be supportive of cattle prices over the next few years, regardless of how much or little expansion takes place. The stronger the expansion that occurs, the more beef supplies will decline and push cattle prices higher.
Table 1. Domestic Per Capita Retail Supplies of Major Protein Sources

Source: Livestock Marketing Information Center a Estimated b Forecasted
Note totals for red meat include lamb and veal and total poultry includes turkey and other chicken