Here's an informative study....

[pknoeber]

http://www.agmanager.info/livestock/marketing/bulletins_2/industry/demand/MF2457.pdf

That link should get you to a paper detailing the determinants of beef demand. The post below had a valid point, but somehow if you get 3-4 certain people posting on a topic, it pretty much turns right into mud slinging. I'd appreciate it if people would read the article & post their thoughts. But please don't reply to other posts. We all know exactly where each person stands and that the other guy's an idiot. So quit trying to pick apart everything they say & trying to prove them wrong. Just post what you think of this article & it's relative value today. The study does have some age on it, but I think it's still relatively accurate.

I'll tell you what I think: Expensive gas and inflationary pressures in other sectors will hurt more than anything else.

Phil

 

[Econ101]

http://www.agmanager.info/livestock/marketing/bulletins_2/industry/demand/MF2457.pdf

That link should get you to a paper detailing the determinants of beef demand. The post below had a valid point, but somehow if you get 3-4 certain people posting on a topic, it pretty much turns right into mud slinging. I'd appreciate it if people would read the article & post their thoughts. But please don't reply to other posts. We all know exactly where each person stands and that the other guy's an idiot. So quit trying to pick apart everything they say & trying to prove them wrong. Just post what you think of this article & it's relative value today. The study does have some age on it, but I think it's still relatively accurate.

I'll tell you what I think: Expensive gas and inflationary pressures in other sectors will hurt more than anything else.

Phil

Phil I thought it was a pretty good article but there were some things I would like to discuss about it a little later. For instance, the graph on page 4 compared two years, 1998 and 1999. If you look on the graph on page 1 you will notice that the years 1998 and 1999 changed very little. This means that the conclusions to the graph on page 4 are limited to a time when beef demand was relatively stable compared to former years.

Some of the things the paper pointed out well included the need to make sure consumers are able to pick the quality of meat they desire (pg 2, upper rt. hand corner), and changing consumer demographics (pg. 3). Productivity is the measure of goods produced (many times) per person. Although productivity has been touted in our country as being "good" one must realize that many times productivity is the result of businesses laying off people and getting the remanining people to work harder/longer (sometimes productivity is measured on hourly work). This kind of productivity actually makes the workforce lose economic assets in favor of the business. When workers work longer hours, the result is that they buy less beef because they just don't have time to spend at home cooking it (consumer demographics).

Many of the health claims that made the news during the 1998-1999 time period on the back included claims of chicken breast compared to beef. Of course I have never seen a chicken with just breast meat, but they are getting closer. The information (or propaganda) that is research funded for studies like this are usually industry funded and are for a purpose. They are pawned off as "health" studies. It was interesting that Atkins was counter to those movements and had little to do with industry funded studies.

Some of the shortcomings in a paper like this is in the details. It is a paper that only scratches the surface of some of these issues. What were the data sources, why weren't years with larger demand declines studied harder, etc..

Over all, I liked the paper, but as fedup2 always says, there are a lot of questions. There are some good points in what the checkoff could do, however. Maybe we could amicably discuss some of them.

 

[DiamondSCattleCo]

Interesting article. I found it especially interesting that during the study years, chicken and pork prices had little effect on beef demand. I wonder if that would hold true today? Consumers have far less disposable income than they had in the 90s and the gap between chicken and beef prices is widening. I suspect another study today would show a little different picture, as people use chicken to free up more income for toys.

Near term beef demand I believe will be most influenced by health concerns, vis-a-vis BSE. I believe that we need 100% BSE testing on all animals over 20 months, and as the tests reliably indicate BSE at lower ages, we need to continue dropping the age. If the beef industry shows its doing everything it can to ensure a safe product, its going to help a great deal.

Next greatest influence, at least in Canada. Or perhaps in Canada this could be the greatest influence, is quality. Since our culls are staying home, we're eating more and more crap in the supermarket meat shelves. Packers are cutting meat in odd ways, and not telling consumers that their preparation needs to change to match the new cuts.

Long term, over the next couple decades? Consumer disposable income is going to continue to decrease drastically, and less expensive alternatives are going to look even better.

I think maybe I'm gonna buy me some chickens. :lol: :lol:

Rod

 

[Bill]

Interesting article. I found it especially interesting that during the study years, chicken and pork prices had little effect on beef demand. I wonder if that would hold true today? Consumers have far less disposable income than they had in the 90s and the gap between chicken and beef prices is widening. I suspect another study today would show a little different picture, as people use chicken to free up more income for toys.

Near term beef demand I believe will be most influenced by health concerns, vis-a-vis BSE. I believe that we need 100% BSE testing on all animals over 20 months, and as the tests reliably indicate BSE at lower ages, we need to continue dropping the age. If the beef industry shows its doing everything it can to ensure a safe product, its going to help a great deal.

Next greatest influence, at least in Canada. Or perhaps in Canada this could be the greatest influence, is quality. Since our culls are staying home, we're eating more and more crap in the supermarket meat shelves. Packers are cutting meat in odd ways, and not telling consumers that their preparation needs to change to match the new cuts.

Long term, over the next couple decades? Consumer disposable income is going to continue to decrease drastically, and less expensive alternatives are going to look even better.

I think maybe I'm gonna buy me some chickens. :lol: :lol:

Rod

Are you saying because of BSE beef is being mislabled in Canada and the it is not actually the quality it is graded as?

 

[Econ101]

Rod, did you notice that much of the information given in the article about the things that affected beef demand were from just a one year period? You can get any data set and make it what you want. Ask Agman. To see things that you can work with to influence change, you have to look at those one year periods for the previous 19 years, not just one out of the 19 and see what the factors were that decreased demand there. This article did not do that. It is one of the weaknesses. It doesn't mean the data Phil's old prof. looked at was wrong, it just doesnt' show the whole picture or one as complete as I would like to see.

The interesting points which I do happen to agree with are:

1) Consumers need to know the quality of meat they are buying when they are buying it at the store (pg. 2 upper rt. hand column before Expenditure Impact on Beef Demand). If they are looking for a good eating experience and buy a substandard piece of meat and are disappointed, it will show up in the next sale. That is why we have "independent" grading by a govt. agency. It seems that "independent" information is not making it to the retail customer, one of my gripes.

2) Food Safety recalls do affect meat demand so have a system that is credible that makes sure we have little or no recalls. The batch method of processing that is "efficient" creates recalls that are huge when they happen. Reducing the size of recalls makes them less of a problem. Reducing recalls through independent oversight is a must. NOT ALLOWING MEAT RECALLS WHEN WARRENTED IS THE WORST POLICY. Meat packers want MID for cattle they buy but they want to shield themselves from recalls from their places. (See posted article).

3) Health issues are a relative problem. The poultry industry is probably the worst when it comes to plant issues but you hear a lot less about them. The studies on poultry vs. beef cited in the news mass media are studies that are promoted by industry through their avenues of information dessimination. These avenues must be studied and understood to be able to combat the distortions they can bring. When I say health issues are a relative problem, the relative problem is the perception of health vs. the substitutes of pork and chicken compared to beef. I think most large beef recalls do include ground beef that is batch produced or where the plant has not used proper hygene/slaughter methods and contaminated many lbs. All processing plants need to be indentified easily on the packge of the product to protect consumers. IF PACKERS WANT MID THEY SHOULD START DOING IT THEMSELVES FROM THEIR DOOR TO THE RETAIL CUSTOMER.

4) Other Goods price--I want to address this because it is so important to the over all economy. Our market economies reflect relative prices. What I mean is that prices are relative to other goods sold. If for instance, the prices of all goods went down and beef remained the same, the price of beef actually goes up in real terms. With globalization, this is partly what has happened. We are importing goods from other countries that can produce them cheaper largely because they do not have the labor costs and infrastructure costs we have here in the U.S. Our infrastructure costs are one of our most important assets. These include everything from roads to schools to social security plans, to labor protections to universal utilities like electricity and phone systems and I would even include political freedoms. When other countries can take products from the U.S. (take chicken for example) and process it and then ship it back over here for less than we can do it all here, we need to look at why. Much of the time it is because these countries we are dealing with do not have the infrastructure costs that we have. Infrastructure does make our quality of life better, but when we trade with other countries we have to keep in mind the effects that the trade has on us. My argument on trade is that we are benefiting from the price differences in trade based on these differences but at what cost? Who is benefitting? Is the preiminance of a non democratic totalitarian China that is saber rattling Tiawan worth the trade? These are the questions we should be asking.

5. The factors of actual beef demand were given for a one year period (1998-1999pg. 4) when the trend has been a 19 year trend. What were the REAL factors that attributed to beef demand over those other 18 years? I want to see those time periods compared under the same methodology used in the 1998-1999. Beef trade is not included in the results at all. We all know international markets are "dumping" markets. What is the consequence of trade if trade figures so predominantly in the economy?

Other questions but no more time now.

 

[DiamondSCattleCo]

Are you saying because of BSE beef is being mislabled in Canada and the it is not actually the quality it is graded as?

Not so much that Bill, as there is alot of unlabelled stuff on the shelves and its difficult to find the higher end cuts, at least out west. Not sure about Ontario way. I often wonder about the quality though as I have eaten some upper end stuff that tasted terrible and was tough as shoe leather.

Rod

 

[DiamondSCattleCo]

Rod, did you notice that much of the information given in the article about the things that affected beef demand were from just a one year period?

Perhaps I was reading too much into it as all the data wasn't available for inspection, but I think he was using the other years of relatively stable demand to show that other factors didn't have an effect. Sometimes lack of movement is as telling as a bunch of movement when analysing markets. Although I do agree, I would very interested in seeing someone take the time to develop a model that stretched back 25 years or so.

Rod

 

[Econ101]

Rod, did you notice that much of the information given in the article about the things that affected beef demand were from just a one year period?

Perhaps I was reading too much into it as all the data wasn't available for inspection, but I think he was using the other years of relatively stable demand to show that other factors didn't have an effect. Sometimes lack of movement is as telling as a bunch of movement when analysing markets. Although I do agree, I would very interested in seeing someone take the time to develop a model that stretched back 25 years or so.

Rod

From years 1980 to 1997 (graph on pg. 1) beef demand, as he measured it, decreased. The year he picked for his graph on pg. 4 for factors was the only year that beef demand increased. I would like to see the results with the same analysis for the other years.

 

[DiamondSCattleCo]

From years 1980 to 1997 (graph on pg. 1) beef demand, as he measured it, decreased. The year he picked for his graph on pg. 4 for factors was the only year that beef demand increased. I would like to see the results with the same analysis for the other years.

Ah, I see what you're getting at. I considered 1990-1997 to be relatively stable, with only a decrease of around 20 points. The drop through the 80s was significant though, and I certainly would like to see an analysis of those years.

Rod

 

[Econ101]

From years 1980 to 1997 (graph on pg. 1) beef demand, as he measured it, decreased. The year he picked for his graph on pg. 4 for factors was the only year that beef demand increased. I would like to see the results with the same analysis for the other years.

Ah, I see what you're getting at. I considered 1990-1997 to be relatively stable, with only a decrease of around 20 points. The drop through the 80s was significant though, and I certainly would like to see an analysis of those years.

Rod

It was very interesting that the article did include changes in substitutes (chicken) one of the things that changes the demand curve for beef. This has, of course, been one of my arguments with Agman.

Tyson is so large in all of the meat proteins that they can influence the demand for beef pretty easily. If they wanted to end the "cheap chicken" they could slow the velocity in their poultry complexes down instead of flooding the market. I thought it was interesting that Schroeder picked a year where his calculated values for substitutes was low. That is why we need to see all of the years with the same calculated values using the same formula he did on the last page for demand determinants.

They should also stop taking advantage of consumers by selling salt water beef with gas treatment at Walmart as fresh Choice meat when it is really Select. It cheapens both Tyson and Walmart.

I think the paper put all the figures in a 1997 constant and this suggests an inflation adjustment to get at real changes, not those brought on by inflation. The inflation adjustment formula is important in this case. It could have a bias in the way it is calculated.

Maybe Phil has a few comments on the points we brought up. We might learn something from him.