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New Demand for Beef Creates a Niche for New Products

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Posted Aug. 31, 2000

For the first time in twenty years, we have seen an increase in beef demand, as measured by a combination of increased beef consumption and consumer spending. New product development helps revitalize beef demand in the long run.

Time-starved consumers need new beef products because they frequently purchase food that is easy and convenient to prepare. The beef industry has been slow to offer these types of products. For example, in 1997, only 117 out of 12,398 new food products were beef. For the beef industry to capitalize on the recent increase in demand, it must give consumers more of what they want.

In today's society, 78 percent of decisions about what to eat for dinner are made after 4:30 p.m., which does not allow time for a beef product, such as a roast, to be prepared. Because modern-day consumers have busy schedules and want a healthy, nutritious product that can be cooked quickly and easily, they prefer precooked and frozen foods. These items require little preparation and clean-up time - usually about thirty minutes compared with the average three to four hours for a roast.

What does all of this mean for beef cattle producers? Beef demand can be stimulated through the introduction of beef products that satisfy consumers' changing wants. These new beef products are made from underused cuts, primarily chuck and round. By adding value to these cuts, the total value of the carcass rises. Increases in value and demand equal more money for producers.

For producers, it is imperative that beef demand continue to increase because beef prices will increase. As they do, more money will be available to dispense among the segments of the beef industry, with the cow-calf segment being the last to see the benefits of a price increase. For producers to realize any price increase from the consumer level, they must find ways to increase their profit. Since margin operators, stocker operators, feedlots, and packers - work toward making a profit, when there is a change in the price of beef, there is a change in the amount of money available to dispense through the various segments of the industry, which ultimately affects cow-calf producers.

Although beef prices are at an all-time high, producers must continue to manage their costs to position themselves for a slump in the cattle market cycle. It is essential that they continue to find new ways to increase beef demand increased demand means increased consumer spending for beef.

New beef products are only one of several factors important for increasing beef demand: The industry must continue to work toward producing consistent high-quality beef and look for new ways to satisfy consumers, educate them about beef's nutritional characteristics, and build their confidence in food safety. To have a profitable product, we must listen to consumers and produce cattle that will provide them with a beef product they will purchase. It is important for us to remember that the product we produce is beef for consumers, not cattle for the next segment of the market.

Laura was an Agricultural Economics major at OSU from Mena, Arkansas. She spent the summer of 2000 with NF as an agricultural economics intern.

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