High feed prices in 2012 and 2013 have caused many Wisconsin beef producers to cut back or liquidate their herds and get out of the beef business. Ditto for farmers who raise Holstein steers. Many are finding the price of feed is just too expensive for those who have to buy it, and an increasing number of those who grow their own corn are thinking it may be more profitable to sell the corn rather than feed it to steers.
This trend didn't just start because of the drought. It goes back six years to when corn prices spiked in the fall of 2006 due to increased demand for corn for ethanol, growing demand for corn and soybean exports and high demand for feed for livestock.
So it should come as no surprise that beef production is down. But I was shocked to learn at the Wisconsin Ag Outlook Forum held recently at University of Wisconsin-Madison that the beef herd nationally is the smallest it has been in 63 years. Cow slaughter was down 4% in 2012. It actually climbed 4% for dairy but dropped 12% for beef.
So what are consumers going to eat?
Well, it turns out beef consumption has plummeted as well.
U.S. meat consumption has declined 9% in the last five years, according to Brenda Boetel, UW-River Falls associate professor of economics. She reported that beef consumption in 2012 fell to 57.3 pounds per person, compared to 94.4 pounds in 1976. In 2013, she projects that beef consumption is going to fall to 56 pounds per person.
I knew we were eating a lot more chicken, fish, vegetables, pasta, pizza and soup today than we were eating in 1976, but I had no idea beef consumption had dropped that much.
One of the biggest reasons consumers are eating less beef is the price. Retail prices for beef hit $5.15 per pound in November before easing to $5.11 in December. This includes everything from hamburger and stew meat to roasts and steaks.
The USDA is predicting beef production will decline 3.2% in 2013. While this may sound like music to beef producers' ears, the USDA is predicting that pork production and broiler production will both be up .7%, and turkey production is expected to increase 1% in 2013.
The increase in meat prices, and particularly beef, may be slowed as consumers remain cautious buyers as the economy continues to slowly recover.