Beef Demand Dips Slightly In 2005

Total demand growth since 1998 remains above 20%.

Published on: Mar 20, 2006

Consumer demand for beef dipped slightly in 2005 but the Beef Demand Index remains up more than 20% since reversing its 20-year decline in 1998, Cattlemen's Beef Board Chairman Al Svajgr announced at the Cattle Industry Annual Convention here today.

"We had such a stellar growth year for demand in 2004 that we didn't top that mark in 2005 even though we continued to enjoy terrific strength in the market, including strong prices for cattle throughout the year," says Svajgr, a cattleman from Cozad, Neb. The index decreased 3.6% in 2005 compared to that record growth in 2004, according to preliminary year-end results.

The Beef Demand Index is calculated based on a series of formulas developed by Dr. Wayne Purcell, director of the Research Institute on Livestock Pricing through Virginia Tech University's department of Agricultural and Applied Economics. The Index now is monitored by Dr. James Mintert, a professor of agricultural economics at Kansas State University. The index reflects several specific factors, including per capita consumption and consumer retail spending for beef, but does not take wholesale beef prices into account.

"When demand advanced nearly 8% in 2004, bringing total growth between 2000 and year-end 2004 to more than 17.5%, we knew we couldn't sustain that kind of growth indefinitely. We have, however, accomplished demand growth of more than 20% since 1998, and we certainly far surpassed the goal we set in our last beef industry Long Range Plan: to grow demand by 6% during the first five years of this decade.

"At our Board meeting this week, Svajgr continues, "we're voting on a new Long Range Plan that calls for building demand another 10% but 2010, so we're keeping focused on sustaining an upward trend over the long haul."

Cattle-Fax estimates that the increase in demand since 1998 has added about $250 per head to the price of fed cattle and about $200 per head to the price of calves.

"Producers should be proud of what they've been able to accomplish in the area of consumer demand, Svajgr says. "When it comes to the beef checkoff, we remain diligent about advancing demand-building programs, such as new-product development, nutrition research, youth education, beef safety efforts and promotion, as we move forward with continued optimism about opportunities for demand growth."