Beef...Is It Still What's for Dinner?
22 February 2017
Too much supply and less demand is the issue producers need to address. Between red meat health concerns promoted by various health organizations and higher prices, consumers are choosing more chicken and pork over beef. These added factors are pushing the cattle industry towards a possible glut.
According to the cattle inventory report, the number of cattle and calves on feed for slaughter market fell from 13.2 million head on January 1, 2016 to 13.1 million head January 1, 2017. It appears producers ran into a speed bump when feeder cattle prices fell in 2016. So what happened?
Over the last two years, the U.S. saw a fast expansion of cattle herd thanks to low feed costs and healthy pasture conditions. Now things are different. What once was a staple at the dinner table is now sitting in the cases of grocery stores. To get beef moving into consumer’s hands prices had to drop meaning less money for the producer. Another issue is President Trump’s revised executive order to reestablish his temporary shutdown of the U.S. refugee program and ban against immigrants from seven majority-Muslim countries. If the order moves forward the ban could hinder access to workers at facilities where labor will be most needed for processing the abundant meat supply.
The cattle industry also relies on exports to help with supply overflow. Since President Trump pulled the U.S. out of the Trans-Pacific Partnership deal, the future of trade is up in the air leaving producers wondering what to do next.
The decision lies with the producers on what their next step is. Are they making the right decision to keep expanding? Are they anticipating that meat prices will go back up? Or will they realize they need to cut back on production so they don’t find themselves with an oversupply of cattle?
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