February 23, 2020

Recent Livestock Issues: Lower Prices for Beef, Pork; and, Consumer Preferences

Bloomberg writers Shruti Singh and Lydia Mulvany reported on Tuesday that, “Cattle ranchers who quickly expanded their herds after a prolonged Texas drought now have become their own worst enemies.

“The industry-wide buildup was the fastest Shelby Horn, a fourth-generation cattleman with a family ranch in Nebraska, had seen in at least 30 years. The result: An explosion of beef on the market and a 30 percent drop in wholesale prices from a record set in May 2015, when supplies were tight after the drought. And with many of the calves still a year or two from slaughter, the industry finds itself with no easy way to adjust.”

The Bloomberg writers explained that, “Beef production will rise 5.2 percent this year and climb a further 3.4 percent in 2017 to a five-year high, the U.S. Department of Agriculture projects. Output is increasing as the cattle, hog and chicken industries expand simultaneously, leaving the nation set for a year of record meat production and declining prices. Consecutive years of bumper grain harvests have also sparked expansion as feed costs fell.”

And yesterday, Bloomberg’s Simon Casey tweeted that, “Hogs hit 13-year low.”

Purdue University ag economist Chris Hurt pointed out earlier this week that, “Lower corn and soybean meal prices this fall will drop estimated costs of production to about $47 to $48 per live hundredweight. With hog prices in the higher $30s this fall and winter, estimated losses will be $25 to $30 per head.”

Meanwhile, with respect to consumer meat preferences, Wall Street Journal writer Jacob Bunge reported earlier this week that, “U.S. food regulators need to take further steps to curb antibiotics use in livestock to maintain the drugs’ ability to defend human health, according to an advocacy group.

By early next year, animal drugmakers have agreed to abide by U.S. Food and Drug Administration guidelines to stop using antibiotics used in human medicine to help livestock and poultry gain weight faster. Some antibiotics had been used for that purpose on farms for decades, alongside treating and preventing disease.

“But researchers for the Pew Charitable Trusts said Tuesday in a review of livestock antibiotics that the new guidelines don’t go far enough. The Philadelphia-based group said regulators need to clamp down on how long some antibiotics can be used, and more closely scrutinize some uses that may not directly relate to keeping animals healthy. Pew is a nonpartisan, nonprofit group that researches consumer, environmental and health issues, including a focus on the impacts of large-scale food production.”

Mr. Bunge added that, “Regulators’ efforts to scale back antibiotics use on farms gained momentum as some of the biggest U.S. restaurant chains, including McDonald’s Corp. and Subway, over the past few years announced plans to buy meat produced with less antibiotics.”

Lastly, Kelsey Gee and Heather Haddon reported in today’s Wall Street Journal that, “In grocery store cases stuffed with exotic grass-fed and organic meats, new ‘single-origin‘ cuts are taking the local food craze to new heights.

“Retailers including Whole Foods Market Inc., FreshDirect, and Inc. are building farm-to-store meat operations that sate some consumers’ desires to trace their burger or bacon all the way back to an individual animal.”

Graph from today’s WSJ

The Journal writers explained that, “These efforts take aim at the industrial meat processors like Cargill Inc. and Tyson Foods Inc. that sit at the center of a hub-and-spoke system tying hundreds of thousands of farmers across the country with retailers and food distributors.”

Gee and Haddon added that, “Sales of conventional meat last year grew less than 3% in value, compared with a 12% uptick for meat labeled ‘natural’ and a 23% gain in sales of labeled ‘antibiotic free,’ according to market research firm Nielsen.”


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