Meat demand

Ag economists say domestic meat demand has remained strong, even as consumer habits have shifted due to coronavirus disruptions. 

Evaluating meat demand goes deeper than simply looking at consumption, says Jayson Lusk, head of Purdue University’s ag economics department.

“People often look at per capita consumption,” he says. “That is what people are consuming, but also it doesn’t reflect demand. People are going to eat what we produce.”

Lusk says demand indices and price movement provide a fuller picture, and those have sent signals of strength.

“What we’re seeing there is pretty positive,” he says.

Scott Brown, Extension ag economist with the University of Missouri, says income growth impacts demand, along with prices.

“No. 1, what’s overall income growth look like?” he says. “That’s money in the pocket. I’ll start there. And second, what’s the price of these products?”

He points to average retail beef prices, which were $6.06 at the start of the year, surged to $7.59 in May amid processing plant slowdowns and shutdowns, and then worked their way back down to $6.37 by September.

“This is unprecedented what we’re going through,” he says. “It’s amazing how consistent and strong meat demand has been in the face of COVID-19. … It’s amazing how well we moved product with higher prices.”

Different demand

The strong domestic demand for meat has come during an unusual year with some disruptions, including steep reductions in eating in restaurants.

“That’s somewhat surprising because we’ve had a real destruction in the food away from home category,” Lusk says.

Looking back 20 years, he says domestic beef demand was coming off a long period of decline due to concerns about cholesterol and fat, while chicken had seen an increase. Beef demand has bounced back in the last two decades.

“Over the last 20 years, the trend has been positive for beef demand,” Lusk says. “That’s despite some negative publicity.”

Chicken and pork domestic demand have also been increasing or steady during the last 20 years.

“Chicken demand has continued to rise during that time,” Lusk says. “Pork has been fairly steady all along.”

Overall, Brown says demand has been robust in recent years.

“I think by and large we’ve been on a really good roll with meat demand,” he says.

Lusk says the future gives “mixed signals.”

“It appears incomes have fallen some due to COVID,” he says. “Overall, it appears incomes will be down in 2020, and we expect that to affect beef demand.”

Also, meat consumed in restaurants will continue to be lower, although Lusk says consumers have shown strong demand for meat in meals prepared at home.

“When consumers are cooking more at home, they’re finding ways to incorporate meat products,” he says.

Lusk says a lot of domestic demand trends will be tied to what happens with the virus through the winter.

Restaurant vs. retail

The virus issues — and economic trends in non-pandemic times — can affect different meats and cuts in different ways. For example, Brown says when meat prices get higher, many consumers switch from beef to pork.

Also, when people shop in grocery stores more and eat in restaurants less, it favors certain cuts, such as pork loin products.

“I think loin prices this year have been stronger than we’ve seen before,” Brown says. “The flip side is bacon. In the restaurant business bacon was added to almost any other meat to add flavor.”

Lee Schulz, Extension ag economist with Iowa State University, says the food service industry still isn’t at the level it was before the pandemic.

“We’ve continued to see strong domestic demand, but I think that demand has changed a lot because of the consumption patterns,” he says.

Schulz credited the food system with adjusting to the dramatic shifts.

“It’s also showing some flexibility from the industry to be able to pivot and get more product into grocery stores,” he says.

Schulz says the Bureau of Labor provides statistics on meat prices, which show the impact of the demand shifts. He says the pork chop price per pound is up 14% from last September to this September, while the bacon price is up about 1%.

Schulz is expecting similar pork production in 2021, along with similar retail meat prices as domestic demand remains solid.

“I don’t expect prices to increase much from a retail standpoint,” he says.

Looking ahead, Brown says meat demand could be impacted by whether or not the federal government approves another stimulus to address the impact of the virus on the economy.

Brown says exports are vital for the industry, although domestic meat demand is still the biggest part of the picture.

“You take all the meat products, we’re probably exporting 10 to 15% at a given time,” he says. “So exports are important, but domestic demand is still the main driver.”

Ben Herrold is Missouri field editor, writing for Missouri Farmer Today, Iowa Farmer Today and Illinois Farmer Today.