If demand metrics are any sign, Americans have meat on their minds and dinner tables. Whether it’s eggs and bacon or a double cheeseburger, consumers are hungry for more.
Overall, the meat industry has plenty to be happy about with cheaper feed prices and rising consumer discretionary income (thanks to cheaper gasoline), say economists cited by Ag Web. By 2018, the U.S. meat market could approach $84 billion at a growth rate of 1.7% per year. This is a significant improvement over the market’s value of about $68 billion in 2013, according to a Canadean report.
But each segment of the meat industry has its own internal happenings as well, particularly the big three: beef, pork, and chicken.
Beef production wanes, while demand, prices remain high
According to the USDA, the beef industry may be inching toward a 22-year low in output. Cattle ranchers have had difficulties recovering from the 2012 drought, and beef output is predicted to decrease 1.7% to 23.901 billion pounds.
Demand for beef, however, continues to rise and has reached a record high, according to a Texas Cattle Feeders Association market analyst, particularly among Americans. With this waning supply and increased demand, beef prices have skyrocketed and experts predict they will remain high for awhile.
According to the Lubbock Avalanche-Journal, the USDA reported that in November, prices were already at a record high, and those prices ticked up another 0.1% to an average of $6.31 per pound by a month later. This ends up being a 17.7% increase over the year leading up to this past December. But as the drought eases, the cattle supply should begin to bounce back, which may eventually bring prices back down.
On the agricultural side, Ag Web says that live cattle prices are predicted to decrease from an average $154 per. cwt in 2014 to about $150 per. cwt in 2015. As Ag Web reports, Rich Nelson, chief strategist for Allendale, which hosted Ag Leaders 2015 Livestock Outlook, believes livestock prices will continue to drop into 2017 and further. Also dropping in 2015 is live cattle demand, despite rising consumer demand. While demand for live cattle jumped 13% in 2014, which Nelson says is an all-time high for single demand increase, 2015 may reverse that increase with a drop of 10%, according to Ag Web.
Pork catches up
Beef may have beat pork in the meat market for decades, but for the first time since 1952, pork output surpassed beef. The USDA expects pork output will jump 4.6% to reach an estimated record 23.908 billion pounds in 2015, reaching record highs. The output has increased in part due to a larger hog population, which increased by 2% to 66.05 million in the year leading up to Dec. 1.
These numbers should relieve pig farmers who suffered when the porcine epidemic diarrhea virus decimated the U.S. piglet population in 2014. The dramatic decrease in supplies sent prices of pork products soaring, which then had effects on manufacturers who use pork and bacon in their own products.
The epidemic is more controlled with new vaccines but not entirely, as the virus booms in the winter months, according to Paul Sundberg, vice president of science and technology for the National Pork Board in Des Moines, as reported by Bloomberg. However, the pig population is coming back, and prices are decreasing once again. The pork supply continues to increase thanks to a larger breeding-sow herd, which reached the largest in five years and its highest increase since 1998 in the three months ending Dec. 1.
Cheaper feed led to a higher pork output as well as both the pig population and the pigs themselves continue to grow. According to Bloomberg, “After two years of bumper corn and soybean crops, feed is cheap and that means hogs are getting bigger.” In 2013, an average pig weighed about 208 pounds, but that weight increased by an average of 8 pounds in 2014, including a record additional 14 pounds in May.
Chicken’s reign continues, despite setbacks
Chicken continues to sit comfortably atop the meat industry, as poultry export quantities reached record highs for two years in a row. The USDA predicts chicken will hit an all-time high of 39.206 billion pounds this year. This is in spite of losing the Russian market in 2014, which had accounted for 8% of U.S. poultry exports.
However, the avian flu is causing some concerns both in the U.S. and abroad. In one case, China banned U.S. chicken and egg imports earlier this year due to fears of contamination by avian flu.
Meat industry recalls
According to the USDA’s Food Safety and Inspection Service, the country saw 94 meat industry recalls in 2014, for a total of nearly 18.7 million pounds recalled. Most were recalled for undeclared allergens, followed by recalls classified as “Other,” which includes problems with inspections and labeling, among more. Recalls in the “Other” category, however, accounted for the most pounds of meat recalled. Listeria was the third-leading cause for a recall.
Leading recalls by species was poultry, which includes both meat and egg products, at 31 recalls, followed by pork at 26, and beef at 22. Though poultry had the most recalls, beef saw the most pounds of meat recalled by far at more than 13.2 million pounds as compared to poultry’s about 2.2 million pounds.
Food Dive recently outlined the winners and losers of the Dietary Guidelines Advisory Committee's food guidelines report. It warned against eating too much red meat once again as well as processed meats this time around.
The North American Meat Institute did not wholly agree with this assessment. It said in a statement, “We appreciate the Dietary Guidelines Advisory Committee’s (DGAC) recognition of the important role that lean meat can play in a healthy balanced diet, but lean meat’s relegation to a footnote ignores the countless studies and data that the Committee reviewed for the last two years that showed unequivocally that meat and poultry are among the most nutrient dense foods available. Nutrient dense lean meat is a headline, not a footnote."
As a whole, the U.S. meat industry is faring well in today’s economy. For direct impact on consumers, it will be key to watch how fluctuating supply and demand will affect prices at the grocery store over the next few years.