Industry News – AM
Fat is in, changing meat economics: Steiner
By Lisa M. Keefe on 9/15/2014
CHARLESTON, S.C. — Recently released information indicating that dietary fat may not be the nutritional bogeyman it’s been made out to be for 50 years seems to be changing the economics around meat demand, livestock economist Len Steiner told an audience here at the North American Meat Association Outlook Conference.
In a wide-ranging overview of changing economic conditions affecting meat consumption and production globally, the principal of the Steiner Consulting Group explained the challenge that the record-high prices in the market now for beef presented for his team’s calculations. Prices in the market were markedly higher than their calculations indicated they should be, even taking into consideration the tight supply situation domestically.
The hidden factor, he said, seemed to be a shift in the demand curve: U.S. consumers are demanding their beef, even as higher prices normally would have dampened sales and consumption.
And what seems to be fueling the demand is a wave of media coverage, first, of the results of a meta-analysis of existing health data, released in March 2014, that questions the longstanding link between saturated fat and heart disease; and second, the April release of the book, “The Big, Fat Surprise: Why butter, meat and cheese belong in a healthy diet.”
“A lot of what’s been passed on by the food nutritionists for the last 40, 50 years is simply wrong,” Steiner said.
“We have reason to believe that [a demand curve shift] is a big part of what’s occurred this year,” he said. “We can’t get to the prices we’ve paid for beef and pork this year with the old demand curve.”
Lower prices — just not for beef
Looking ahead to prices for proteins in 2014 and 2015, Steiner projects that fresh beef will end the calendar year up 32.4 percent over 2013’s prices, with prices in 2015 up another 12.5 percent. Meanwhile, 50/50 trim, with prices up 38.6 percent in 2014, will slow down next year, up only 5.6 percent.
Other markets, on the other hand, are expected to drop from their lofty levels as record grain crops and lower feed costs work their way through the supply chain for pork and poultry, where the growing cycle is shorter.
Pork cutout value, after ending 2014 up about 20.3 percent, is projected to drop in price by 15.4 percent in 2015.
Boneless skinless chicken breast, up a projected 5.1 percent in price in 2014, should drop 8.3 percent next year, Steiner said. And turkey breast, after rising a whopping 82.7 percent in 2014 over the year earlier, is expected to fall off in price by about 13.2 percent next year.
Editor’s note: Look for our interview with Nina Teicholz, the author of “The Big, Fat Surprise,” in the November issue of Meatingplace magazine.