As we looked in 2011 data, America’s total beef consumption was 25.6 billion pounds. Comparing with the beef production of 26.29 billion pounds, America’s consumption has been going down. Data indicates that American meat consumption down to 12.2% in 2012 compare to 2007. The demand for beef market get affected by the meat industry as a whole by three reasons: (1) the growing exports, (2) higher costs due to rising feed prices, and (3) the government policy.
1. The Growing Exports:
Knowing that exporting goods help the economic overall, but it also creates a disadvantage for the customer side. Increase in export activity adds to and supplement the domestic demand for beef. With a specific supply in beef (26.29 billion pounds in 2011), an increase in exporting and a consistent importing activity, it will lead to an increase in beef’s price. This will move our demand point in a demand curve to a lower position, which is a decrease in demand.
2. Higher Costs
Not only exporting activity increases the costs, but also from rising feed prices. It costs $5 a day to feed and house cow with an average of 26,000 cattle in supplier’s yard. With the demand decrease, it will affect the farmer and increase the cost even higher if he can’t move cattle to slaughter on time
3. The Government Policy
The government plans to furlough all Food Safety and Inspection Service workers nationwide for the same 11 non-consecutive days this summer from mid-July into September. However, this furlough would cost more than $10 billion in production losses and a loss of more than $400 million in wages to industry workers. This problem has increased worry for the beef industry if the meat stations have to shut down since inspectors can’t come to work and the supplier need the operations to be certified by law before selling to the market. Moreover, the farmers worry that their cattle won’t be able to get slaughter on time for the best meat quality and also raise the cost from keeping the cattle longer ($5/ day). Furthermore, the policy allows cattle to eat feed containing blood from other cattle and other wastes, both could lead to mad cow disease