The pounds of meat produced in the United States will drop in 2013 for the
second time in five years. That includes beef, pork, chicken and turkey,
according to a report given to Congress today.
Livestock farmers struggle to fill growing world meat demand, not because
of low prices but because of high costs, Scott Brown, University of Missouri
economist, reported to House and Senate agriculture committees.
The annual MU economic baseline projects production and prices for the
coming decade.
“When we look at 2013, the big issue for livestock and dairy farmers is
feed costs. If we get a decent crop in the bin this fall, 2013 and beyond looks
much better,” Brown said.
Crops have produced below-trend-line yields for three years, with 2012
bringing lowest yields.
“Having the worst drought in decades mattered a lot,” Brown said. “Many
livestock farmers remain in business, hoping feed costs subside, bringing a
better financial situation.”
Size of U.S. beef herds dropped in the face of less forage and feed. On the
hog side, sow inventory remained stable despite sharp increases in feed
costs.
Weather remains a big unknown in price projections. For their analysis, MU
economists assume normal weather ahead.
“Producers see record livestock prices, but no record profits,” Brown said.
“Market signals encourage increasing cow herds. Even with good beef prices
available, it takes time to rebuild cow herds.
“For cow-calf producers, it is more than feed costs when forage was not
available in drought-stricken areas.” Producers remain concerned about available
pasture.
For years, beef dominated the meat industry in terms of production, Brown
said. As recently as 1995, beef was tops. However, by the fourth quarter of
2013, pork production may eclipse beef for the first time since 1962.
More than costs are in play in the baseline. The general economy remains a
big unknown in the projections.
“The U.S. needs economic growth to sustain record prices,” Brown said.
“Meat prices have stayed strong in the worst economic downturn in
decades.”
If anything causes job growth to slow or if the economy heads into
recession, those meat prices can’t be sustained.
Brown doesn’t expect inflationary food prices. “Beef prices were up 49
percent in 2012, compared to 2000-2006,” Brown said. “The challenge will be to
maintain prices.”
U.S. consumers have changed eating habits, reducing meat consumption by 20
pounds per person. Mainly, that drop comes from lower availability. If feed
prices decline, meat supplies should grow.
At the same time, growing international demand takes more meat,
particularly high-quality beef, out of this country. That export demand,
especially from the Asia/Pacific region, grows with rising middle-class
earnings.
“Economies of those developing countries show real growth of 6 to 7 percent
per year. That helps our meat sales.”
Increasingly, U.S. dairy products compete in the world market, Brown said.
Now, the U.S. exports half of its nonfat dry milk. “Dairy farmers are garnering
a larger share of the international trade.”
As domestic fluid milk consumption declines, that export trade becomes
essential.
Dairy producers faced high feed costs in times of low and volatile milk
prices. While milk prices recovered in late 2012, farm receipts remained below
cost of production for many producers.
“Like livestock producers, dairy producers need a larger projected crop in
2013 to lower future feed costs and improve net returns.”
In 2012, feed costs approached $64 billion, more than double 2006.
The livestock and dairy projections are included in a 50-page briefing
book, “U.S. Baseline Briefing Book: Projections for Agricultural and Biofuel
Markets.” It was prepared by the MU Agricultural Markets and Policy team (amap.missouri.edu). The
book can be seen at the MU Food and Agricultural Policy Research Institute
website at www.fapri.missouri.edu.
The economic units are in the MU College of Agriculture, Food and Natural
Resources.
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