A Few Thoughts by John Nalivka – Meeting both U.S. and global consumer demand for beef | TSLN.com

A Few Thoughts by John Nalivka – Meeting both U.S. and global consumer demand for beef

Our memories don't have to be too sharp to be reminded of how quickly prices respond to herd expansion and increased production. It is no wonder the export market has taken center stage.

As meat supplies in 2018 edge toward a new record and the highest in a decade, the analysis and conversation is centered, almost exclusively, on demand and more specifically, U.S. exports and U.S. trade negotiations – specifically TPP and NAFTA. Including a 4 percent increase in exports, this year's record beef production will leave U.S. per capita beef supply (Sterling Marketing projection) at 59.2 pounds and the highest since 2010. Certainly, strong export demand supported by economic growth in major global markets provides plenty of optimism. In 2017 through November, U.S. beef exports were up 13 percent from a year earlier. The value of those exports was $5.6 billion dollars and 19 percent higher than the prior year.

As exports become increasingly important to maintaining prices, it is easy to draw the conclusion that the dollar needs to remain weak. The dollar has fallen 11 percent over the past 12 months. And, while a weak dollar does reduce export prices which in turn supports exports, that singular focus generally ignores the overall health of the U.S. economy. There has been more than one global economy that has exercised a weak currency policy in order to support export growth – i.e., Brazil and Argentina. How did that work out? The U.S. does not need to fall into that trap. A growing economy supports a strong dollar.

I don't disagree at all about the importance of needing export growth to support prices in the face of sharply increasing supplies of red meat and poultry. I have expressed that opinion. But, I also think it is important to maintain at least as much focus on the U.S. consumer. We know that $5.6 billion in export value supports beef and cattle prices, but let's not throw caution to the wind, "export the beef cutout," and assume that today's American consumer will also be tomorrow's consumer. Tastes and preferences change and the meat protein industry must constantly assess this changing demand.

In 2017, exports took 11 percent of U.S. beef production off shore compared to 9 percent in 2010. That is nothing to scoff about but at the same time, a sound, long-term strategy must continue to be driven by equal focus on both U.S. and global consumers.