A Few Thoughts by John Nalivka: US grassfed beef production doesn’t meet demand
August 26, 2015
Grass fed beef demand has experienced strong growth over the past few years in the supermarket meat case as well as in food service. For most programs, this beef category is certified and bears a grass fed label. In addition, it is usually certified organic or natural. As niche markets grow in the meat industry, questions concerning supply often arise – how well supply change and meet growing demand?
In the case of grass fed beef, the U.S. supply is supplemented with imported product from Australia and Uruguay. Beef production in those two countries is nearly all grass fed. Under WTO, both countries have quotas to export fresh and frozen beef to the U.S. While the current total grass fed beef supply including imported beef is ample, the question still arises – could we meet more of the demand with U.S. production?
In order to address this question, I have calculated current U.S. production of grass fed beef. Cattle slaughtered that could be or are certified as grass fed accounts for about 1 percent of total cattle slaughter on a weekly or annual basis. Assuming a "typical" industry slaughter weight and yield for these kind of cattle generates an annual production estimate of about 178 million pounds and this production represents about eight-tenths of one percent of total beef production this year. Assuming the carcass is broken into cuts as well as trim, the trim going into ground beef production would represent about four-tenths of one percent of the total U.S. ground beef supply.
These estimates of current grass fed production strongly suggest that current demand could not be satisfied by U.S. production alone. Since nearly all of the U.S. produced grass fed beef is spoken for in specific programs, there is not enough left in "free supply" to replace imported grass fed beef currently being used to meet the remaining demand, primarily fast food.
Demand for grass fed beef is expected to continue to grow. However, the production of grass fed cattle is largely dependent on the premiums offered for these cattle as well as forage availability and consequently, the supply can become quite variable. But, even with the potential variability in supply, the U.S. is not likely to go toward a grass fed production model similar to Australia or South America where grass fed beef accounts for the largest share of production. We will continue to have an absolute competitive advantage in global markets and in the U.S. markets producing grain fed beef.
Production of grass fed beef in the U.S. will remain small relative to total production and will continue to be supplemented by imported fresh, chilled, and frozen beef.