Steve Kay’s latest monthly Kay’s Cuts column for Beef Central on developments in the US meat and livestock industry reflects many of the sentiments expressed last week during Beef 2021 in Rockhampton

 

 

NORTH AMERICANS continue to fuel their enthusiasm for beef with strong buying at the grocery store, despite higher prices than a year ago. Beef continues to be the leader in the meat case, aided in part by pork’s higher wholesale and retail prices versus this time last year.

The strong demand began well before the COVID pandemic upended consumer food purchasing patterns from March-April 2020.

March US retail prices showed that consumers remain unfazed about higher beef prices. USDA’s retail Choice beef price averaged US$6.48 per pound, up 7c from February and up 7.1pc from March last year.

Its All Fresh retail beef price averaged US$6.39 per pound, up 9c and 7.2pc, respectively. March is likely to be the last month to make valid meat price comparisons with a year ago, as April prices last year rose sharply and then sky-rocketed in May. This was because of the dramatic reduction in red meat production caused by the large number of COVID cases, illnesses and absenteeism among meat plant workers.

Beef demand has risen for several years

However, US beef demand had been on several years of strength prior to the pandemic, says David Anderson, Texas A&M University. A growing economy, falling unemployment and consumer preferences towards higher USDA quality grade beef were building demand. 2020 did not slow beef demand, even with the increase in unemployment, he says.

The All Fresh beef demand index scored 119 for 2020, the best in 20 years.

Contrast this extremely positive beef demand scenario and likely outlook with the absurd claims made in a 2019 report. It claims that new technology will devastate the conventional US beef industry by 2030 and that the industry and that of other livestock species will collapse by 2030 because of a lack of demand.

It’s no surprise that the report comes from a San Francisco-based think-tank made up of Silicon Valley techies

It’s no surprise that the report comes from a San Francisco-based think-tank made up of Silicon Valley techies. The COVID pandemic has focused new attention on the study which claimed that by 2030, the number of cows in the US will have fallen by 50pc, and the cattle farming industry (as it calls it) will be all but bankrupt.

All other livestock industries will suffer a similar fate, while the knock-on effects for crop farmers and businesses throughout the value chain will be severe, claims the report from RethinkX, which describe itself as an “independent think tank that analyzes and forecasts the speed and scale of technology-driven disruption and its implications across society.”

Just about everything in the report borders on the absurd. But it is reassuring to know that parts of the think-tank’s report already have been proven wrong, as North Dakota State University livestock economist Tim Petry points out.

Consider the report’s source when evaluating its potential accuracy, Petry recently told Agweek.

“It was written by Silicon Valley hi-tech people who want to lure billionaire investors to invest in their companies. That’s the case with anything. When you have something very dramatic, it’s easier to get it in the papers than a report that says meat production is going to increase 1pc a year.”

Some key 2019 predictions have failed to come true already, he says. For example, the projection that the meat industry has reached its limits on scale “absolutely has not started, or come true. We (the US meat industry) are going to have record beef/pork/chicken in 2021, and with significantly lower breeding stock than a few years ago.”

The report underestimated production agriculture, adds Petry. “The authors don’t understand how much more efficient we’ve become.” The pandemic definitely affected US livestock markets but conventional meat products remain popular, he says.

And as individual Americans become more affluent, they’re increasingly willing and able to buy high-quality meat, which also works against the report’s conclusion.

‘Precision fermentation’ predicted to replace meat

The report also predicts that consumption of conventionally-produced meat and other animal-derived products will plummet because of growing competition from “precision fermentation, a process that enables the programming of micro-organisms to produce almost any complex organic molecule. Its costs are dropping exponentially because of rapid improvements in underlying biological and information technologies.”

Because of precision fermentation, by 2030 modern food products will cost less than half as much to produce as the animal-derived products they replace, and the US market for ground beef by volume will have shrunk by 70pc, the steak market by 30pc and the dairy market by almost 90pc, the report predicts.

By 2035, US demand for beef and dairy products will be down nearly 90pc, leaving only local specialty farms in operation, its predicts. Industrial farmland values will collapse by 40-80pc, claims the report.

By now, you have realised that the report isn’t worth the paper (or computer file) it was written on.

Nevertheless, it is instructive for the US beef industry to at least know what crazy claims are being made about its future and to debunk them if necessary.