Building Demand for Beef Still Important When Supplies are Tight, Beef Board CEO SaysMon, 04 Mar 2013 16:30:48 CST
Polly Ruhland, Cattlemen's Beef Board CEO, says building demand for beef clearly is one of the goals of the checkoff, but that goal often is misunderstood. She says that beef demand and consumption are not the same thing.
"Demand is not consumption. Now I'm no economist - that's the disclaimer right up front - but I will tell you beef demand is commonly confused with beef consumption, although the two are very different. And here's what I like to say: simply put, you can't eat what you don't make. So consumption is a measure of what we eat - it's a measure of inventory in our business. Domestic production and imported supply of beef and beef products divided by the number of people eating. So if that's the definition of consumption, what happens when supply decreases?"
Demand is still there even when supplies are lower, Ruhland says.
"In demand, prices adjust to clear the market, whatever the supply. So if consumers are willing to pay more, the market reflects that in demand regardless of what the supply is doing. Does that make sense? Price adjusts to clear the market. So even when volume is low, as it is now, and through the next year or two at least we expect, demand and strength (strength of demand) can grow. Demand can grow when supply is low and that's what we're seeing right now. I understand demand is up 2 percent even though prices are up - because prices are up- in a low supply situation."
Ruhland says keeping demand high, even when supplies are limited, is a very important goal of the beef checkoff program.
"The key about demand is that it's all about the consumer, right? Beef demand goes beyond a simple quantity and measures consumer desirability and consumer preference. Those are two things the checkoff knows very, very well - beef desirability and consumer preference for our product. The economy plays a factor - we can't control the economy, we probably can't control disposable income, but we can influence consumer's desire to pay more for our product, thereby supporting and maybe even growing demand in a time when we have little product to offer them and prices are high."
You can learn more about the Beef Checkoff's efforts to stimulate demand by going to their website at: http://www.beefboard.org/
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