Document Type

Article

Publication Date

4-15-1997

Keywords

livestock production, cattle feed, cattle pricing, beef cost, livestock market, beef industry

Abstract

Beef demand in the United States began to weaken relative to the demand for pork and poultry in the 1970s. The literature offers two possible explanations: 1) the lifestyles explanation; and 2) the relative-price explanation. Barkema and Drabenstott (1990) review the literature concerning the market share issue and concisely outline the two possible explanations: "The lifestyle argument suggests that consumers chose to eat less beef due to health concerns and changes in lifestyles. The relative-prices explanation suggests consumers switched from beef to poultry because beef became relatively more expensive than poultry." The issue of improving beefs competitiveness against other domestic meat products and foreign imports has been discussed widely by groups associated with the beef industry. One possible strategy that has been seriously considered is a new Value Based Marketing System (VBMS) for finished cattle. This strategy is articulated in the Value Based Marketing Task Force final report(1990), published by the National Cattlemen's Beef Association (NCBA). Based on the report's findings, the task force gave a strong recommendation for the development of a new marketing system (application of discounts and premiums beyond dressed weight & grade) that will encourage producers to raise leaner cattle that still will grade USDA low choice or higher. In turn, leaner cattle will reduce revenue loss due to fat (estimated at $2 billion per year) and increase consumption of leaner beef by fat conscious consumers. Thus, a new VBMS (beyond dressed weight & grade) will address both the lifestyle and relative-price dilemmas.

Publisher

Department of Economics, South Dakota State University

Series Number

97-3

Number of Pages

16

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