How much do Americans love meat? Rising prices will soon show

Despite higher prices linked to increased production costs and supply chain restrictions, U.S. consumer demand for MEAT remains exceptionally strong, according to a new report from CoBank's Knowledge Exchange. Unfortunately, consumer demand for meat will be tested once again as the full effects of producer price inflation hit retail meat sales.

“Retail meat prices will remain high throughout 2022,” said Brian Ernest, lead animal protein economist at CoBank, in a press release. meat prices, but that will change soon.”

With the combined cost of beef, pork and chicken up 22% year-over-year in the first quarter of 2022, consumers will almost certainly see higher meat prices, CoBank said.

“Beef consumption has not yet declined due to price increases. But as general inflation reduces consumer purchasing power, we may finally see a significant change in their willingness to pay for red meat,” Ernest said in a press release.

If that turns out to be the case, he believes the US broiler industry could be well positioned again for moderate growth and high margins.

There is no doubt that the main drivers of higher and more volatile meat prices are changing consumer buying patterns and market uncertainty caused by the pandemic. But Ernest says supply issues also played a role. The temporary closure of beef and pork factories in 2020 led to stockpiles of fattened livestock that are still in place in some places.

CoBank reports that the country's beef cattle population continues to decline, in part due to the ongoing drought in the US west and modest prices for fattening calves. In addition, the combined number of cows and replacement heifers has decreased by 12% since 2017. Similarly, the country's sow herd is declining and has declined by almost 6% over the past three years, mainly due to losses incurred in 2018-2019. The USDA forecasts a 2% decline in U.S. beef and pork production in 2022.

“Price volatility in the animal protein sector has become a daily headache for purchasing departments. While prices began in 2022 in a post-holiday slump, wholesale prices were still higher than pre-pandemic levels. Volatility in wholesale markets remains an obstacle to planning promotions,” CoBank said in a statement.

Increased spot market volatility and supply volatility have handcuffed retail protein marketing during the 2020 grilling season.

“Activity rebounded substantially in 2021 as grocers sought to maintain sales generated during the pandemic. In 2022, the solution to higher meat prices could be to offer more products like ground beef, hot dogs and charcuterie,” Ernest said in the report.

it is likely that meat retailers will shift their focus this year to increasing profits over sales volumes as the grill season kicks into gear. This means consumers will see a more creative approach to meat products, according to CoBank.