New Research Examines Beef Demand Indices
Beef demand is critical to understand and monitor as it directly influences overall beef industry prosperity. When beef demand strengthens, beef and cattle prices for the entire industry are higher than they otherwise would be, says Kansas State University Economist Glynn Tonsor. This highlights the clear economic value in accurately measuring beef demand. One way to do this is through construction of an index that provides an easy to understand, single-measure indicator of beef demand over time. A beef checkoff-funded study by Glynn T. Tonsor, and Ted. C. Schroeder, both of Kansas State University, recently examined the feasibility of developing new foodservice and grocery store beef demand indices.
“Despite the usefulness of existing demand indices for monitoring demand strength, all have a number of important limitations,” says Tonsor. “Indices that are updated more frequently, and that can be dissected by product or market region, can be especially informative about where demand is changing most. Armed with such information, the beef industry could better adjust, target and monitor product marketing strategies.”
As beef demand changes over time, insights from regularly updated demand indices would provide the entire industry a barometer of demand strength. Operators throughout the nation’s retail sector could use this information to benchmark their own situation within the broader beef demand position. If demand is improving in a retailer’s region but not in their operation, that information might lead to more timely solutions to their marketing challenges. Conversely, if a retailer’s operation is experiencing stronger beef demand than their broader region, that could provide valuable lessons about the elements of “winning strategies.”
Click here to read an article by Tonsor about beef demand in the Northeast region.
“Ultimately a deeper understanding of any situation requires ongoing effort and appreciation for details that previously may have been ignored. Beef demand is no different,” says Tonsor. “Previously available insights regarding beef demand were limited to summarizing the situation in a highly aggregated, national manner. Going forward, refined insights specific to geographic regions or product type could be used to refine understanding of current beef demand.”
It is the researchers’ hope that this improved understanding will assist all beef industry stakeholders, including retailers who act as the face of the industry for consumers.
For more information about your beef checkoff investment, visit MyBeefCheckoff.com.
UNDERSTANDING THE BEEF CHECKOFF PROGRAM
The Beef Checkoff Program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. States may retain up to 50 cents on the dollar and forward the other 50 cents per head to the Cattlemen’s Beef Promotion and Research Board, which administers the national checkoff program, subject to USDA approval.