Challenging times: Robb looks at future of U.S. beef

A lot of unknowns lie ahead for U.S. cattle producers in the coming year, according to a senior economist and director of the Livestock Marketing Information Center. Jim Robb presented a marketing outlook to nearly 100 ranchers during a beef production conference in Torrington on Nov. 19.
    Robb said the direction the economy takes in 2013, and whether the drought continues are going to be key drivers in determining cattle prices during next year.
    “Consumer demand is an important part of the picture that we sometimes forget when we’re out in the country trying to make a living,” Robb said.
    Since the recession, the U.S. has had a very anemic growth rate, he continued.
    “There are not many positives in our economy right now,” he said. “Where this economy goes, besides the drought, is going to be a key driver in where cattle prices end up.”
    “The sad reality of this growth rate is if we take per capita income and adjust it for inflation, the average U.S. consumer has less money now than they did in 2008,” he said. “This means every U.S. person has less disposable income. In other words, they are poorer than they were in 2008.”
    The domestic consumer demand for beef has followed the economy. Per capita consumption has declined, Robb said.
    “It has declined because we export more beef than we did a few years ago, and foreign consumers are willing to pay more than U.S. consumers for some of our beef cuts.”
    Despite the decrease in consumption, demand has increased because consumers are paying record high prices, Robb said.
    While U.S. beef exports are down on a tonnage basis, it could be the second highest year ever, the economist said.
    “In 2011, we got a kick to the cattle market, and exports were booming,” he explained. “This year, exports are a big factor, but they are not giving us a big kick this year because income in other countries is softening. Our beef prices are at record highs, so people are eating a little less and buying a little less.”
    Robb said the value of beef exports this year may be at record highs, but the tonnage exported is going down.
    “The really good news is that we have a diverse and large export market,” he continued. “Canada or Mexico are often the largest, but we also have Korea, Japan and others.”
    The U.S. is also importing more and more beef. Since lean finely textured beef (LFTB) can no longer be produced in the U.S., and there is a need for it here, it has to be imported from other countries. A lot of ground beef is also imported to help supply a growing fast food industry, he said.
    Gayle Smith is a correspondent for the Wyoming Livestock Roundup and can be reached at roundup@wylr.net.