CME: 2012 not a banner year for consumer meat demand

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click image to zoom USDA’s release last week of October trade data completed the information needed to compute U.S. meat consumption (disappearance) for October — and thus the data needed to make some judgments about the state of meat demand in the U.S. Demand indexes for the four major meat/poultry species appear in the chart at right. Observations through 2011 represent annual year-on-year changes. The 2012 observation represents the 12 month period ending in October. We do this for the most recent year so it represents an entire year of data and all of the seasonal variations that may be present.

The conclusion is still that consumer-level meat/poultry demand is a mixed bag for 2012. Beef and turkey demand are still higher than one year ago while pork and chicken are still lower. But none of the yearon- year shifts are large and all of them got closer to zero in October. The two negative numbers became less negative and the two positive number got smaller.

So is this good or bad? Probably depend on whether you are a “glass half full” or “glass half empty” sort of person. The figures certainly do not spell a banner year for meat and poultry demand. But it is obvious that there have been no banner years for at least the three largest species since 2004 when the Atkins diet pushed both beef and pork demand higher while chicken demand saw its then-normal annual gain. It is also obvious that a year of steady demand is better than a number of years since 2004 so things could be worse. When considered in the context of a still-struggling U.S. economy, still-high unemployment rates and very slow growth for personal disposable income, these demand changes are probably about as good as could be expected. We expect the figures for November and December bot be more of the same when the data for those months becomes available in mid-January and mid-February.

What do these indexes tell us? They are constructed to simply tell us how the demand curve for a given species moves relative to one year before. At risk of causing some unwanted flashbacks to the possible horrors of a college economics class, we offer the standard supplydemand diagram to make the point. An observed price change from P1 to P2 would be accompanied by a reduction in the quantity demanded from Q1 to QE if demand is stable. If the observed change in quantity demand, however, is to Q2, demand has obviously increased — Q2 is higher than QE at the new observed price. The index above is the ratio of the actual percentage change in quantity to the expected percentage change in quantity and thus measures the horizontal shift of the demand curve from D to D’.

It is pretty simple stuff but it is amazing how many people — even those who are trained in economics — still mess this up, at least in their terminology. How many times have we read “Corn prices have not risen enough to ration corn demand” or “Higher beef prices will eventually hurt demand” this year? Neither of those statements are correct and they confuse the issue immensely. A change in a product’s price does not change its “demand”. It changes the quantity of the product demanded. Perhaps what we need is a change in terminology. We prefer to say “Higher corn prices will eventually ration corn usage” or “ .. corn consumption” or “ . . . corn purchases” since those phrases suggest the quantity purchased or consumed. Lower quantity is, of course, the reason for higher corn prices in the first place.

So what shifts demand? Consumer tastes and preferences, (can be either positive or negative), prices of competing goods (a positive relationship), prices of complements goods (a negative relationship) and the amount of money consumers have available for spending (a positive relationship for “normal” goods). Note that the diagram above features only price and quantity. Changing any of these other factors will move the demand lines and at lest one of them must have changed if demand has gone from D to D’.

Finally note that the indexes provide no explanation for why demands may have changed. They only indicate that changes have occurred, thus our discussion of the factors that may have affected demands in general. In addition, there could obviously be some interplays among the species. A preferences-driven shift in beef demand could increase beef prices and thus increase demand for other meats. The only way to parse those changes is with a properly specified and estimated econometric model. Ooh — more economics class horrors!

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Seattle wa  |  December, 21, 2012 at 12:05 PM

If you are one of the many people who are giving up meat [and eggs and milk] for the animals, your health, or for the planet, and you would like some free recipes, nutrition info, facts about how animals and the planet are harmed by animal-based diets, and info on what vegans eat - please visit to request a free pack with the aforementioned information!

Seattle wa  |  December, 21, 2012 at 12:06 PM

Hoping this one will hyperlink:

Action for Animals    
Seattle wa  |  December, 21, 2012 at 12:11 PM

Correction to the above article: cows, not "beef" birds, not "poultry" pigs, not "pork" ANIMALS [living, breathing, sentient beings], NOT products!

Midwest  |  January, 14, 2013 at 05:54 PM

Thanks for the info :) Will check it out. Am interested in plant-based lifestyle.


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