For the first time in more than 20 years, U.S. demand for beef is on the rise. While the pork industry should sit up and take notice, it’s not necessarily cause for alarm – yet.

“Last year beef sold about 800 million pounds more product than in 1998, while prices increased 7 cents,” says Dave Weaber, research director for Cattle-Fax, a market analysis and research cooperative.

“A big reason that all meat demand is up is due to general income and wealth,” says Steve Meyer, the National Pork Producers Council’s economics director.

The gains in meat demand reinforce the theory that when peoples’ incomes increase they also improve their diets, which usually means adding more meat. That’s good news since much of the world is expected to be coming out of poverty in the next 20 years. The Council for Agricultural Science and Technology projects global meat demand to increase more than 60 percent by 2020.

While largely income-driven, other factors have played a role in increasing beef demand. The success of high-protein weight-loss programs and new studies showing that meat is part of a healthful, well-balanced diet, also have contributed.

“Positive publicity is coming out saying that you can have both beef and pork in a healthful diet,” says Glenn Grimes, University of Missouri agricultural economist. “Since beef demand started declining in the late 1970s, meat has received mostly negative publicity.”

Another reason for beef’s rebound comes from new consumer-friendly products. The beef industry is getting more involved in the value-added side of the market, offering meal-solutions and microwavable products.

Pork has lead beef in this area, so more competition for the consumer dollar is a negative for pork. Wayne Purcell, agricultural economist at Virginia Tech University, expects beef’s new product development to accelerate over the next five to 10 years.

Consumer convenience is the way the winds are blowing. Some retail markets are even grouping beef cuts not by their carcass origin, but by cooking methods – grilling, roasting, braising.

“The fewer mistakes you allow the consumer to make, the better off you are,” says Weaber. “If consumers select a round steak and think they can throw it on the grill they’ll be disappointed and you could lose a customer.”

Value-adding alliances like Certified Angus Beef and U.S. Premium Beef have only added to the consumer ease by promoting brand recognition.

So what will the gains in beef demand mean to pork? The answer depends largely on which factor played the most significant role in beef’s demand rise.

“It’s a mixed picture. If retail beef prices rise, that should increase pork demand,” says Purcell. “However, beef may be starting to take a bigger share of the marketplace for the further-processed, convenience-driven items.”

Future demand is difficult to predict, but if the U.S. economy stays strong Grimes and Purcell believe beef demand will remain strong.

Retail prices have been running 3 percent to 6 percent higher than last year. Even if you adjust for 2.5 percent inflation, that’s still a moderate increase.

In 1998, the average retail price for all fresh beef was $2.53 per pound. In 1999, the average rose to $2.61, and that trend is expected to continue.

“Retail prices should increase another 10 cents to 12 cents over the next four years,” says Weaber. “Typically, the average price for all fresh beef reaches $2.70 to $2.74 per pound at the low (supply) point in the beef production cycle.”

Cattlemen are liquidating the herd, approaching cycle low cow numbers this year, says Weaber. The herd will probably be rebuilt as prices rise, but beef production is pegged to decrease from 1999 levels by 1.5 billion to 2 billion pounds around 2003.

Traditionally, high beef prices have been positive to pork, because they are one of pork’s demand factors.

“However, with pork’s more inelastic demand you have to ask how important competing meat supplies are,” says Grimes. “Competing meat supplies are important for people who are price shoppers. But with more inelastic demand we believe that more people feel that food is such a small part of their income that price becomes irrelevant.”

While that price independence is ultimately positive news for pork, it puts pressure on the industry to keep pace with consumer demands. Consumers will switch allegiance to whichever product best fills their needs, whether that’s pork or beef. The real winner will be the supplier that provides new products, adds value and offers meal solutions.

For the past five or 10 years, beef has been chasing pork in new product development. But as beef continues to provide more consistent and convenient products, it will battle pork more and more for a share of the consumer dollar.