US Beef Herd Reduction and Its Implications
The United States is experiencing a significant reduction in its beef herd, expected to continue for the next 18 months, according to Meat Industry Association Chief Executive Sirma Karapeeva.
This decline, primarily driven by drought affecting about a third of the lower 48 states, is leading US farmers to reduce their herds. Karapeeva, who recently returned from the US, notes that this situation presents new opportunities for New Zealand beef exporters.
Expected Changes in US Beef Production
By January, the US beef herd is anticipated to be 2.7% smaller than the previous year, resulting in lower beef production compared to 2023. However, this decrease is being balanced by increased pork and chicken production.
Projections suggest that by 2025, the supply of red meat and poultry in the US will return to levels similar to those in 2019. The rebuilding of the US beef herd is expected to commence around 2025 and will take several years to complete.
Consumer Trends and Demand
Karapeeva observed a soft demand for high-value beef cuts typically served in white-tablecloth restaurants, while demand from fast-food outlets remains steady. Despite consumer spending being above pre-COVID levels, consumer confidence is low. She noted a trend of consumers seeking value at retail, often purchasing on promotion and switching to more discount retail chains.
Overall, beef demand remains reasonably steady, but total meat consumption per capita in the US is forecast to decrease slightly by 2025.
Opportunities for New Zealand Exporters
New Zealand’s export quota to the US has not been filled for several years, presenting a significant opportunity for exporters to boost exports. Competition from South American beef producers is moderated by a quota system that operates on a first-come, first-served basis, with Brazil often dominating this quota.
Diversifying Markets and Consumer Preferences
Karapeeva highlighted the evolving US market, where lamb is struggling to gain traction but is finding new opportunities in diverse ethnic restaurants. She suggests that targeting chefs and consumers who are moving away from Eurocentric cooking styles could be beneficial.
Recognizing the US as a market with diverse demands and requirements is crucial for New Zealand exporters.
Inflation and Consumer Choices
Inflation has led to a 33% average increase in red meat prices in the US, causing consumers to trade down to cheaper cuts and alternative meats like chicken and pork. Karapeeva emphasises the need for New Zealand red meat exporters to work harder to maintain their presence on US shopping lists, warning that complacency could lead to missed opportunities.
