A MAJOR shift appears to be taking place across the global beef industry as consumers everywhere rein in their spending patterns in the wake of the current global financial crisis.
The world’s largest burger chain, McDonald’s, recently announced plans to open 1,000 new restaurants worldwide in 2009 as consumers seek cheaper eating out options.
In Australia, the world’s largest beef producer, the Australian Agricultural Company recently claimed that over the short to medium term, the likely trend in consumer sentiment would be towards lower-cost beef products.
In response, it plans to adapt its flexible pathway system to be weighted more heavily towards less costly grassfed beef production.
These examples illustrate responses to the broader shifts being seen among cost-conscious beef consumers everywhere, which will deliver new medium-term supply challenges for the Australian industry.
These consumer trends include:
• Selection of lower-priced cuts of meat over premium cuts.
• Reduction in business among high-end and family restaurants, and corresponding growth in hamburger and other cheaper food service options based on manufacturing meat.
• Replacement of dining out with less expensive at-home entertaining.
• In markets like Korea, some importers are modifying their order specifications, requesting beef from animals grainfed for shorter periods, or moving from grainfed to grassfed.
Meat and Livestock Australia chairman Don Heatley says the defensive response by consumers to the current economic climate will inevitably impact on the Australian industry.
“Whatever decisions are made at the production level this year will be as a direct result of consumer signals,” he says.
“We are seeing much the same trend in all markets – the knock-on effect of the decline in disposable income is flowing back into red meat demand.
"Consumers don’t want to stop eating red meat outright.
"But it is the form it is presented in that is changing.
"And greater demand for manufacturing meat in many markets is an example of that.”
Mr Heatley says it's fortunate that a good season in many key beef production areas of Australia this year means Australia’s capacity to produce larger volumes of quality grassfed beef at lower cost has improved.
“There is a stronger push evident this year to produce not only more grinding beef, but bigger quantities of quality grassfed table meat, particularly in more northern regions of the country and those areas further south that have had a decent season,” he says.
But while the lotfeeding industry has experienced tough times over the past year, it is certainly not down and out in the current market environment.
“Regardless of global economic conditions, there will always be those consumers with the capacity and willingness to spend money on higher quality product,” Mr Heatley says.
While grassfed table beef often still carries a reputation for being more inconsistent in terms of eating quality than does the grainfed product, he says the increasing uptake of Meat Standards Australia (MSA) tenderness guarantee systems will help underpin much of that abundant grassfed product likely to be generated this year.
“As MSA has become increasingly accepted and expanded by the larger processors, it has provided more opportunities for grassfed products underpinned by MSA and pulled through by brand programs to gain greater recognition.” he says.
While MSA is on track to grade more than 800,000 head of cattle across Australia for the year ending June 30, the target for 2009-10 is one million head.
And an increasingly large proportion of those animals are likely to be grassfed.
Speaking after an MSA producer forum in Roma, Qld, on Friday, Teys Brothers livestock general manager Geoff Teys said while feedlot numbers in the near-term look likely to remain very low, MSA grading of grassfed cattle is starting to take off.
* Extract from the National Beef Review, included in the April 9 editions of Rural Press's weekly agricultural newspapers, The Land, Queensland Country Life, Stock & Land, Stock Journal, Farm Weekly and the North Queensland Register.
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