Producers: Diet trends aggravate U.S. meat glut

Tuesday, May 16, 2006

From staff and wire reports

Too much of a good thing isn't good for anyone. That goes for protein, too. After years of people stuffing themselves with chicken, pork and beef while they were following low-carb diets like Atkins, the meat industry is looking at a glut as the diet trend turns toward a more balanced approach.

Benchmark wholesale prices for beef and pork are down more than 8 percent from a year ago and 20 percent for chicken, according to the Livestock Marketing Information Center.

"There is just an overabundance of protein on the market," the center's Jim Robb said.

Retail prices for meats are forecast to be flat to 1 percent lower this year compared to a 2 percent to 3 percent increase for all foods, according to the U.S. Department of Agriculture.

Agricultural economists said the oversupply and subsequent dip in prices is part of the normal business cycle. Good profits in 2004 and 2005 tempted farmers and agribusiness companies to raise production faster than the growth in demand.

Changing diets

But changing diets have helped pressure the market, as have export problems for beef and chicken.

Consumers are increasingly shunning high-protein diets such as Atkins and South Beach, which have been lauded for inducing rapid weight loss but criticized for raising the intake of fats and cholesterol.

"The popularity of high-protein, low-carb diets gave an extra kick to demand for meats," said Ronald Plain, professor of agricultural economics at the University of Missouri in Columbia.

"Now we're in a situation in 2006 where we see an increase in meat production and that diet popularity is going away, so the Atkins diet turned out to be like other diets, a passing fad," Plain said.

DeWayne Gray, a rancher who has 1,450 head of cattle southwest of Springfield, said he has been expecting prices to come down as the normal business cycle holds sway.

"We reached the apex of the cattle cycle around the first of the year," Gray said.

Stan Murray has a small cattle farm in northern Bollinger County. He agreed that the local cattle market has softened somewhat.

"As far as it having anything to do with the diets, that's harder to gauge," he said. "But there is a pretty good supply out there, so it will soften. But it's still a pretty good market. ... We'll just have to eat our way out of the glut."

But Roger Eakins, a regional livestock specialist with the University of Missouri Extension Office in Jackson, said connecting the diets with the meat glut is a "bunch of crap."

Eakins said the prices have more to do with supply and demand and the cyclical nature of the meat industry. The high prices for beef, he said, caused farmers to increase their cattle head counts.

"There is a meat glut, there's a little meat out there, but it's not because of demand," he said. "The market will sort it out. It's really more a seasonal thing."

Still, big food processors are feeling the effect of what the industry calls an "oversupply of protein."

The nation's largest meat processor, Springdale, Ark.-based Tyson Foods Inc., blamed a second quarter loss in part on the protein glut. No. 2 processor Pilgrim's Pride Corp., based in Pittsburg, Texas, also posted a loss for similar reasons; and Smithfield Foods Inc., the world's largest pork processor based in Smithfield, Va., said it expects its fiscal fourth-quarter earnings to fall short due to plummeting hog prices.

Overseas health scares are also dampening exports, putting more meat on the home market.

Business editor Scott Moyers contributed to this report.

Respond to this story

Posting a comment requires free registration: