The industry will have modest long-term growth despite challenges, as beef remains a US staple
Los Angeles, CA (PRWEB) September 05, 2012
Declining consumption of beef due to health concerns has negatively affected the US Beef Cattle Production industry in recent years. This trend has been exacerbated by the recession. Consequently, revenue and profit have declined from 2007 to 2009. However, the skyrocketing prices of red meat and livestock feed, driven by rising oil prices, on top of the depreciating US dollar and growing foreign demand for US beef surged the revenue and profit figures in 2010 and 2011. As a result, IBISWorld expects revenue to grow at an annualized rate of 4.0% in the five years to 2012, according to IBISWorld industry analyst Agiimaa Kruchkin. The US Department of Agriculture (USDA) has reported a corn price hike of 60.0% in 2012, which is detrimental to the industry as corn makes up the majority of beef cattle feed. These striking price changes have been brought on by recent drought conditions and heat, threatening agricultural industries worldwide. Therefore, the 2010 and 2011's robust revenue growth will be replaced with moderate growth of 3.0% in 2012, with revenue totaling an estimated $65.8 billion at year's end.
Despite strong growth in 2010 and 2011, the industry has reached the maturity stage of its life cycle. In 1995, chicken replaced beef as the most-consumed meat in the United States. American diets have shifted toward what consumers perceive as healthier white meats, such as poultry and fish. Red meat's relatively higher prices further discourage consumption of beef products, in turn hurting the demand from meat, beef and poultry processors. As industry input costs hit the roof in 2012 due to the worst drought in a quarter of a century, revenue growth has slowed and the share of profit has declined. Nevertheless, expanding export markets for US beef products, together with beef remaining a staple food in American diets will prevent the industry from recessionary drops.
During the next five years, beef cattle production revenue is forecast to grow modestly. This is because beef consumption in the United States is expected to decline marginally. The exposure of the Beef Cattle Production industry to external volatility, such as weather conditions, market prices and disease outbreak, will remain unchanged; consequently, profit margins may vary accordingly from year to year. Despite the uncertainties, Americans have no beef with continuing to consume red meat, so steaks and hamburgers are here to stay, Kruchkin says.
The Beef Cattle Production industry comprises a mixture of concentrated and widely dispersed activities. Typical of many agricultural pursuits, many small operators characterize US cattle ranching. Older producers operate a large portion of these farms, but competitive pressures are forcing smaller farms to close as the industry moves toward specialist large-scale operations that typically incur lower per head costs through economies of scale. For more information, visit IBISWorld’s Beef Cattle Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes farms and ranches that primarily engage in raising cattle (including cattle for dairy herd replacements), or feeding cattle for fattening to prepare them for consumption. The industry also comprises cattle feedlot operations, which produce high-quality beef.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.