ECON 337: Agricultural Marketing

Econ 337, Spring 2013

ECON 337:Agricultural Marketing

Chad HartAssistant [email protected]

Lee SchulzAssistant [email protected]


Today’s Topic

Livestock Marketing Introduction


Livestock and Meat industry

• Per capita consumption• Demand measures• Trends• Industry segments and structure

• Think of implication for supply and demand??????


Livestock & Poultry Markets 2012

Billion Per Cap Price Exp Imp

lbs1 lbs2 $/cwt %3 %3

Broilers 37.038 80.4 86.98 19.7 0.3

Beef 25.912 57.3 122.86 9.5 8.6

Pork 23.250 45.7 83.69 23.2 3.4

Turkeys 5.967 16.0 106.35 13.4 0.4

Lamb 0.156 0.86 276.12 6.8 98.41/ Billion pounds of US production2/ Pounds consumed per person per year3/ As a percent of production


U S RED MEAT & POULTRY CONSUMPTIONPer Capita, Retail Weight, Annual

0

50

100

150

200

1989 1992 1995 1998 2001 2004 2007 2010 2013

Pounds

Turkey

TotalChicken

Pork

Beef

M-C-0103/12/13Livestock Marketing Information Center

Data Source: USDA-NASS, Compiled & Analysis by LMIC


U S EXPENDITURES FOR MEAT & POULTRYPer Capita, By Type of Meat, Annual

0

100

200

300

400

500

600

1987 1990 1993 1996 1999 2002 2005 2008 2011

Nominal Dollars

Turkey

Broiler

Pork

Beef

M-C-16A03/12/13Livestock Marketing Information Center

Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled & Analysis by LMIC


Measuring Consumption• Balance sheet approach

Beginning inventories+ Production+ Imports- Exports- Ending inventory= Disappearance

• Per Capita consumption = Disappearance Population

• A measure of supply rather than demand


BEEF PRICE-QUANTITY RELATIONSHIPAnnual, Retail Weight, Deflated All Fresh Retail Price

88

899091

92939495

9697 98 9900

01 02

03050607

0809

10

11

12

04

2.90

3.10

3.30

3.50

3.70

3.90

4.10

4.30

55 60 65 70 75

Pounds Per Capita

$ Per Pound

C-P-65A02/08/13Livestock Marketing Information Center

Data Source: Bureau of Economic Analysis & USDA-ERS, Compiled & Analysis by LMIC

Year-Over-Year increases in 9 of last 10 quarters (since Q3 of 2010):Q4:2012 = +3.4% / 2012 = +3.5%

Actual Quantity & Price Changes:1990: 67.8 lbs (per capita consumption); $2.00 (real All fresh price)2012: 57.3 lbs (per capita consumption); $2.04 (real All fresh price)

2012: Per Capita Consumption = -0.002% (Year-over-Year) Real All Fresh Prices = +3.5% IF Real All Fresh Prices +0% = 0% Demand Change

Year-Over-Year increases in 6 of last 9 quarters (since Q4 of 2010):Q4:2012 = +2.59% / 2012 = -0.58%

Actual Quantity & Price Changes:1990: 49.7 lbs (per capita consumption); $1.72 (real price)2012: 45.7 lbs (per capita consumption); $1.51 (real price)

2012: Per Capita Consumption = +0.42% (Year-over-Year) Real Prices = -1.08% IF Real Prices -0.50% = 0% Demand Change











Econ 337, Spring 2013Livestock Marketing Information Center

Data Source: USDA/NASS

SOWS FARROWEDQuarterly

2.25

2.50

2.75

3.00

3.25

3.50

1987 1990 1993 1996 1999 2002 2005 2008 2011

Mil. Head

PIGS PER LITTERQuarterly

7.2

7.7

8.2

8.7

9.2

9.7

10.2

10.7

1987 1990 1993 1996 1999 2002 2005 2008 2011

Head

LITTERS PER BREEDING ANIMALAnnualized, Quarterly

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

1987 1990 1993 1996 1999 2002 2005 2008 2011

Litters

PIG CROPQuarterly

18

20

22

24

26

28

30

32

1987 1990 1993 1996 1999 2002 2005 2008 2011

Mil. Head


US Beef Cowherd, Farms and Herd Size, 2007

0%

10%

20%

30%

40%

50%

1-49 50-99 100-499 500+

58516

9465

73174

5.5897

Number of herds in1000sAverage cows per herd


US Feedlot Marketings, 2007

0%

10%

20%

30%

40%

50%

<1,000 1,000-3,999 4000-15,999 16,000-31,999 32,000+

85,00044

1,3731,584

5258,589

13333,797

12987,419Number of feedlots

Average marketings per year

One time capacity


Feedlots: Less than 1,000 Head Capacity Feedlots: Over 1,000 Head Capacity

Number of Operations

Marketings (thousand

head)

Annual Change in Marketings

% of Total Marketings

Number of Operations

Marketings (thousand

head)



2006 86,000 3,640 13.94% 2,165 22,480 86.06%2007 85,000 3,700 1.65% 14.14% 2,160 22,460 -0.09% 85.86%2008 80,000 4,050 9.46% 15.31% 2,170 22,400 -0.27% 84.69%2009 80,000 3,910 -3.46% 15.27% 2,170 21,690 -3.17% 84.73%2010 75,000 4,030 3.07% 15.43% 2,140 22,080 1.80% 84.57%2011 75,000 3,170 -21.34% 12.31% 2,120 22,577 2.25% 87.69%2012 73,000 2,854 -9.97% 11.44% 2,100 22,095 -2.13% 88.56%

Feedlots: Less than 1,000 Head Capacity Feedlots: Over 1,000 Head Capacity

Marketings (thousand head)



Marketings (thousand head)



2006 915 52.50% 828 47.50%2007 1,025 12.02% 55.11% 835 0.85% 44.89%2008 1,050 2.44% 54.83% 865 3.59% 45.17%2009 1,013 -3.52% 53.40% 884 2.20% 46.60%2010 1,047 3.36% 51.75% 976 10.41% 48.25%2011 1,050 0.29% 50.90% 1,013 3.79% 49.10%2012 952 -9.33% 49.58% 968 -4.44% 50.42%

United States

Iowa

Source: USDA-NASS, Cattle on Feed


Estimated Beef Packer Capacity

Rank Company Head/Day Share

1 Cargill 29,000 21.2%

2 Tyson Foods 28,700 21.0%

3 JBS Swift 28,600 20.9%

4 National Beef Packing 14,000 10.2%

5 American Foods Group 7,000 4.7%

6 Greater Omaha Packing 2,900 2.0%

7 Nebraska Beef 2,600 1.9%

8-13 10,100 7.4%

Smaller 14,605 10.7%

Total 136,855

Source: CME DLR


Inventory Operations Inventory Hogs/Operation

<500 48,760 2,727,080 56

500-999 2,840 2,181,664 768

1000-1999 1,860 3,272,496 1,759

2000-4999 1,600 6,135,930 3,835

5000-9999 670 5,454,160 8,141

10000-19999 340 5,454,160 16,042

20000-49999 150 6,135,930 40,906

50000+ 120 36,815,580 306,797

US Hog Operations and Inventory by Size Based on Ownership of Hogs, 2007


Commercial Hog Slaughter Companies

Company 2002 2003 2004 2005 2006 2007 2008

Smithfield 19.9 22.5 26.1 25.1 26.5 28.4 28.3

Tyson 18.0 18.0 18.5 17.9 17.4 17.6 17.6

JBS USA 10.7 11.5 10.8 10.8 10.9 11.1 10.8

Cargill 8.5 9.2 8.9 9.0 8.7 8.5 8.5

Hormel 7.0 6.9 7.0 7.0 8.4 8.7 8.2

TOP 5 64.1 68.1 71.3 69.8 71.9 74.3 73.4


Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Swine or pork market formula 44.5 41.4 41.4 39.9 41.8 38.3 37.1 41.2 38.7 38.4 40.9

Other market formula 11.8 5.7 7.2 10.3 8.8 8.5 11.0 7.9 10.7 9.8 7.7

Other purchase arrangement 8.6 19.2 20.6 15.4 16.6 15.2 13.4 11.6 13.1 15.2 15.4

Packer-sold 2.1 2.2 2.1 2.4 2.6 6.7 6.1 5.6 5.6 4.7 4.3

Packer-owned 16.4 18.1 17.1 21.4 20 22.7 23.1 25.7 26.7 27.7 28.0

Negotiated - spot 16.7 13.5 11.6 10.6 10.2 8.6 9.2 8.1 5.2 4.2 3.6

Percent of U.S. Hogs Sold Through Various Pricing Arrangements, 2002-2012


Class web site:http://www.econ.iastate.edu/~chart/Classes/econ337/

Spring2013/index.htm

ECON 337: Agricultural Marketing

Documents