Where Do We Go from Here?
April 1, 2008
Where Do We Go from Here?
The dinner table was laid out with a grand meal to celebrate the onset of the spring season. Spring, however, seemed a misnomer to Midwesterners this year given the several inches of snow remaining on the ground the day after Easter Sunday.
Spring, after all, is designated as the season of the year between winter and summer when certain plants sprout leaves and flowers. The ground may be covered with snow in my part of the world, but I believe that Mother Nature does not plan to withhold her bounty, which surely stands ready to sprout when the time is right.
Much was discussed at dinner during those mastication interruptions. The weather, of course, but the main topics focused on the recession and the high prices of meat. Our table was graced with beef tenderloin and roast turkey at the center of the plate. It was noted that beef tenderloin would not be served in that house again any time soon. In fact, the hosting family has resorted to more “meatless meals.”
The discussion reminded me of a report in The New York Times in January entitled “Rethinking the Meat-Guzzler.” Among other things, the writer suggested that “a sea change in the consumption of a resource that Americans take for granted may be in store.” That meat, like oil will be revalued in light of cost and price changes, among other factors.
We all know that the sticker prices for meat protein are higher these days. The question is, given the current economic climate, where do we go from here?
Although escalating prices for meat can be blamed in large part on increasing costs, it is also true that increased costs that impact an entire industry invariably find their way into the selling price of the commodity. The degree to which increased selling prices impact growth lies in the relative elasticity of demand. Will my dinner friends forego the tenderloin in favor of chicken or some vegetable delight?
The major culprits dominating the news these days include grain (particularly the demand for corn and soy for feed), meat and energy. It is said that what is a tragedy for some is a blessing for others. That is certainly true concerning the current real estate market in which foreclosures represent a windfall for those prepared to cash in on the available bargains all across the nation. Notably, farm land is fetching record-high prices as redevelopment property and a higher source of income for farmers. One food-industry analyst reportedly tagged this phenomenon as the golden age of agriculture due to a surge in demand for grain to use in biofuel production, to say nothing of the growing imports to other countries, especially in the developing world.
Let us not follow the route of immigration reform, however, meaning an ongoing discussion and agreement on the need to refashion U.S. immigration law with no viable solutions. High operating costs are a major struggle for the meat industry, to be sure. Of course, like the plants that come in spring (whatever its timetable), the beef industry will always exist. How much the industry produces will depend to some degree upon how economically the meat can be brought to market. Ultimately, this will depend upon how well the industry controls costs across the board.
The good news is officials are not simply moaning and groaning. Sustainability comes up frequently in discussions these days. “Our company has a high interest in sustainability and related issues, especially energy savings and anything along these lines,” an executive at a major company said. “This is not just important for the company, but this is increasingly important for the sustainability of our world. Not only that, many of our customers are very interested in what the company does in this area.”
So what is this company doing? For one thing it is spending money on systems not only designed to reduce operating costs but to provide meat products that consumers are willing buy.
Spring is a time of new growth and regeneration in nature. It can also be the season this year that the industry decides where to go from here. I would like to see my friends have beef tenderloin for dinner more than once a year.