Where's the Beef: U.S. beef consumption in decline

(Reuters) - For the past decade, cattle ranchers and meat packers watched with despair as America's beef consumption steadily declined, ceding ground to leaner meats as well as vegetarian trends among the health-conscious.

Most recently, high unemployment in the world's wealthiest nation had cash-strapped Americans avoiding restaurants where beef is a common entree and had them switching to lower cost non-meat dishes at home.

USDA estimates 2011 U.S. per capita beef consumption at 57.4 lbs, down 13 percent from 10 years ago and down about 25 percent from 1980. In 2012, USDA predicts, Americans will eat 54.1 lbs of beef on average.

The beef industry is coping with these changes by developing new cuts that will satisfy appetites for steaks but at a lower cost. Also, it has benefited from a huge recovery in beef exports particularly to Asia and Russia, where consumers are upgrading their diets and concerns about mad cow disease fade.

Beef companies, like Tyson Foods, JBS, Cargill, and National Beef, are carving up beef carcasses in interesting new ways. Carcass portions that were once meant for ground meat or roasts, such as rounds and chucks, are now sliced into cheaper cuts of steaks for the American palate.

These new less expensive steak cuts became popular during the recession and still are, said Chris Calkins, professor of animal science at the University of Nebraska.

At the height of the recession the beef industry saw a decline in high-end steak consumption, such as tenderloin and ribeye, in fine dining restaurants.

This created an opportunity for beef companies and retailers to promote those higher-end cuts in supermarkets but in smaller portions, Trevor Amen, director of market intelligence at the National Cattleman's Beef Association.

"We have been successful in maintaining sales and item movement by producing smaller and thinner packages of our more expensive beef items," said Karen May, external communications manager for Supervalu, a U.S.-based retail grocery chain.

As tough economic times and higher-priced food bite into Americans grocery budgets consumers look for ways to cut costs. Meat industry experts say Americans still crave the "steak-eating experience" but want it with a cheaper price.

An even more popular cost-cutting tactic has been to purchase ground beef, often times in bulk, instead of steak, creating what has become known as the "Hamburger Economy," said Erin Borror, an economist with the U.S. Meat Export Federation.

Ground beef sales in dollar terms rose 7 percent in the last 52 weeks while steak cuts increased 1.3 percent, according National Cattleman's Beef Association data.

In an effort to improve domestic beef sales meat giant Tyson Foods Inc ran a 2011 summer promotion featuring its premium ground beef for burgers during the height of grilling season that was picked up by 1,600 retail stores, said Gary Mickelson, a Tyson spokesman.

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Graph-U.S. beef production seen declining in 2012: link.reuters.com/car84s

Graph-U.S. beef and veal exports on track to set 2011 record: link.reuters.com/bar84s

Graph-Top global beef exporters: link.reuters.com/wyq84s

Graph-U.S. beef prices on the rise: link.reuters.com/tyv84s

Graph-U.S. per capita beef consumption: link.reuters.com/jun35s

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These efforts, plus strong exports and a decline in imported beef have helped push the average retail beef price to a record $5 per lb in November, U.S. government data showed.

EXPORTS ARE SURGING

While Americans are eating less beef, the appetite overseas is growing, particularly in places like Japan, South Korea and Russia, which has helped meat company profits. In the first 10 months of this year exports are up 25 percent from a year earlier, putting 2011's exports on track to be the largest ever.

The more expensive cuts, like ribeye and T-bone steaks, that for years were eaten here, are increasingly finding their way to affluent overseas customers who are expanding their presence in the world of fine dining.

"Americans are cutting back. We've consumed ourselves to a plateau, but the growth and demand is there for exports," said Chandler Keys, spokesman for the U.S. subsidiary of Brazil's JBS, the world's largest meat producer.

"After the BSE we (the meat industry) realized we can't pile back into the domestic market," he said, alluding to Bovine Spongiform Encephalopathy, the scientific name for mad cow disease that was discovered in the United States for the first time in December 2003.

The industry was laid flat by that mad cow outbreak as overseas consumers initially shunned U.S. beef for fear they would contract the human form of the disease, with exports plunging in the aftermath.

Since then export markets have slowly reopened.

Japan, the top export market for U.S. beef before the mad cow case, has gradually resumed beef purchases since 2003 and is now the third largest importer. Plus, it is considering fully reopening its door to the meat, a move that could add $1 billion to the value of U.S. beef exports, the U.S. Meat Export Federation said.

With rising retail costs here and efforts to tackle chronic but preventable ailments such as obesity and diabetes, meat companies are increasingly developing and catering meat products to the tastes of foreign consumers.

"The key thing is the people we're selling our beef to are not in economic trouble. Asian countries make up a good portion of our buyers and Asia is still on a very strong economic growth path," said Rich Nelson, director of research at Allendale Inc. in McHenry, Illinois. (Reporting by Meredith Davis; Editing by Bob Burgdorfer)