Agricultural Economics Department

 

Date of this Version

July 1996

Comments

Working paper 1996.

Abstract

Since 1950, the composition of the U.S. meat diet has shifted markedly from red meats to poultry. For example, from 1970 to 1984, on a percapita basis, beef consumption has declined by 6.4 percent, while chicken and turkey consumptions have increased by 37.9, and 42.5 percent respectively (U.S. Department of Agriculture, 1985). The numerous studies of this phenomenon from the demand side (Chavas, 1983; Braschler, 1983; Nyankori and Miller, 1982; Moschini and Meilke, 1984; Wohlgenant, 1985, Thurman, 1987; Chalfant and Alston, 1988) have failed to achieve a consensus as to whether a change in taste contributed to this shift. One reason for the lack of consensus is that the very large price and quantity changes make it difficult to establish whether consumers are on a new indifference map. But there have been no comparable studies of the nature and causes of the technological change that has made these large consumption and price changes possible. A decrease in the relative price of poultry with respect to red meat is in any case a major explanation of recent shifts in meat consumption patterns. The main reason for such a decrease appears to be a higher rate of technical progress in the poultry industry than in the red meat industry. Substantial productivity gains in both the production and marketing of poultry over the last two decades appears to have been translated into lower retail prices for poultry. Although some productivity gains have taken place in the red meat industry, they have not matched the cost reductions in the poultry industry (Chavas, 1987). Thus, a consumption shift from beef to poultry could possibly be interpreted as a response to changing relative prices, the structural change having occurred in the meat industry. This would imply that, if the beef industry desires to maintain or expand its market, it should seek a decrease in the production and marketing costs of beef.