The Cost of Meeting Consumer Demand

The beef industry has experienced a roller coaster ride on emotions and market prices much of which has been driven by animal disease and resulting trade restrictions. Examples include: discovery of BSE in Japan on September 10, 2001, avian influenza blocking poultry exports to Russia in March 2002, discovery of BSE in Canada in May 2003, and finally, discovery of BSE on US soil in December 2003. Underlying all these shocks were basis supply and demand fundamentals. In late 2001 and 2002, while demand was improved from 1998, the supply of market ready cattle and carcass weights were large and growing. In 2003, inventories and carcass weights were low and declining. The price impacts were quite different in the two years. This simple analysis is typical of how we economists and the industry in general talk about “the market”. W