The U.S. Department of Agriculture’s (USDA) December forecasts call for another sharp drop in U.S. domestic meat and poultry consumption in 2012, according to today’s CME Group’s Daily Livestock Report published by Steve Meyer and Len Steiner.

The authors state the plunge doesn’t come as a big surprise, but the cumulative reductions of the past few years are rather shocking in historical context.

U.S. meat and poultry consumption is measured in this article on a boneless equivalent (BE) basis because it best represents the amount actually consumed by people after allowing for pet food usage and wastage from bones and skin.

USDA data suggests that the average American will consume 12.2% less meat and poultry in 2012 than they did in 2007. The high for BE consumption was in 1999 at just over 190 lb. per person. After a 7-lb. reduction in 2001, total consumption stabilized from 2002 through 2007 at nearly 189 lb. The downward trend resumed in 2008, even for chicken, which the authors note had been nearly bullet-proof.

Even pork consumption, which had experienced quite steady performance since the early 1980s, began to fall in 2008, and the downward trend for beef accelerated.

Three major reasons for the change in meat consumption include:

--Growing exports. This factor is especially true for pork, which saw exports jump by more than 40% in 2008 and will set another record in 2011. Larger exports mean lower availability of meat and poultry products and thus lower consumption.

--Higher costs.  The CME Group authors comment: “It is no coincidence that the rapid growth of corn-based ethanol production coincides with the downtrend in U.S. meat and poultry production. The first major diversions of corn to ethanol drove feed costs higher and producers of all species saw floods of red ink. Some reduced output. Others were forced out of business, thus further reducing market supplies. Domestic availability was reduced in order to push prices high enough to cover the new level of costs. It was a classic economic response to a heretofore outside shock.”

--Government policy over 30-40 years.The feds have waged war on meat protein consumption for many years. Add in non-governmental agencies’ efforts to limit meat consumption in the name of the environment, animal rights and social justice, and it is amazing that consumption held up as long as it did.

The projection is for domestic meat and poultry consumption in 2012 to land at 165.5 lb., driven by lower beef and chicken supplies.

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