The National Pork Board’s five-year strategic plan, developed in 2009, and officially adopted one year ago, includes four key metrics regarding consumer pork demand. They are:
1. A 10% increase in real per capita domestic consumer expenditures for pork, using 2009 as a baseline, by 2014.
2. Increase consumer awareness of how to cook pork in a way that results in a juicy, tender and flavorful experience as measured by a 10% improvement in a national market survey between 2009 and 2014.
3. Increase U.S. annual “eatings” per capita of fresh pork, as measured by the NPD Group’s National Eating Trends data, by 10% from 2009 to 2014. For more on NPD Group’s market research, go to: www.npd.com/corpServlet?nextpage=corp_welcome.html.
4. Increase the U.S. share of global pork exports annually between 2009 and 2014 to 37%.
Those are pretty well-crafted goals, I think. They recognize a key barrier (cooking), the fact that people must actually eat pork (eatings) and the issue of how much people are willing to pay (expenditures), as well as a key global metric.
Goal 2 addresses what we have long believed to be a major detriment to consumer’s pork demand – the inability to cook pork properly. The majority of that inability, we still believe, is mama’s or grandma’s admonition that there is “something in there that needs to be killed,” referring, of course, to trichinae. At one time, I argued that the bigger issue was that no one actually wanted to cook. That may still be the case, but it appears that the Food Network, Guy Fieri, Emeril and others may have rekindled an interest in cooking in the past few years, so we may be at a teachable moment. Still, I fear that our products, especially those from the loin, are a challenge to many kitchen warriors, primarily because they are so lean. Pumping and basting and marinating help, but can they overcome the troika of leanness, lack of knowledge and “kill-whatever-it-is” mentality? Maybe, but I will continue to admonish breeders and producers to improve pork muscle quality. Take the initiative instead of forcing your customers to be perfect in their attempts at culinary mastery.
Of particular interest to we economists, and I think most producers, are the first and fourth goals, which deal with key components of live hog demand.
Goal 1 says, in essence, that the industry hopes to increase the domestic retail demand curve by 10% over a five-year period. Real per capita expenditures (RPCE) is another way to state the demand index developed by Professor Glenn Grimes years ago. As can be seen in Figure 1, RPCE mimics the index almost perfectly, but changes the measurement from “percentage of a base year” to simple dollars. It utilizes virtually all of the same data that Grimes used and, I think, makes the metric more understandable.
With data through November, it appears that RPCE for 2010 will be slightly lower than in 2009, making the Pork Board’s 10% growth a four-year goal instead of a five-year goal. While a steady year is in no way acceptable to either producers or their employees at the National Pork Board, I must point out that this number has gotten steadily stronger as the year has progressed.
January’s RPCE for pork was $9.38, 13% lower than in January 2009. November’s figure: $11.51, is 16.5% higher than in November 2009. The momentum for pork demand at year’s end is definitely positive (Figure 2).
Finally, the fourth goal is a good one, but was probably set too low to begin with. That is not an indictment on the Pork Board or its staff. They had just come off 2009, during which pork exports had fallen for the first year since the early 1990s. The string of records had been broken and no one knew for sure whether that meant a change in the long-established trend or possibly just a blip.
As can be seen in Figure 3, the blip has turned out to be 2008, with 2009 and 2010 exports returning to the long-term trend. That also implies a return to the long-term growth of U.S. share of total world exports and that trend should take us beyond 40% market share by 2014.
The trends of all three variables in Figure 3 are also illustrative, since all three are increasing at an increasing rate. So, not only are world trade, U.S. exports and U.S. share growing, they are growing faster each year. That should be no surprise to pork producers as industry leaders and observers have been predicting this kind of growth for many years.
Kudos to the National Pork Board for clear, measurable goals that have value for the industry and its producers. One of them appears, in retrospect, to be a bit low, but that can easily be rectified by setting expectations higher. The other is a challenge to be sure, especially when one year has passed without progress. That setback is, in large part, due to the demand challenges that existed when the plan was initiated. But catching up will be a tall order, The first step comes this spring with the launch of a new checkoff-funded advertising campaign that I am told will be a great one. It must succeed if the lofty goal for domestic demand growth is to be met.
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Steve R. Meyer, Ph.D.
Paragon Economics, Inc.