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Federal Reserve Bank of Dallas FARM and RANCH BULLETIN June 1974 SUBSTITUTES FOR BEEF GAIN CONSUMER ACCEPTANCE Although consumers have traditionally tried to establish and maintain diets that include con siderable amounts of meat, especially beef, it is now becoming apparent that meat substitutes are gaining wider acceptance than at any time in the past. In the main, the shift toward meat sub stitutes has gained impetus from rising meat prices. But, in addition, the technology of fabri cating foods from vegetable proteins has im proved to such an extent that substitutes for meats have received considerable recognition. As a result of heightened consumer interest, beef blends consisting of vegetable proteins (derived mainly from soybeans) mixed with fresh ground beef have shown rapidly growing sales in the past year. mixed beef products is, obviously, the compo sition. Most of the beef blends on the market contain 25 percent of the vegetable protein product by weight and normally have a fat con tent of less than 30 percent, the maximum al lowed in regular hamburger meat. With regard to processing, grocery firms pro cess the blends in the same manner as regular fresh ground beef. The most common procedure is for the beef to be coarsely ground and mixed with the vegetable protein at a central location. The blend is then shipped from the central plant to individual stores, where it is finely ground and packaged for consumers. The beef mixture is given a special name, with all ingredients listed on the label, and is placed in the meat display counter with regular ground beef. Growth in acceptance Consumer reaction Faced with a dampening in the growth of their purchasing power, particularly since early 1973, consumers have sought ways to reduce spending on food. And since the ground beef-vegetable protein blend is generally 10 to 20 cents a pound less than regular ground beef, consumers have naturally been attracted to the substitute. In fact, sales of the blend have been quite success ful. Results of a 30-week study by the Eco nomic Research Service of the U.S. Department of Agriculture beginning in April 1973 showed that since the spring of 1973— when the blend was first marketed alongside regular fresh ground beef— it has claimed more than a fourth of all ground beef sales in grocery chains that sell the product. But despite the fact than more and more con sumers are purchasing the substitutes, many buyers are not too familiar with meat blends. The primary difference between the whole and To ascertain consumer response to meat sub stitutes, the Texas Agricultural Market Research and Development Center at Texas A&M Univer sity studied reactions of blended beef buyers to both the mixture of textured vegetable protein with ground beef and fresh ground beef. The rapid increase in beef prices in 1972 and early 1973 had prompted grocery retailers to offer con sumers the ground beef-vegetable protein mix ture. Surprisingly, the researchers found that blended beef captured the larger share of the ground beef market in stores where it was avail able for purchase. Results of the survey indicated that, generally, blended ground beef seems to be regarded as an excellent substitute for all-meat ground beef and hamburger. In fact, the majority of survey re spondents expressed either a preference for or, at the worst, indifference to blended beef. Over 90 percent of the people that had bought the blend at least twice planned to purchase it again. The researchers did, however, find some nega tive response to the product. For example, some users reported a flavor dilution in hamburger patties made from the blended beef. And slightly more than half of the first-time users of the mixture preferred the color of the precooked reg ular ground beef. But in many categories, con sumers showed a preference for the beef substi tute. The beef blend received a more favorable rating than regular ground beef in terms of tenderness, fatty taste, shrinkage, consistency for making patties, overall food value, and gen eral satisfaction. In summary, the researchers concluded that regarding most basic product characteristics, the blend compares favorably with regular ground beef. The product is normally used in the same way as regular ground beef and appears to be gaining widespread consumer acceptance. Buyers of blended ground beef also showed a very favorable attitude toward meat analogs— meat-like products made from nonmeat foods. More than three-fourths of the consumers con tacted in the survey by Texas A&M’s agricul tural economists indicated their willingness to try a meat-like product made entirely of vege table protein. ing consumer interest and awareness and ulti mately produce far-reaching changes in foods. While the fabrication of foods from vegetable protein is not new, further advances in technol ogy and processing will, no doubt, make meat substitutes more like meat products in terms o f texture, flavor, and nutritional characteristics. WOOL SUPPLY TIGHT; PRICES REMAIN STRONG The high level of prices and tight supplies that characterized wool markets in 1973 are apt to continue, both in the United States and over seas. Raw wool supplies for 1974 are very limited, and prices are expected to remain well above averages for recent years. W O R LD P R O D U C T IO N A N D C O N S U M P T IO N OF RAW W O O L B IL L IO N P O U N D S 3.6 --------------------------------------------------------- PRODUCTIO N > , t V Viable competitor This highly positive response to meat substi tutes suggests that consumers are sensitive to the price level of meat when a similar product is available at a lower price. In the Texas A&M study, more than 80 percent of the blended ground beef buyers indicated that their reason for purchasing the blend was price. Thus, the substitution effect based on the relative price levels of beef and a meat proxy may, in the future, be a far more important consideration for beef producers than the availability of other meats, such as pork and poultry. Substitution of more vegetable protein for animal products probably will generate increas 197 3 p r e l i m i n a r y SOURCE: U S . D e p a r t m e n t of A g ric u ltu re In retrospect, domestic wool markets in 1973 were influenced by such variables as ramifica tions of the energy shortage, transportation prob lems, and a resurgence of consumer demand for textiles, especially natural fibers like wool. These and other factors kept demand for raw wool run ning ahead of supplies, effectively pushing prices to their highest levels in 20 years. While prices soared from the levels of recent years, U.S. production slowed. Raw wool output was off about 8 percent, and high prices caused mill use of raw apparel wool to fall a fifth. Imports were also down in 1973, falling an eye-catching 38 percent. High world wool prices and sharply reduced use of wool by the carpet and rug industry were cited as the chief reasons for the plunge. And with the tight supply situa tion in world wool markets, imports are apt to be even less this year. Meanwhile, on the heels of impressive gains in 1972, U.S. exports fell to only 4 million pounds, clean content, last year. Because of limited supplies, shipments will likely be below that level this year. That would be slightly more than a season before but would lag reported sales by more than a million bales. This large backlog of shipments, combined with an additional 3 million bales al ready sold for delivery next season, gives the United States an export commitment of more than 4 million bales in the 1974-75 trade year. Several factors are contributing significantly to demand for U.S. cotton. For one, competition from foreign markets has eased somewhat. This is largely because foreign production has not kept pace with consumption. While consumption in the 1973-74 season is expected to rise mod erately to more than 51 million bales, production U .S . C O T T O N P R O D U C T I O N . U S E , AND CARRYOVER M IL L IO N B A L E S 20 --------------------------------------------■ £ [3 ] E X P O R T S COTTON EXPORTS RISE AS FOREIGN USE INCREASES Bolstered by the largest February cotton ship ments since the 1960-61 marketing year, U.S. cotton exports in the first seven months of the 1973-74 season totaled 2.8 million running bales. And outstanding sales for the rest of the year indicate U.S. exports would total around 7 mil lion bales— the strongest foreign demand for cotton since 1959-60— were it not for shipping difficulties. Handling and transportation problems, includ ing shortages of cargo space and ships, will limit the number of bales that can be exported by August 1, the end of the current season. Conse quently, some cotton booked this trade year will not be delivered until the 1974-75 season. According to a recent Foreign Agricultural Service report, actual 1973-74 U.S. cotton ex ports, therefore, will likely be 5.7 million bales. "64 '6 6 ’6 8 '7 0 '7 2 1 9 7 4 fig u re s p r o je c te d S O U R C E : U .S . D e p a r t m e n t o f A g r ic u ltu re '7 4 FOREIGN COTTON PRODUCTION AND CONSUMPTION (Million bales) Year beginning August 1 Production 1969 ........................ 1970 ........................ 1971 1972' 19732 19743 Consumption 42.3 41.8 45.9 46.5 46.6 47.6 45.6 48.9 47.0 51.0 48.0-49.5 53.5-54.0 Difference 3.6 4.7 1.0 3.3 4.0 4.0-6.0 1. Preliminary 2. Estimated 3. Forecast SOURCE: U.S. Department of Agriculture is up only slightly to nearly 47 million. World wide, production increases in 1973-74 were mainly in the Soviet Union, the People’s Repub lic of China, and Central America. Cotton pro duction declined sharply in Mexico and Turkey as a result of acreage shifts to food crops and was curtailed in India and Pakistan because of natural disasters. As a result of these demand and production factors, high levels of trade have been reached this season. In fact, total world exports may match the record 20.5 million bales in 1972-73. Of this total, U.S. exports may account for 28 percent, compared with 26 percent last season. VEGETABLE SITUATION MIXED Based on early spring production, an overview of the vegetable situation indicates that 1974 will be a mixed season for vegetables. Acreage of 14 fresh vegetables for spring harvest is 4 percent less than a year earlier, with production pro jected to be off 5 percent. Imports of fresh vege tables are near the record 1973 levels and, with the exception of potatoes, no fresh vegetables are in short supply. In contrast, supplies of processed vegetables are limited, spurring steadily rising prices in the 1973 selling season. Prospects for increased supplies of frozen vege tables have emerged. At least part of the 25percent increase in stocks of frozen vegetables can be attributed to the off-season packing of broccoli, carrots, and spinach in California. But despite the improved supply picture, wholesale prices have shown substantial strength. For the second consecutive season, potato prices are high. In states growing spring pota toes, production is forecast at 22.7 million hun dredweight, more than in 1972 or 1973 but less than in other recent years. Growers intend to in crease summer and fall acreage only 1 percent this year. The cutback in planting intentions is probably due to both high production costs for potatoes and a shift to other equally profitable crops requiring less intensive use of labor and energy. As a result, potato supplies are likely to remain low in the near term. DAIRY OUTLOOK LINKED TO FEED COSTS Milk output will probably remain below levels in 1973 through this summer and then increase late in the year. Prospects are for larger supplies of grain and a further lowering of feed prices to dairy farmers later this year. With improved milk-feed price relationships, milk output per cow this year should resume its long uptrend, the U.S. Department of Agriculture reports. But because of a further decline in milk cow num bers, milk production for all of 1974 will likely be slightly below 1973 output. With farm prices for milk substantially higher than a year ago, cash receipts from dairying posted a sizable gain of 30 percent in the first quarter of this year over the same period last year, despite the decrease in milk marketings. Due to the expected decline in feed prices, the income situation in dairying will likely be im proved from the depressed level of 1973. Prepared by Carl G. Anderson, Jr.
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