Pink slime bankruptcy: After the backlash, what's next for beef?
Pink slime bankruptcy: A major beef processor has declared bankruptcy, citing the backlash against 'pink slime.' The economic fallout from pink slime is just beginning.
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Whether beef prices stay high depends on the industry’s ability to adjust, Dr. Calkins says. “If the price goes higher, then [customers] are going to have to be willing and or able to pay for it, or they will trade down for a product that isn’t super lean.”Skip to next paragraph
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Exacerbating the price issue is the fact that beef prices are going up anyway. Because of drought conditions in states where beef cattle are raised, resulting in a lower supply of grain and corn to make feed, the number of cattle is low – as low as it’s been since the 1950s, according to Calkins.
“The challenge is that we are going to need 1.5 million more cattle to replace the meat that we would use for this process, at a time when we’re already seeing higher prices because of drought and feed,” Riley adds.
Calkins thinks that the loss of a domestic meat supply will increase US imports of beef, something that the country already relies on heavily. “There is strong consumer demand for lean ground beef so you have to find a different source of very lean meat for grinding. That means an increase in imports. We bring more cheap beef in than we supply, and export high quality steaks and cuts, because there’s a global demand. Lean beef – we bring it in for a less costly source of raw material.”
But what happens to the pink slime? “The products that used to go into lean finely textured beef, those products can go into manufactured items: in hot dogs, frankfurters, etc,” Calkins says “ I don’t think it will get thrown away, but it will oversupply that part of the channel.”
That could mean lower prices on those products, if briefly. “It will take a while for the industry to sort that out,” he adds.
It’s early yet, but there’s little evidence so far that consumer demand for lean ground beef has been affected by the controversy. “I think everybody’s looking for that, but I haven’t seen anything that suggests it,” Calkins says. “We have the highest quality safest product in the world, so it's no surprise that ourcustomers like it and continue to eat it.”
“It’s not like everyone’s eating hamburgers every day anyway,” he adds.