by GTX on Sun Mar 16, 2008 3:03 pm
You'd need a lot of people to pull that off though. The economy, albeit crashing, is a lot more stable than that.
(I apologize now for this, it's huge, it's detailed, and it shows a few interesting points)
On the extreme side, if only 1 person in the US bought beef, and they bought 28 billion pounds of beef (as of 2007), then the beef market would sustain itself.
Since that's not probable, we have to look at the market share as a whole.
Let's say that all 300,000,000 people in the US (CIA July 2007 Estimate) stopped buying beef. That still leaves at least $1.7 Billion in Beef exports to Japan, Mexico, South Korea, and Canada. That alone is about 90% of the exports, which means there's at least a total of $1.8 Billion is exports, roughly.
Now, that IS a substantial drop from the 28 billion pounds consumed per year in the US alone (estimated at $4 a pound to equal $112 Billion). So, telling EVERYONE in the US to stop eating beef would work very well. However, it's practically impossible for that to happen, so, let's work with smaller, easier numbers.
We work with 300 million in the US. Now, not all of those are meat eaters anyways. According to PETA.gov, there are 6.7% of adults (over 18 ) who won't eat most land-based meat and an additional 2.3% who won't eat land meat, fish, and the like (total vegan). So, 9% won't eat beef, basically. We can take 300 million and knock that down to 273 million. Since the census counts 217.8 million people age 18 and over; 35.9 million people age 65 and over; and 53.3 million children ages 5 to 17, we cannot take into consideration how many toddlers, if any, are included in the counts and thus is not reccomended to be fed beef (to tough) at such a young age.
So, we still have 273 million people that can potentially eat beef. For the sake of statistics, we will rule out homeless, which can't afford beef all that well. News sources such as MSNBC or CNN state that homeless people are about 700-900,000 in the US. The National Alliance to End Homelessness estimates the number is much higher, over 3 million. For the sake of arguement, we'll choose 3 million. We're now down to 270 million people who potentially eat beef.
Now, for the sake of error, miscalculation, and minute percentage points, we're going to shave 20 million people off that list. 250 million.
Since the US Department of Agriculture states that the US alone consumes 28 billion pounds of beef per year, that's about 112 pounds per person per year. Sounds a little up there, but it's about right. That's assuming 250 million people eat beef though. So, at the average of $4 per pound of high-quality beef, people can spend up to $448 per year.
However, not all of that 28 billion pounds of beef goes for $4 a pound. The actual retail value of the beef industry in 2007 for 28 billion pounds was $74 billion, which only equates to an average of $2.64 a pound. But that's the total value, and not the total value of cattle and calf production. For 2007, that was only $35.7 Billion, or $1.28 per pound average. Things like burgers you get at fast food resturants are extremely cheap per pound in bulk. TMZ Farms sells 95% lean beef patties (very high quality) for $18.99 for 10lbs, or $1.89 per pound. Buying almost an entire cow knocks that price down to nearly $1.15 per pound.
While a lot of sales are in fact generated by consumers at retail outlets, more of the meat is actually sold to resturants and such at such a lower price because of the bulk rates and the savings on processing.
So, since we figure that there's 28 billion pounds of beef sold in 2007, and there's 250 million people that could be buying this beef at 112 pounds per yer and they're paying, at lowest, $1.28 a pound, then people only spend $143.36 a year on beef. Doesn't sound too bad.
Of course, not everyone buys the cheapest meat, and not everyone buys the most expensive. The USDA did not have any specifics on what type of meat was sold, so we'll break a median. If some of the most expensive meat is at an average of $4 TODAY (most of these stats are based on 2007), and the lowest is $1.28, then we'll go median of $2.64 a pound (hey, works out to the retail value of the industry. Go figure).
So, 112 pounds per year, $2.64 a pound, $295.68 a year.
Ok, so, we got the numbers. Now we can see if a Boycott will work.
You have to cut profits enough that farmers cannot make money off of selling their cattle. Their expensis are land and feed, mostly. The average markup on beef per pound is only 20-40% (depending on market depand. Thank you again USDA for this one!). So, we'll middle it out at 30%. That means if the beef is selling for $2.64, then it cost $1.85 per pound to raise the cattle. In US standards, though, that's the average cost for a "solo farmer" to raise cattle. Industrial-bred cattle, since it's more modernized and more efficient, can knock that down to $1.05 per pound in expense, creating a better profit per pound.
Lastly, with this pricing, we assume that the cattle is all the same meat. The largest portion of the cattle is cheap, high-fat meat, which usually sells for the low $1.28 a pound. Higher quality, which is "rare" on a cattle, can cost the higher $4 per pound. Technically, it's a 60% "bad" meat to a 40% "good" meat on a cow, but for sake of statistics, we're going to go with the average of $2.64 a pound.
So, if it's Industrialized, then there's a $1.05 per pound expense per cow, estimated. But, since private farmers have a $1.85 expense per pound, we average it to be $1.45 expense per pound. Profit is then $1.19 per pound (if sold at the above mentioned $2.64 average). At 28 billion pounds sold, that means the US companies made about $33.32 billion in profit.
Now the boycott will be aimed at hitting their wallets where it hurts most, and that's the profits. To kill the market, we would have to get the profits to at least $0 per pound (company breaks even) or lower.
Since there's $1.19 per pound profit at 28 billion pounds for $33.32 billion in total profit for selling 112 pounds per year to 250 million people, we got some numbers to work on for how many people have to stop eating beef to get the profits down to 0.
In this case, buying a cow, raising it, and selling it will almost guarentee a profit at these markups, BUT, you have to SELL the cow for it to work.
It would be best to graph the expense-to-profit equations, but I can't do that with text, so, I'll try to break it down:
First, we assume that, reguardless of demand, 28 billion pounds of meat is still MADE in the US (not exactly consumed at this point). So, companies are going to spend about $40.6 billion in expenses ($1.45 per pound average for either $1.05 per pound expense for industrialized or $1.85 per pound for non-industrialized).
Let's start dropping people now. Say 5,000,000 people stop eating beef. At 112 pounds per person per year, that's 560 million pounds that aren't going to be sold. Since the expense will stay the same, we just have to calculate potential profit. Profit is about $1.19 per pound, so there's a $666.4 million loss. BUT, they lost out also on the sale average of $2.64 a pound. Total sale loss is then $1.48 Billion. That's enough to hurt smaller, independant cattle farmers, but not industries, as they're still making more than enough off.
If 25 million people stop eating beef at 112 pounds per year at $1.19 profit per pound, that's 2.8 billion pounds not sold for a $3.34 billion profit loss and a $7.3 billion total loss.
25 million people affects profits by $3.34 billion nationwide. ONLY $3.34 BILLION.
Since 25 million people stopped buying beef at 112 pounds each, then 2.8 billion pounds were not sold. 28 Billion pounds were made, only 25.2 billion sold. How much would the industry have to raise the average price of beef to compensate?
Let's break it down:
28 billion units made at a cost of $1.45 per unit (pound) = $40.6 billion
28 billion units sold at $2.64 per unit (pound) = $73.92
28 billion units sold at $1.19 profit per unit (pound) = $33.32 billion
25.2 billion units sold at $2.64 per unit (pound) = $66.5 billion
25.2 billion units sold at $1.19 profit per unit = $29.99 billion
(What doesn't make sense here is the math is exactly $4 billion off. Total Sales minus Expense will equal profit. Sales = $66.5 billion. Expenses = $40.6 billion. Subtract those and you get $25.9 billion profit. However, $2.64 for sales minus $1.45 for expenses equals $1.19 profit, but 25.2 billion units sold at $1.19 equals a $29.9 billion profit. Totally odd)
So, IF the number's are right and the industry loses out on $3.34 billion profit, how much would they have to raise the price average to compensate? About 13 cents. 13 freakin' cents. 13 cents means their profit per pound goes from $1.19 to $1.32, and for 25.2 billion pounds, that's $33.26 billion. So, it's more like 13.5 cents or so. Most people here won't even be phased by 13 cents.
The beef industry's response to a boycott of 25 million people would simply mean prices go up by an average of 13 cents per pound. The other 225 million people buying beef won't even really notice.
Conclusion. All this assumes that all 250 million people buy beef and all buy the same kind of beef. Since cheaper, $1.28 per pound beef is in high demand and consumed more, that means profit margins will actually be lower. Summary? Buy more cheap beef. It'll lower the profit margin. But, companies will compensate by raising prices
You'd either have to get well more than 25 million people to stop buying beef or find a way to cut sales of pounds of beef by well over 2.8 billion pounds.
I don't see that happening anytime soon.
I need a new sig.
