The Future of Animal Agriculture in North America - Farm Foundation

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worldwide. The World Bank predicts that during the period
2000 to 2015, per-capita income growth in most areas of the
world will continue to grow, with the exception of East Asia
(Bruinsma, 2003). Higher income allows consumers to spend
more on food and have greater discretion in spending,
especially on such preferred foods as animal protein sources
and specialized food products.
One measure of income is Gross Domestic Product (GDP) per
capita. The United States has the highest GDP per capita
among developed nations, and Canada is comparable to
other developed countries (Figure 2). However, Mexico has
approximately one-sixth that of the United States. Differences
in income, prices and underlying preferences contribute in large
part to differences in diets across North America and to changes
in diet over time. Despite rising prices for food, income has
risen faster, and the percent of income spent on food has fallen.
On average, U.S. consumers spend only about 10 percent of
disposable personal income on food (USDA-ERS, 2003). In
Canada, the food share of personal disposable income is
approximately 14 percent (Statistics Canada, 2003). The share
of income spent on food in Canada is larger than in the United
States, as per-capita income in Canada is lower. For both
countries, the share of income spent on food has fallen over
time as per-capita income has increased.
For Mexico, lower per-capita income on average means
that a higher share of the average consumer’s budget goes to
necessities, including food. Today, Mexican consumers spend an
average 26.6 percent of total expenditures on food (USDA-
ERS, 2005b). This compares with 38.8 percent in 1968, and
41.3 percent in 1984. With income growth, the additional
income spent on food went first to more diversified products in
the diet. Then the percentage of income spent on food declined.
The low share of income spent on food in Canada and the
United States means that most consumers have some discretion
in how they spend money, and, in aggregate, choose to spend
a lower share of income on food or choose higher quality
products and meat cuts. For example, in Canada, per-capita
beef consumption has not gone up significantly, but there is a
change in demand for quality beef and value-added products.
Consumers are buying more quality beef (steaks) and more
ready-to-eat, prepackaged meats, such as shish kebabs or filet
mignon. In the United States, consumers rank quality as the
most important attribute in purchasing meat products (Food
Marketing Institute, 2005).
While there are similarities in the consumption demand for
protein related to income, demand for specific meat products
varies in each country. Total consumption of meat in the
United States and Canada has remained relatively stable during
the last several decades at nearly 200 pounds per capita, with
the largest share of meat coming from red meat sources (Figures
3 and 4). In both countries, poultry consumption has increased
Consumer Demand Issues
in share. In Mexico, average consumption of meat in 2004 was
about 146 pounds per capita, nearly double the level of meat
consumption in 1990 (Figure 5). Of the total, about half was
from beef or pork—nearly 40 pounds of beef and 35 pounds of
pork—and more than one-third was from poultry, 53 pounds
per capita. Mexican consumption of variety meats is much
higher than in the other North American countries.
Within certain animal species, the preferences for the
appearance, marbling and size of meat cuts may vary
significantly. Fat color is an important determinant of
purchasing preferences for Mexican consumers, as both
grass- and grain-finishing techniques are available and may
result in different fat and marbling characteristics. A much
higher percentage of the beef in United States and Canada is
grain fed. Another difference of consumers across North
America is the demand for small-serving muscle cuts—a
common preference in industrialized, urban regions. In
contrast, demand for roasts, legs and quarters, especially of
sheep and lamb, is strong by consumers with more time and
less income available to purchase more processed muscle cuts.
Immigrants from Asia, Africa and parts of Latin America have
strong preferences for goat meat and milk. In the United States,
goat meat and animal sales have risen sharply during the last
several decades. The number of goats slaughtered at U.S.
federally inspected plants has tripled since 1990, and many
more goats are sold live or freshly processed through facilities
that are not federally inspected.
In high-income countries, consumers do not change their shopping
habits when income and prices are relatively stable. Studies
indicate that a large change in income would be required for
U.S. consumers to change how much meat they buy. Changes
in income bring somewhat greater response in Canada and in
Mexico. Of course, in any of the three countries, significant
price or income changes may change meat-shopping behavior.
Increases in income are also associated with changes in the
composition of foods consumed. In general, higher income
consumers have diets that are more varied. With increases in
income, the primary source of calories changes from root crops,
cereals and other staples to animal products. Protein sources
shift from cereals and pulses to animal products. Data across a
wide range of countries show that the share of protein from
animal sources increases as incomes (GDP) rise, but the rate
of increase then slows. Increasing demand for protein sources
implies that there will be an increase in the total demand for
protein, as well as a redistribution of demand across the various
meats and fish, which act as substitutes for each other. While
demand for fish is not specifically investigated here, as income
increases, consumers may prefer fish as part of the overall
increase in protein consumption. Higher income consumers
also demand other food attributes, such as variety, added food
preparation and convenience.