The Future of Animal Agriculture in North America - Farm Foundation

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Increased urbanization of the North American population leads
to more available food establishments and more meals and
snacks eaten away from home. The related trend toward more
dual-career families, where both partners live in an urban area
or where one rural partner commutes to work in an urban area,
is likely to continue to boost away-from-home and prepared
food expenditures. Urban households consume more prepared
foods and, due to geographic proximity, are more likely to have
prepared foods delivered to the home. Urban dwellers consume
more processed than fresh foods and less pork and beef (USDA-
ERS, 2005) compared to rural residents.
The second major demographic trend affecting food markets is
that the population of North America and most developed
countries is becoming older—people are living longer, and birth
rates are relatively low. Older consumers eat less total food and
are likely to have different food preferences. As people age, they
lose taste buds and seek foods that have enhanced flavor but
without large amounts of sodium or fat. Obesity affects all ages.
However, changes in metabolism lessen the ability of older
people to engage in strenuous exercise and increase susceptibility
to weight gain. Demand by the older generation for the health
attributes of meat are expected to influence demand for meat
(Lin et al., 2003). With increased attention to choosing a diet
that may reduce heart and stroke disease risks, older consumers
can also be expected to consume more fruits, vegetables and fish
(Blisard et al., 2002).
In the United States, the baby-boomer generation (born
between 1946 and 1964) is the wealthiest in history. As these
consumers age and demand lean protein, they are able to afford
to purchase smaller, but more expensive processed meat cuts
that meet their preferences or desired attributes. These
consumers will be less sensitive to relative price. When eating
out, older adults can also be expected to eat smaller portion
sizes. Older consumers tend to eat away from home less often;
however, an increasing number live and eat in an institutional
setting, and food service in this area is growing.
In the United States and Canada, average household size is
smaller, with fewer traditional families with two parents and
children. There are more young adults living on their own or
with unrelated adults, more single parents with children, and
more older, single-person households. In the United States
today, just over half of households are married-couple
households; one-fourth are single-person households, similar to
Canada. People in smaller households eat more food away from
home, spend more per capita on food and, when eating at
home, prefer more processed and ready-to-eat foods.
The third demographic trend is increasing ethnic diversity.
During the next two decades, population growth in the United
States will be strongly influenced by Hispanics and Asian
immigration. About 10 percent of the U.S. population is
foreign born, nearly double that of 1970. In contrast to the
Consumer Demand Issues
early part of the 20th century, today more than half of those
foreign born come from Latin America. The U.S. population
growth rate is projected by the United Nations to be higher
than that of Mexico by 2025 due to immigration and higher
birth rates among the younger, immigrant populations. In
Canada, immigration has been increasing during the past
several decades. Net immigration is the main contributor to
population growth (Industry Canada, 2004). Most immigrants
to Canada during the last decade have ethic origin from Asia or
the Middle East (Zafiriou et al., 2002, citing Statistics Canada).
The growth of more ethnically diverse populations in the
United States and Canada is expected to lead to changes in
food consumption: increases in fruits, rice, poultry and fish,
and decreases in dairy (Blisard et al., 2002). Ethnic preferences
can also be expected to result in demand for different types
of meat, including lamb and goats. Demand for meat or
animal carcasses may also be related to religious holidays and
celebrations resulting in identifiable demand spikes. Increased
ethnic diversity has already introduced changes in the types of
foods and food preparations consumed throughout the
population at home and away from home. For example, Davis
and Lin (2005a and 2005b) found that U.S. Hispanics ate
more beef and less pork than the national average. These
changes reflect increased consumption levels by new ethnic
groups, as well as increased globalization of food choices by
traditional consumers.
Changing Food Markets
Major changes have occurred in the retail market for food.
There has been increased consolidation and concentration in
retail food markets. Expansion of private brands and changes in
food distribution channels mean retail food stores are larger,
offer more variety and services, and are open more hours. These
stores exert increasing control in the retail market. North
America has seen a dramatic increase in the consolidation and
concentration of food retailing during the last 10 years. In
Canada, the five largest supermarket chains have 90 percent
of supermarket sales (Conference Board of Canada, 2005).
Although the market share of the top five food retailers in
Canada was lower than for many European countries, relative
to the United States, Canada has a more concentrated food
retailing industry (Zafiriou, 2005). Expansion of the Mexican
market has allowed an increase in new stores that provide a
variety of products to consumers. The retail food industry has
been characterized by very low profit margins; however, margins
vary by store department and by combining food sales with
general merchandise—which often has higher profit margins—
to attract the time-scarce consumer.
Wal-Mart is the No. 1 retailer and the No. 1 food retailer in the
United States today. At the same time, other food stores in
North America are increasing sales of general merchandise in an
attempt to capture a greater share of the household shopping