We’re joined by David Anderson, PhD., from Texas A&M University, who explains the motivation behind the research and the practical goal of building more accurate predictions for everyday food costs. From the role of protein substitution and value cuts to the way broader economic signals can indirectly influence grocery choices, this discussion connects the modeling techniques to real shopper behavior—making the forecasting feel both understandable and actionable.
Jeffrey Snyder, Broadcast Retirement Network
We’re going to welcome back to the program Dr. David Anderson. He’s a professor and economist with Texas A&M University.
David, it’s great to see you. Thanks for joining us this morning.
David Anderson, PhD., Texas A&M University
You too. Thanks for having me on. Glad to be with you.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. Last time we chatted, we talked very at a large, high level prices and consumer prices had gone up, but they had ebbed a little bit. So in that vein, I saw a recent report that you and the team at Texas A&M put out about meat prices this summer.
Before we get into the results of the report, give us the behind the scenes of the report in terms of the methodology. Is this something you do every year? How do you do it?
Who supports it, et cetera?
David Anderson, PhD., Texas A&M University
Well, we’re calling this kind of a Texas A&M food price predictor type thing. And we’ve started with this little project to, you know, I think we’re all aware there’s a lot more computing power, statistical methods, mathematical methods. And we’re trying, you know, in the background to try to implement some of these to see if we can better predict food prices.
And so there’s some of these techniques you’ll see called machine learning. Some of them are AI modeling related. Some are a lot more similar to different time series, statistical methods that folks have been using for a long time.
So we’re kind of trying different ones. And it’s almost like I would characterize it like the U.S. Open. It’s an open tournament.
Anybody can play their way in. And so we try these different modeling techniques to see which one performs better. So can we better predict things?
And so we’re trying this with retail food prices. And we’ve got this report where we’ve done this for, I want to say, a couple years now, about twice a year. We’re thinking about trying to do kind of a summertime grilling season type thing, and then more of a holiday time driven one.
So that’s the report that came out that you saw. So that’s a little bit of background.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. Look, I don’t think anyone’s thinking that people are out there counting herds, individual cattle. I think everyone knows that researchers like yourself are using machine learning to help speed up and hopefully get to a point where we can in some way be predictive of prices.
So David, let’s get into the report. I think my takeaway, but I want to hear you, of course, and if the audience does, they don’t want to hear me, is we’ve got less volatility this summer in terms, that’s the top line, in terms of beef prices. You take it away.
David Anderson, PhD., Texas A&M University
Yeah, I think that’s true. That’s kind of what our modeling results would show. You know, last year we saw some big surges in prices, and this year it’s not been quite like that in terms of the meat prices.
If we look at, say, retail beef prices like come out from the CPI report every month, you know, historically those prices tend to peak kind of mid-year and then decline. And that’s a lot of what this modeling effort is showing, is that showing that we expect some decline in prices like we see historically. And historically those are based on kind of seasonal production patterns.
We start producing more beef in the summer than we do in the spring, just from a normal production pattern type thing. And that we get past the surge of grilling season, we get the dog days of summer, because it’s a long time from 4th of July to Labor Day, and it’s hot out there. And so we get some changes in consumer demand patterns, production patterns, and prices tend to ease.
And so I think we see a little more of that ahead rather than some of the volatility of last year.
Jeffrey Snyder, Broadcast Retirement Network
So let me ask you, David, you know, we’ve talked with you and also others about the war in Iran, the impact on oil prices. As we’re talking this morning, there’s also been some attacks in the Red Sea, which I think would impact Saudi Arabian oil. I’m not sure how much that impacts the United States directly, don’t really care.
But I want to ask you, how much of that volatility, what we’re seeing in the Strait of Hormuz, and now in the Red Sea, impacts oil prices? How much of that kind of flows through to the predictor of meat prices, beef prices?
David Anderson, PhD., Texas A&M University
Yeah, so that’s an interesting thing in these models. So we don’t have things like that explicitly in the mathematical model. You know, oftentimes in these kinds of models, the best predictor of the price tomorrow is the price today.
So if you think about that and time lags and things, but I do think that’s important in kind of the context of it, because, you know, since this began, this surge in fuel prices that goes through the entire economy, pressures all of our budgets. And one of the things I think that I’m watching for some hard evidence of that I think we’re beginning to see is consumers changing their spending patterns because of that budget pressure. And that comes from, you know, higher fuel prices, if we just take the simple one.
And so that’s one of the things that I expect to see affecting demand in coming weeks and months, particularly on the beef side, because beef is more expensive than pork and chicken. And so, you know, quite honestly, we’re producing less beef, and that has contributed to higher prices. But if we didn’t have growing beef demand, you know, if it was supply alone, prices would not be this high.
It’s that we’ve had growing consumer demand for beef that’s pushed prices to these record levels. And so, you know, that’s where if we change our buying patterns, we start to see lower prices, which is just simply a market response to high prices and income changes is buying less.
Jeffrey Snyder, Broadcast Retirement Network
So David, you mentioned pork and chicken. Are those areas where consumers are finding, or shoppers, consumers are finding relief right now, knowing that beef prices, look, Americans like beef. Clara Powell said it, where’s the beef, right?
For those that don’t remember, I think she was the Burger King spokesperson back in the 80s.
David Anderson, PhD., Texas A&M University
Wendy’s. I think she was Wendy’s.
Jeffrey Snyder, Broadcast Retirement Network
Oh, was she Wendy’s? Okay, where’s the beef? Anyway, I got that wrong.
Wendy’s you consuming. But it has been a staple for the American diet and also diets around the world. But where are consumer shoppers finding relief today?
David Anderson, PhD., Texas A&M University
Well, I think one is, you know, if we go to the grocery store versus restaurants, you know, these rates of inflation have been much higher over the last couple of years at away food, what we call food away from home, compared to food at home, grocery store shopping and cooking yourself versus the others. So, you know, we see a shift that way. You know, so I think that’s part of it.
We certainly see grocery stores, even on beef doing different, more value based cuts, lower priced cuts. We see specials around holidays and things as we often do. But that relative price difference of beef versus the others has gotten wider over time, meaning beefs become relatively more expensive.
So even though we like it, sometimes we’re forced to maybe do some different things.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. And so when you switch, you know, I’m not a beef aficionado. I don’t know the market like you do.
But when you from a taste perspective, you’re someone who really follows the I’m assuming you consume beef in some way, shape or form. If you switch cuts, is there a difference in taste? So if you go from fillet to a different cut of the animal, will I notice that in terms of texture, taste, et cetera?
David Anderson, PhD., Texas A&M University
You know, there are certainly some are more tender than others. You know, we think of the fillets of, you know, ribeyes, New York strips. One of the things you see a lot, you know, are flat iron steaks.
I think that’s a really great cut. It tends to be leaner. You know, there are some tenderness things, but the beefiness is there.
And so you still get that good, you know, that flavor, those things that you’re looking for, I think. And I’m not a I’m not a meat scientist. I’m just an economist, but I’m an eater.
So that’s that’s sort of you consume.
Jeffrey Snyder, Broadcast Retirement Network
So you have an opinion.
David Anderson, PhD., Texas A&M University
That’s right.
Jeffrey Snyder, Broadcast Retirement Network
You have a more informed opinion than I do. So I’m asking you.
David Anderson, PhD., Texas A&M University
Yeah. And I think I think you still get that beefiness. And but there are different values, different prices on those different cuts.
And so those are ways to to, you know, kind of move around a little bit within that space and still get the beef part. And, you know, one of the things about ground beef, it’s not just a hamburger we’re making. We use it in so many things.
It’s such a versatile item that, you know, brings you all the vitamins and nutrients and things we’re supposed to get.
Jeffrey Snyder, Broadcast Retirement Network
Yeah. David, you know, ours is not a political show, but I want to ask you about the Make America Healthy Again focus of the what is it, the Health and Human Services, I guess, Robert Kennedy’s department, whatever it is, is how does that impact or has that shown an impact? Does it get included in the model?
Because if the government, which is responsible for, you know, I remember the food pyramid. I don’t think they do that anymore, but they’re responsible for kind of the refocus. Does that have an impact at all on the beef market or is it so intangible because it really is hard to change people’s tastes?
David Anderson, PhD., Texas A&M University
You know, I think if we went back to the 1970s, when we first did the very first dietary guidelines, which really, you know, following the nutrition evidence of that time, you know, we really, you know, it was such a big effort to move people away from red meat, away from fat, away from this. Now the problem came in and kind of what we as consumers substituted for that. We didn’t substitute vegetables and whole grains.
We substituted, you know, highly refined stuff and sugar because it tastes good. So, you know, it really led us to, I think, nutritionally, some other problems, kind of unintended consequences. But, you know, that pendulum has swung back, you know, back to, you know, maybe the butter, some of the animal fats, red meat, maybe those are not, maybe those are better than the alternative.
But like in all this, it’s not all a one or the other. It’s sort of moderation, which, you know, we ain’t very good at.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, no, I think it kind of flutters its way. And, you know, I remember David, I don’t know if you ever saw the very Brady movie or the Brady Bunch movie. It was not with Florence Henderson and the rest of the cast, but it was a new cast.
And there was a scene where Carol Brady played by, I can’t remember who it was, came in and she went to the beef market and all the other mothers who were buying beef looked at her because she was like loading up on ground beef. So, you know, that just kind of gives you the, you know, kind of the 70s perspective. Let me, as we close out, let’s talk about what’s next in terms of your research.
So you said this is a summer bit of research. Do you have any intent to maybe do something this fall into the holiday season? What can we expect from Texas A&M?
David Anderson, PhD., Texas A&M University
Yeah, we have been trying to do this sort of a fall leading into, say Thanksgiving, Christmas time, sort of that whole Thanksgiving dinner, you know, the price of the turkey, all the fixings that go with it. Now we’re a little limited in some of the retail price data that we have to model, particularly on turkeys. But, you know, we’re looking at doing some things like that.
I think we often see right before Thanksgiving, what’s the cost, American Farm Bureau Federation every year comes out with, what’s the cost of your Thanksgiving dinner. And so we’re doing some kind of these same modeling type things to see about predicting some of those prices through the holidays. So I think you can look for something like that from us kind of later in the year.
Jeffrey Snyder, Broadcast Retirement Network
Well, we’ll certainly bring you back for that. But in the interim, I just want to point out, you are one of my mother’s favorite guests. So Helen Snyder is a big fan.
I’m a big fan. I think the audience is a big fan because you take what arguably can be very challenging concepts for people like me to understand and make it really easy. Dave Anderson, great to see you as always.
Great research. Thanks for joining us. We look forward to having you back very soon, sir.
David Anderson, PhD., Texas A&M University
Thanks. I look forward to it.