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Paying for that barbecue: beef prices on the rise

August 8, 2014

Supply is down

Soaring meat prices are hitting producers, suppliers and consumers across the country. The price of beef and veal shot up more than 10 percent from June 2013 to June 2014, according to the most recent Consumer Price Index. Pork prices rose by 12 percent.
The largest price increases in three years are driven by one principle component: supply.
Drought has thinned herds of cattle in California and Texas. Disease has struck pork.
“I just buy less of it (beef), but I still buy it,” says Tara Basterson, shopping for roasts at Colville Safeway. “Less of costly cuts like steaks and more kinds that you can stretch into other dishes. Hamburger meat for spaghetti sauce and lasagna and roasts for shredded beef---stuff like that. It’s just my husband and me, and we don’t mind leftovers.”
While demand is high and technology allows more producers to get more meat than ever out of cattle, the domestic beef supply is at a 63-year low, according to beef industry experts and U.S. Department of Agriculture data.
“There aren’t a lot of young people getting into the cattle industry,” says Scott Nielsen, President of the Stevens County Cattlemen’s Association. “It’s a business predominantly run by older guys. Not a lot of young folks are fighting to get into it.”
The USDA reported a slide in overall cattle production to 87.7 million head, the lowest number to start a year since 1951 and the seventh straight year of declines. But the U.S. will still become a net beef importer in 2015 and remains the top overall beef producer globally (25 percent). But areas such as Brazil (20 percent), the European Union (17 percent) and China (12 percent) are nipping at U.S. heels.

Rising prices a break for small cattle operations

“The country of origin’s labeling bill (passed in the Farm Bill in 2002) is, I think, a boon to the local cattlemen,” said Nielsen. “People wanted to know what country their meat was coming from; now they do. Before, for example, a package of ground meat could be made up of cows from Canada and the United States and the manufacturer could put a patriotic looking label on it and the consumer would have no idea. Not any more. I think, even if the price is still a little higher, people will buy American if they are given the chance.”
Rising beef prices are a much needed break for the cattlemen that produce it. The United States Department of Agriculture reported in May that beef and veal prices will rise 5.5-6.5 percent this year, more than any other food group.
“Cattlemen like to see that, because it means we’re starting to get back more of the money we put into our operations,” said Nielsen. “Every operation varies in size and is different, but it costs around an average of $500 to $600 a year to raise one calf. Times that by however many head of cattle you have and you’re looking at some serious expenses.”
In May, ground beef prices jumped 16 percent in a year to a record $3.86 a pound on average, according to statistics supplied by the Bureau of Labor Statistics. And those numbers are expected to keep firm or even rise a bit more.
That can put a pinch on the consumer, who could either cut back on the amount of beef purchased or switch to alternatives such as chicken, which is enjoying a lower price and an increased demand in restaurants. But the high prices did not seem to stop people from enjoying their Fourth of July eating experiences.
“Chicken and fish are a bit different, because rules and regulations allow them to be raised in small areas,” Nielsen explained. “The environmental rules and regulations that govern cattle operations are very strict. Plus you need acreage to herd your cattle on. It’s not humane or environmentally friendly to raise them in lots, but as a result, it costs more to raise them and create that product that consumers want to buy: beef that’s been raised and processed in the USA.”
The USDA saw a spike in loin sales — the meats typically used for grilling — from July 3-10. Demand also went up for ground beef and rib. Demand was down for chuck and round cuts. A week later, those numbers were reversed, with sales increasing for chuck, round and ground beef, while cuts of rib and loin dropped.

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