Beef up for higher pricesThree percent decline in production expected in 2013.
By: Betsy Simon , Forum News Service
Beefing up could mean meat eaters will have to open up their wallets a little wider this summer, as the price of beef and other meats continue to climb.
“Beef prices have been high this year at all levels,” says William Hahn, Animal Products and Cost of Production Branch Markets and Trade Economics Division of the U.S. Department of Agriculture-Economics Research Service. “April had the highest five-area 35-65 percent Choice Direct steer we have ever seen.”
According to USDA, supply and demand is what controls the price of beef cattle, but prices will fluctuate because it takes time to replenish the cattle supplies.
Other food products, like pork, have seen rising prices too, Hahn says.
He says pork prices peaked in the fall of 2011, while beef prices continue an uphill climb.
Paul Huffman, owner and manager of Lemmon (S.D.) Livestock Inc., says the cattle market has been good in the past year, but it has hit a slump in the last month.
“It’s a seasonal market but the drought might have something to do with it too,” he says. “When it comes to prices in the grocery store, the producer gets the smallest cut of the pie.”
The National Farmers Union found that when a consumer purchases a 1-pound sirloin steak for $8.49, the farmers share is only about $2.
There are hundreds of factors that affect prices because the beef market is global that is impacted by supply and demand, says Timothy Petry, a North Dakota State University livestock marketing economist.
“For example, the terrible tsunami and subsequent effects in Japan a couple years ago greatly impacted Japan’s beef and other meat supply infrastructure,” he says. “So, Japan had to import more beef and other meat from countries like the U.S., which temporarily caused beef prices to increase.
“On the other hand, abnormally severe winter storms on the U.S. East Coast in 2012 and 2013 prevented consumers from going to restaurants and supermarkets to purchase beef and other meats. Therefore, beef backed up in supply chains and temporarily caused lower beef prices.”
Weather also has a major role to play in the supply of beef, Petry says.
“Drought in much of the U.S. cattle-producing region the last couple years caused higher than normal beef cow slaughter, which temporarily increased beef supplies,” he says. “However, fewer cows will lead to decreased beef production in the next few years.”
He says USDA is projecting a 3 percent decline in U.S. beef production in 2013, followed by a 4 percent decline in 2014.
“Beef prices in the aggregate are record high at the wholesale and retail level in 2013, however different cuts of beef have different seasonal price patterns, so some beef cuts are lower than a few weeks or months ago and some are higher,” Petry says. “Beef in the aggregate is the second-highest priced meat protein source, behind lamb and higher than pork, chicken and turkey.”
He predicts that generally lower supplies of beef and hopefully improving domestic and worldwide demand will cause prices to vary around current levels for quite some time.
“Overall, macroeconomic factors generally point to gradually increasing prices for all commodities, including beef and other foods,” Petry says.
Even with price increase, it’s as hard to predict the consumer’s actions as it is to break their habits to grilling beef in the summertime, said Austen Germolus, meat laboratory manager and animal sciences professor at NDSU.
Germolus will take part in the BBQ Boot Camp at the Harold Schafer Heritage Center on Aug. 15 in Medora.
“I am not an economist, but I really don’t think there will be a drop in consumer meat purchases,” he says. “In my opinion, there might be a shift in the cuts that consumers purchase, but that doesn’t mean beef is not an option because there are many great value-added cuts that are perfect for the grill, economical and tasty, like flat iron steaks and chuck eye steaks, for example. I still think there will be good demand for all products. It is hard to break tradition.”