Thu August 15, 2013
You Are Paying More For Beef Than Ever Before
The price Americans pay for beef hit a record high last month, according to a federal report quietly released Thursday morning. The U.S. Department of Agriculture's monthly "beef values and price spreads" report shows a pound of beef at the grocery store averaged $5.36 across the country. That's an increase of more than a dollar over the past five years.
So it's all because of the drought making feed ridiculously expensive, right? Well, that's part of it. But there's more to it, according to David Anderson, an agricultural economist at Texas A&M University.
"It really goes back to the effects of record high feed prices, which really started in 2007," he said. "And part of that is increasing use of corn to make ethanol, and higher costs of production to make feed, the diesel fuel, the fertilizer."
That prompted some ranchers to start producing less beef, "and then the drought came along and further forced our cattle numbers to fewer and fewer, not only in Texas, but in the nation as a whole."
Making supplies even more tight, which pushes up prices, is a rise in U.S. beef exports. Other parts of the world, especially Japan, Hong Kong, Mexico, Taiwan and parts of Central and South America, are increasingly in love with American beef.
“Much of the world does not produce the type of beef that we product in this country, which is basically a grain-fed product," said Shayle Shagam, an economist with the USDA. "As a result, you get that higher degree of marbling or intramuscular fat, which imparts a degree of tenderness and flavor to the meat.”
The USDA is forecasting record growth in exports this year, and that means prices are likely to keep rising.
"We are looking at generally high beef prices at retail moving through this year and into next year, largely as a function of the fact we are looking at continuing tightening supplies of beef," Shagam said.
Even if cattle producers see higher prices as a reason to ramp up their beef production, "the biology of the animal dictates that it takes a very long time before the producer decision made today actually shows up at increased beef at the supermarket."