Beef Prices Skyrocket as Businesses and Consumers Feel Effects

beefBeef prices have skyrocketed, and consumers and businesses feel the effects of the increase. Several factors have pushed the price of the meat higher than ever, just as warmer weather is arriving and people are firing up their grills.

The current price of United States Department of Agriculture (USDA) choice-grade beef per pound is $5.28. This is a 5.4 percent increase from the price a year ago. These prices are the highest they have been since 1987. Extreme weather has caused cattle herd numbers to plummet to levels not seen since 1951. Drought conditions that have continued into a second year in certain areas of the U.S., have caused a reduction in the amount of food available for the cattle. An increasing demand for beef from other countries has resulted in a rise in the average retail price of it, and contributed to rising prices.

CattleFax is an information organization that has been providing information for, by, and on the beef industry for 45 years. A CattleFax analyst, Kevin Good explains that what is being produced is being consumed, and the prices will be high for several years until cattle herds are rebuilt. There are still questions about parts of the U.S. getting enough rain to restore pastures.

In the meantime, many consumers have backed off of their beef consumption to save money. Texas resident Len Markham, 59, said “I quit buying steaks a while ago when the price went up.” Another Lubbock, Texas resident Terry Olson said that she doesn’t buy any red meat anymore, she sticks to buying chicken and eggs.

Not only are consumers feeling the effects, but businesses including restaurants and delicatessens, are also feeling the stress and pressure related to the skyrocketed beef prices. Restaurants are having to make several different adjustments to accommodate the higher prices, which also affects their customers.  The owner of 50 Yard Line Steakhouse in Lubbock, Mark Hutchens, raised the menu prices for beef by five percent in November. Other restaurants have had to adjust the sizes of their steaks to six-ounce sirloins, as opposed to the previous eight or 10 ounce sizes.

In Los Angeles, the owner of the popular Canter’s deli, Norm Langer said that the company went for a two-year stretch without having to raise prices. He recently started printing new menus that reflect a 50 cent increase on sandwiches. “No beef, no delicatessen. That’s the bottom line.” he explained. Canter’s general manager Jerry Haines said “For any profitability, you have to mark it up more and more.” He has seen the profit margins go from five percent to closer to one percent over the last few years instead of raising the prices to cover higher costs, though now the time has come.

Erika Nakamura, the co-owner of Lindey & Grundy butcher shop, works with California farmers and normally buys two or three steers a week to supply local restaurants and hotels with beef. Her suppliers prices have increased and they can no longer accommodate this amount, she said. “That’s where the major struggle is,” Nakamura said, “our farmers just don’t have large enough and healthy enough animals.”

There is some worry among ranchers that consumers, especially the younger ones, may change their buying habits permanently, and rely on chicken or pork for their meat-filled meals, as beef prices remain high. Others like Chuck O’Connor, a South Dakota rancher, aren’t so sure that it will be abandoned. “I’m sure some are maybe going to cut back some, but to say that people aren’t going to buy it anymore, I don’t think that’s going to happen” he said, then added “I hope not.”

Fast food restaurant chains have also been affected by the rise in beef prices. McDonald’s announced in October that after more than a decade, its Dollar Menu would become more of a blend of the cheaper items on the menu. Wendy’s followed suit. Yum Brands Inc., the owners of Taco Bell, might also have to make adjustments to their prices.

As consumers and businesses continue to feel the effects of the skyrocket on beef prices, other meat prices have gone up as well. The price of pork went up after a virus ravaged and killed millions of young pigs, and the composite retail prices of chicken have increased as well. “There’s a concern for the future but what’s a consumer to do? Pay the price or do without” said CattleFax analyst, Kevin Good.

By Twanna Harps

Sources:
CBS News
Los Angeles Times
KPHO

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