Drought sends beef prices soaring, with no relief in sight – U.S. cattle herd the smallest since 1951Posted by Jim at Thursday, March 06, 2014
By Joe Taschler
3 March 2014
(Journal Sentinel) – Next time you bite into a big, juicy hamburger, don't be surprised if it bites back — at your bank account.
Unrelenting drought across large swaths of the Great Plains, Texas, and California has led to the smallest U.S. cattle herd since 1951, shrinking the supply of beef. That has sent prices higher for everything from rump roasts to rib-eyes.
The U.S. Department of Agriculture said the average retail price per pound for fresh beef in January was $5.04, the highest price ever on records that date back to 1987.
From grocers to meat markets to restaurants, a whole lot of folks are watching the situation carefully.
"Everybody's kind of worried about it," said Matthew Bayer, president of the Wisconsin Association of Meat Processors and owner of Country Fresh Meats in Weston, near Wausau. "I don't see them (beef prices) going down."
The situation is on the radar of Milwaukee-based grocer Roundy's Inc.
"We are watching the situation very closely," said James Hyland, vice president of investor relations for Roundy's. "If beef prices become a sticker shock to the customer, there will be a transfer to other proteins like chicken or pork," and that will further complicate the market.
"It can become a difficult balancing act," Hyland said. Roundy's Pick 'n Save brand is the grocery market share leader in the Milwaukee area.
This time of the year, beef prices often fall during what amounts to a lull between the holidays and the beginning of outdoor grilling season, said Chip Bunzel, third-generation co-owner of Bunzel's Old-Fashioned Meat Market in Milwaukee.
But this year, "Beef really didn't drop much since the holidays," Bunzel said, and that sent the price of everything from beef short ribs to ground chuck higher.
"Even the (beef) dog bones, those have gone up quite a bit," he said. "We used to give those away."
Like consumers, Bunzel said he feels the squeeze.
"It's hard because your income isn't going up as fast as the products are going up," he said. "Everybody complains about it. It's like gasoline. Gas goes up and everybody complains about it, but they still use it. You have to still put gas in your car, and you still have to eat."
So do cattle — and there's the rub.
When a calf is born on a ranch, it is usually put out to graze on grass and pastureland. When it doesn't rain, those pastures dry up. Without grass, the animals have to be fed something else.
"They can't eat wind, water, and scenery," said John Freitag, executive director of the Wisconsin Beef Council in Madison.
But other feed types of late have been extremely expensive, as prices of feed grains — primarily corn — soared because of reduced supplies brought on by drought.
"Hay prices are just going through the roof," said Kevin Kester, a fifth-generation rancher whose operation covers 22,000 acres in central California.
As a result, cattle producers have been selling off their animals because they can't afford to feed them. In Texas and Oklahoma alone, "There's a million-plus head of cattle that aren't here anymore," Freitag said. "Some guys just decided it was easier to plant corn than it was to raise or feed cattle." [more]