Where's the beef? Probably not on your grill this summer
Prices are hitting record highs as the summer grilling season starts.
Beef prices are hitting record highs just as the summer grilling season begins.
Steak averages $4.81 a pound at the store and ground beef $3.51 -- historically high numbers, according to economists.
The spike is caused in part by high feed costs because of several droughts that have led to the smallest number of cattle in the U.S. herd since 1952.
Prices hit their highest point just before the Memorial Day weekend. The average wholesale price for beef was $2.06 Thursday, up from $1.94 a year earlier, says Gary Morrison, a market analyst with Urner Barry, which publishes market news on agricultural commodities in Bayville, N.J.
Retailers ordered a lot of beef leading up to Memorial Day, the traditional start of the summer grilling season. Now they find themselves needing to restock the meat case with prices skyrocketing. "They're either going to have to raise their prices or squeeze their margins, two things they don't want to do," Morrison says.
Prices aren't likely to fall much before the next two big grilling holidays, Father's Day on June 16 and the Fourth of July weekend, he says.
The high prices are squeezing restaurants. At the Meddlesome Moth, a brewpub in Dallas, chef David McMillan says he's using secondary cuts of beef to keep his prices down.
"Short ribs are trendy so they're priced through the roof, so we look at a chuck flat and we use that in a steak pot pie," McMillan says. "We do a steak stick on a skewer and we use an inside round, which is a little tougher cut off the rump, but we tenderize it."
John Cascarano and his wife recently bought a house in New Jersey, and one of their first purchases over the winter was a grill. Since then they've been taking full advantage of it, the 30-year-old lawyer says.
He's so into grilling that "for lunch I had a leftover burger off the grill from last night," he says. Their new-found passion is making them "willing to overlook slightly higher prices," but he says they tend to see red meat as an indulgence anyway.
That's a theme Phil Lempert, a food industry analyst in Santa Barbara, Calif., hears a lot. High prices are pushing consumers to consider other sources of protein, nudged along by the message that it's healthier to eat less meat .
"People are grilling more vegetables. They're going to veggie burgers," Lempert says.People are saying, 'You can still have your burger, but have less of it and fill up the rest with grilled veggies.'"
The rise in prices has roots that go all the way back to 2008, says Ricky Volpe, an economist at the Agriculture Department's Economic Research Service. Prices for feed and fuel surged in 2007 and 2008, so ranchers responded by culling their herds to keep costs down. Normally that would have raised beef prices, but at the same time the United States fell into a recession. That cut demand, so 2009 and 2010 saw flat food prices.
Then in 2011, the economy began to recover and beef prices started to rise. Normally that would have caused ranchers to increase the size of their herds, but in 2011 and 2012 there were massive droughts that led to some of the highest prices for corn and soybeans in history. Feed was expensive, and once again ranchers culled their cattle because they couldn't afford to feed them.
Now there is increasing demand but the smallest number of cattle in the national herd since 1952 -- just 89.3 million head. It takes three years to go from a pregnant cow to an animal ready for slaughter, so there's no way to quickly rebuild the supply, Volpe says. He doesn't expect to see a substantial increase in the supply of cattle until next year.
Bill Hyman, executive director of the Independent Cattlemen's Association in Lockhart, Texas, thinks that's too optimistic. He blames not only recent droughts but also federal requirements that 7.5 billion gallons of renewable fuels be blended into the nation's gasoline. About 27% of the U.S. corn crop is used to produce the ethanol that goes into that fuel, according to the National Corn Growers Association.
"As long as they give the ethanol subsidies to the grain producers, we're going to have to live with high feed prices," Hyman says. "And that means the only way we can put weight on our cattle economically is through grass. The weather's been so weird lately" ranchers can't count on enough rain to keep their pastures abundant, he says, so ranchers are cautious about building out their herds because they can't be sure they'll have grass to feed them. USA TO DAY
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