Saturday, June 23, 2018

Drought sends beef prices soaring, with no relief in sight

The 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, Wis. "I don't see them (beef prices) going down."

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 types of feed have been extremely expensive lately, as prices of feed grains — primarily corn — have 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."

All of the beef that hit the market when those herds were culled theoretically should have driven prices lower. Yet that didn't happen, USDA data show, as demand for beef and other sources of protein around the world has soared.

"The growth of the middle class in developing countries probably has more to do with the increase in demand and related prices than anything else," said Jeff Sindelar, an associate professor who studies the meat industry at the University of Wisconsin-Madison.

In other words, more people around the world can now afford to have a steak or a burger, while there are fewer animals to meet that demand. The result has been predictable.

"The cost of meat has gone up significantly — 30 to 40 percent and in some cases 50 percent — in the past five to seven years," Sindelar said.

There are signs that the beef cattle herd may be coming back, Freitag said, and heavy rain fell late last week in California.

"I'm scratching and clawing and trying to hang on and see what Mother Nature brings us over the next 60 days," Kester said. "It might be a very short-term relief for three or four weeks."

Comments

Blast as Zimbabwe president campaigns; Mnangagwa not hurt

Blast as Zimbabwe president campaigns in opposition city; Mnangagwa reportedly unhurt
Updated: 1 hour ago

Poland's Walesa urges opposition to unite ahead of elections

Poland's former president and pro-democracy leader, Lech Walesa, says he is joining forces with anti-government opposition to prevent the right-wing ruling party from winning elections that will be held on all levels in 2018-2020
Updated: 1 hour ago
Israelis, Palestinians await William's inaugural royal visit

Israelis, Palestinians await William's inaugural royal visit

Prince William is set to arrive in Israel and the Palestinian territories this week for the first official visit of a member of the British royal family.
Updated: 1 hour ago
Ornate NYC theater, used for years as a gym, to be restored

Ornate NYC theater, used for years as a gym, to be restored

Basketball to Music Hall: Ornate New York City theater that's been used for years as a gym is being restored to its former musical glory
Updated: 1 hour ago
Oldsmar cheer coach faces new sexual battery charges

Oldsmar cheer coach faces new sexual battery charges

An Oldsmar cheerleading coach charged this week with sending explicit images to a minor now faces additional sexual battery charges.Victor Martin Valenty, 28, is accused of having "inappropriate sexual activity" with a 15-year-old at his home for mor...
Updated: 1 hour ago
Vinnie Paul, co-founder, drummer of Pantera, dies at 54

Vinnie Paul, co-founder, drummer of Pantera, dies at 54

Vinnie Paul, co-founder and drummer of metal band Pantera, has died at 54.
Updated: 1 hour ago
Vinnie Paul, co-founder, drummer of Pantera, dies at 54

Vinnie Paul, co-founder, drummer of Pantera, dies at 54

Vinnie Paul, co-founder and drummer of metal band Pantera, has died at 54.
Updated: 1 hour ago
Ornate NYC theater, used for years as a gym, to be restored

Ornate NYC theater, used for years as a gym, to be restored

Basketball to Music Hall: Ornate New York City theater that's been used for years as a gym is being restored to its former musical glory
Updated: 1 hour ago

AP Top News at 10:53 a.m. EDT

AP Top News at 10:53 a.m. EDT
Updated: 1 hour ago
Pro-EU protesters march in London, demand new vote on Brexit

Pro-EU protesters march in London, demand new vote on Brexit

Tens of thousands of anti-Brexit protesters are marching in London to demand a new referendum on leaving the European Union, as a divided Britain marks the second anniversary of its vote to quit the bloc
Updated: 1 hour ago