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Beef Prices Reach Highest Level Since 1987

April 14, 2014
Red Angus Cow Calf
A rebuilding cattle herd and foreign demand have taken the beef industry to prices not seen since 1987.  
 
 

A rebuilding cattle herd and foreign demand have taken the beef industry to prices not seen since 1987.
By: Betsy Blaney, Associated Press

The highest beef prices in almost three decades have arrived just before the start of grilling season, causing sticker shock for both consumers and restaurant owners — and relief isn't likely anytime soon.

A dwindling number of cattle and growing export demand from countries such as China and Japan have caused the average retail cost of fresh beef to climb to $5.28 a pound in February, up almost a quarter from January and the highest price since 1987.

Everything that's produced is being consumed, said Kevin Good, an analyst at CattleFax, a Colorado-based information group. And prices likely will stay high for a couple of years as cattle producers start to rebuild their herds amid big questions about whether the Southwest and parts of the Midwest will see enough rain to replenish pastures.

Meanwhile, quick trips to the grocery store could drag on a little longer as shoppers search for cuts that won't break the budgets. Patrons at one market in Lubbock seemed resigned to the high prices, but not happy.

"I quit buying steaks a while ago when the price went up," said 59-year-old Lubbock resident Len Markham, who works at Texas Tech. She says she limits red meat purchases to hamburger, opting for chicken, pork and fish instead.

Fellow Lubbock resident Terry Olson says she buys chicken and eggs now.

"I don't buy (red) meat, period," the 67-year-old said, admitting there's an occasional hamburger purchase. "Not like I used to because of the price."

Restaurant owners, too, must deal with the high prices. Mark Hutchens, owner of the 50 Yard Line Steakhouse in Lubbock, raised his menu prices for beef items by about 5 percent in November. Since then, the owner of the eatery has tried to make cuts elsewhere to avoid passing it on to customers.

"It really squeezes the small guys more," he said of non-chain restaurants. "You just can't keep going up on people forever. I just think you have to stay competitive and keep your costs low."

White-tablecloth restaurants have adjusted the size of their steaks, making them thinner to offset the price increases, says Jim Robb, director of the Colorado-based Livestock Marketing Information Center. Some places now serve a 6-ounce sirloin, compared to 8- or 10-ounce portions offered years ago, he said.

And fast-food restaurants are trimming costs by reducing the number of menu items and are offering other meat options, including turkey burgers, Robb said. Chain restaurants also try to buy in volume as much as they can, which essentially gives them a discount, Iowa State University assistant economics professor Lee Schulz said.

"That can help them when they're seeing these higher prices," he said. "They can't do anything with the high prices."

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