Beef, it's what's for dinner......$$$

 

      With all the hoopla about the rising cost of groceries the past couple of years, up to now I could not comment on the price of beef as I only shopped for what I wanted when and where I needed it.  For example, beef in Texas during the winter and pork/chicken/fish back in Michigan during the summer.  

      The past few months I have obviously taken notice that beef prices have not only risen but are skyrocketing.  Of course it is easy to place blame on the current administration, but the real causes are a bit deeper and an unfortunate continuance of past policies.  When I shop for beef, I always look for the USDA inspection label.  There is no requirement to post the country of origin (thanks to President Obama) so a significant portion of our beef comes from either Mexico, Brazil, or Argentina.  I keep my money at home.  

      The average cost of one pound of ground beef reached a record-high of $5.80 in April, according to numbers from the Bureau of Labor Statistics. That is up nearly 50% from five years ago.  Raising steers also comes at a higher cost, with prices going up for feed, land and financing. Those cost increases have contributed to U.S. cattle herds falling to their lowest numbers in more than 70 years, according to USDA data. 

      Beef is so expensive right now because drought, high grain prices, inflation and rising interest rates made cattle farming a costly endeavor in recent years. To deal with rising operating costs, many U.S. cattle farmers reduced the size of their herds — and some got out of the business altogether. As a result, the U.S. cattle inventory is the smallest it’s been since 1951. 

       Smaller herds mean fewer cattle are available for beef.  But consumers have maintained a healthy appetite for it, even amid rising prices.  That combination of low supply and an increasingly steady demand has pushed prices even higher.

      Now, tariffs add another layer to consumers’ price problem. The U.S. imports beef from a long list of countries, with most of it coming from Brazil, Australia, Canada, Mexico and New Zealand. Some of those imports now face a new 10% tariff. (Beef is exempt from the Mexico and Canada tariffs under the United States-Mexico-Canada Agreement.)

Inflation drove up input costs, which haven’t receded, making it expensive all around to care for livestock.  In addition, when climate conditions are not favorable, crops like corn and soy suffer which can increase the cost of feed, therefore, increasing the cost to raise cattle. Some of the cattle liquidation has been a result of increased feed costs compared to other animals.  Ranch grazed cattle enjoy grasslands while the subsequent feedlot cattle feed on grain to fatten them off for sale.  It all goes to cost. 

>Drought conditions continue to impact pastures in cattle regions, which can force producers to spend more on feed.

>Record-high prices can be good for farmers selling cattle. But anyone looking to expand their herd is paying those same sums.

>High interest rates mean producers are paying more for operating loans, which many rely on to run their businesses.

      U.S. cattle producers export beef to a variety of countries, including China, and those exports are threatened by the ongoing trade war.  That means beef exports will likely decline because importers in those countries won’t want to pay the steep tax that’s in place.  In the worst-case scenario, beef producers could go out of business without those markets, and that would put even more strain on the domestic market.

      That’s because producers are exporting beef that isn't in strong demand domestically. While Americans love burgers, consumers around the world prize high quality steaks or other cuts of beef that don’t have the same appeal here.  Mexico is the prime example here.  Cattle producers can export those products and get a higher price than they would if they sold them domestically.

      My thoughts on this:  Part of this is simply Keynesian Economics of supply and demand.  The demand is the result of Americans and their insatiable thirst for entitlement.  This is not easy to swallow, but true, nonetheless.  Chicken, pork, fish, and salads are cool too.  We need to severely limit our export of beef and only import from countries with favorable trade agreements.  Do I know when prices will come down?  No, and we can't do anything about the weather trends, but we can provide more favorable interest rates and tax breaks for ranchers and those who produce the beef.  We have bailed out several other economic sectors over the years, why not ranchers?  Any incentive to provide for increased calf production would be invaluable.  Finally, buy local, USDA American, local, and organic if possible.  I will continue to eat beef when we desire, but only with USDA inspected stock.    

"Go vegetable heavy.  Reverse the psychology of your plate by making meat the side dish and vegetables the main course"

Bobby Flay