Weather problems drive up beef prices sharply
copyright the Chronicle May 7, 2014
by Natalie Hormilla
BARTON — The price of beef in most stores is at a record high, and the price of locally raised beef is getting higher, too.
The average price of a pound of ground beef in most U.S. states hit almost $3.70 for the month of March, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI).
That average price was up from $3.55 in February and $3.47 in January. In March of 2013, it was $3.33; four years ago, it was $2.24.
Just like in the rest of the country, shoppers at the C&C Supermarket in Barton have been wondering why the prices have been so high lately.
“We had a sign over the meat department for three months, stating why we had higher beef prices,” said Ray Sweeney, who works in the meat department at the C&C. “Just to kind of explain ourselves.”
“People were asking a lot,” he said.
At the C&C, hamburger meat cost about $3.29 a pound last fall, he said.
“Right now, it’s $3.99, and that’s only because the beef prices have fallen,” he said in a phone interview on May 1.
As of three weeks ago, a pound of hamburger cost between $4.59 and $4.99, he said.
As the person in charge of meat deliveries at the C&C, Mr. Sweeney is used to seeing the prices from wholesalers fluctuate at least some on a weekly basis. In the last few months, he said, that price changes just about every delivery, which is three times per week.
“That’s how unstable the market is, I guess,” he said.
“They’ve gone up terrible,” said Jeff Currier of Currier’s Quality Market in Glover, about beef prices. “It’s awful.”
A pound of hamburger at Currier’s costs $4.99 per pound, as of May 1, Mr. Currier said.
“We do ten-pound bags for $3.99 (per pound), and at one point it was $2.99. That was a while ago.”
The hamburger meat at Currier’s is ground chuck meat, while the hamburger at the C&C is ground from the trimmings of bigger cuts trimmed right at the supermarket.
The average price of ground chuck tends to be more expensive anyway, according to the U.S. Bureau of Labor Statistics’ CPI.
The average price of ground chuck, in most U.S. states, was $3.75 per pound in March. In March of 2013, it was $3.41. In March of 2010, it was $2.82.
“Steaks have gone up terrible, too,” Mr. Currier said. “All we sell is Angus beef, which tends to be a little higher anyway, but sirloin now is $6.79 a pound; it used to be around $4.99.”
The meat sold at Currier’s and the C&C comes from what is termed commodity beef — that’s beef that comes from the national supply chain. The cattle raised for commodity beef mostly come from out west.
The rising price of beef has a lot to do with the weather, said Chelsea Bardot Lewis, agricultural policy administrator with the Vermont Agency of Agriculture.
“The commodity market for beef is very high,” she said, “because of different issues, including drought, higher corn prices….”
The problem goes something like this: a big swath of the U.S. is in drought, with some areas in Texas, Oklahoma, Kansas, New Mexico, Nevada and California currently experiencing both “extreme” and “exceptional” conditions, according to the U.S. Drought Monitor. Drought conditions have persisted in much of the U.S. over the last few years.
“That kind of sustained, multiyear drought has made it a lot harder for people who are grazing livestock to get the animals the nutrition they need in a cost effective manner,” Ms. Lewis said.
“Even conventional beef are spending a good deal of their lives out on pasture,” she said. “If there’s not grass growing on that pasture, then cows don’t have enough to eat. This also makes feed more expensive.”
Both corn and soybeans need plenty of rain to grow, and both foods are the major components in the grain cattle are fed once they’re done grazing on pastureland.
Many cattle raised for commodity beef travel across the country over the course of their lives.
“There’s different parts of the beef industry happening in different parts of the country,” Ms. Lewis explained. “A lot of what’s called the cow calf operations does happen on the east coast, and the northeast even, where they have good quantities of high-quality grass.”
Once the calves are weaned from their mothers, they go to what’s called a backgrounder operation, on ranches where the cattle mostly eat grass.
“They are generally in Oklahoma, Texas…. And then they’re finished in feed lots,” Ms. Lewis said. That’s where cattle are fed a diet of mostly corn- and soy-based grain.
“There’s a lot in California, Nebraska,” she said of feedlots. “For any of these operations, they’re happening all over the country, but that’s generally where you have the majority. That’s the overlook of the geography.”
Basically, that means there’s not enough rain to properly grow the pasture that conventional cattle eat during most of their lifetime, nor is there enough rain to grow the proper amount of corn and soybeans used in the feed cattle are fed nearer the end of their lives, in feedlots.
This lets the drought deliver a double-whammy to cattle’s food supply, which makes the cost of production for farmers more expensive.
“The increase in price of production has led ranchers to get out of the business altogether or to decrease their herd size,” Ms. Lewis said. “So there’s been fewer livestock raised,” which increases the price of beef once it arrives in stores.
Other demands chip into the corn supply, too, like the ethanol market, Ms. Lewis said. But it’s the current overall herd size in the U.S. that most directly affects consumers currently.
The USDA’s January 1 cattle inventory was at 87.7 million head this year, down 2 percent from 89.3 million last year.
“This is the lowest January 1 inventory of all cattle and calves since the 82.1 million on hand in 1951,” according to the report, released on January 31, by the National Agricultural Statistics Survey.
Fewer cattle also means smaller cuts of beef in stores. Some cattle are being killed much sooner than they normally would.
This affects more than just the price that customers see on shelves.
“Instead of getting 15-pound chucks, you’re getting seven-pound chucks,” Mr. Sweeney said.
But could there be a silver lining for the cattle farmers of Vermont?
“Some people have speculated it could be good for the Vermont beef industry,” Ms. Lewis said. “Because we traditionally operate on a smaller scale, it’s been more expensive than commodity beef,” she said.
So does locally raised beef, which is more expensive, seem more accessible now?
The market for local beef seems to operate somewhat in its own world, running more so on expectations of quality than price.
Bob Butterfield of Spring Hill Angus in Barton thinks the rising cost of commodity beef has helped his farm.
Customers have told him that Spring Hill’s meat doesn’t seem as expensive these days.
People can buy meat from a cow they can actually visit for 50 cents more per pound, he said.
“They can buy meat where they know where it came from for just a little bit more,” he said.
A pound of hamburger from Spring Hill Angus costs $5.55.
Mr. Butterfield said that price may soon go up though.
“We may go closer to $6,” he said.
The drought out west does factor into that price hike some, but not as much as other factors, he said.
For one thing, the late spring here means his cattle aren’t getting out to pasture — “to the free grass” — as early as they should.
The cattle at Spring Hill eat about 90 percent grass, he said. The rest of their food mix is 7 percent corn silage and 3 percent grain, which is where the drought makes its mark.
Grain currently costs about $330 per ton, which is a “reasonable” price, Mr. Butterfield said. Last year, that same grain cost $400 per ton, due to the drought.
One ton of grain lasts about ten days, he said.
Another variable in pricing is the rising cost of feeder calves. The price of a 500- to 600-pound feeder calf used to be between $1.10 and $1.20 per pound. These days, that price is between $1.60 and $2 per pound.
“The price of animals is a big thing,” he said.
His full list of the hurdles to cattle farming include: lack of money, lack of interest on the part of the younger generation, lack of income, the cost of feed, the cost of labor, the cost of land, and the ability to even find land.
Not that any of this has weakened the consumer demand for local beef.
“If we could produce them, we could sell five to six steers a week,” he said.
“We’re processing steers at 14 months old,” he said. “I’d like to get to 16 to 17 months, but there are so many orders.”
Orders have jumped up in the last year and a half, he said.
Spring Hill Angus used to process one to two steers per month, he said. Now they’re processing four to seven per month.
“A lot of it has to do with our state advertising. ‘Buy local’ has been pushed hard and has got people really thinking about what they’re eating.”
“I love e. coli scares,” he said. Whenever there’s a callback on meat, Spring Hill gets more calls, he said.
All the burger meat that goes through Glover and Orleans schools comes from Spring Hill Angus, he said.
“Our sales are jumping because we’re raising quality. We do a lot of genetic work to breed for certain characteristics,” like marbling and higher yields, he said.
The cows at Spring Hill Angus push 62 percent yield on hanging weight, which is very good, he said.
Tangletown Farm in West Glover also reports a strong market for local beef.
“If we could make more beef, we’d sell a lot more,” said Lila Bennett, who co-owns the farm with David Robb. “We sell it as fast as we can make it.”
Most of the black Angus raised at Tangletown is sold at the Montpelier farmers’ market, and a little is sold at the farm stand on King Farm Road, she said.
It’s not really possible to say whether the price of commodity beef has helped Tangletown’s sales, she said.
“I mean, we sell all our beef anyway.”
A pound of Tangletown hamburger meat, which is grass fed and finished, costs $7 per pound. That’s been the price, more or less, for a while, she said.
Will that price rise soon, too?
“It may,” Ms. Bennett said. “We had a tough winter.”
“We move our cows every day, so there’s a lot of labor involved,” she explained. Also, it costs a lot to produce the hay the Angus eat.
“We haven’t decided to raise our price yet,” she said. “It’s hard to do, from both ends. It’s hard to ask the customers to pay more, but it’s hard to make a living.”
The potential change of price will probably depend on this upcoming hay season, she said.
Just like at other local farms, the cows are getting a late start this spring.
“We’ll probably feed them hay for another month,” she said. “A year ago, we were grazing.”
At this point, Tangletown is buying hay at a cost of $37 per round bale, which is a good deal, Ms. Bennett said. The 41 cows at Tangletown go through about two and a half bales per day.
They were short on hay over this past winter, she said, so they sold some heifers and steers for other people to raise.
Even with the rising cost of feed — whether it’s pasture or grain — people were willing to pay a little more than usual for those cows this winter, she said.
“The beef market is paying so well,” she said.
Over at Shat Acres Highland Cattle, which has farms in both Greensboro and Plainfield, the price of beef is also rising.
“But probably for different reasons than with commodity beef,” said Janet Steward, who co-owns the farm with her fiancé, Ray Shatney.
The beef from Shat Acres is sold under the name Greenfield Highland Beef.
“Highland beef is inherently more expensive to raise than other beef, because they’re a very slow growing breed, and they have not been genetically altered to have a faster rate of growth,” Ms. Steward said.
Their Highland cattle are slaughtered at an age of around 30 to 32 months.
“We just sent a 35-month-old steer to slaughter today,” Ms. Steward said in a telephone interview on May 5.
Shat Acre’s cattle are grass fed and finished.
“This was a very difficult winter on cattle and they did not grow as well as they should,” she said. “They expended so many calories trying to stay warm.”
The tough winter means they’ll have to keep their cattle for another winter before slaughter, she said. “And in Vermont, that’s a big deal because you have to produce feed.
“That’s where the change in raising our beef has come, mostly in the production of feed. Everything costs more — the fuel, the hay wrap, the strings, labor to help produce the hay…. And so the cost of the beef has gone up through cost of production.”
The cost of slaughtering the cattle has risen steadily over the years, too, she said. Highland cattle are difficult to slaughter ethically, because of their big horns, and so Ms. Steward said they are limited in which processors they can use.
Shat Acres pays about 95 cents per pound to have the meat processed locally.
“When we go to shows, people look at us like, oh my gosh, we’re paying 40 cents a pound!”
Those cheaper prices are from bigger, commercial plants, she said.
“So right off the bat, the meat is more expensive,” she said.
The price of Greenfield beef went up about five percent about two weeks ago, she said, to $8.40 per pound.
People can buy the beef for 10 percent cheaper at the farm.
“Part of it is that the animals are not big, so from the animals we’re not getting as much beef,” she said.
The late spring doesn’t help matters, either.
“We usually have our animals out on grass right now, but there is no grass right now. So we’re continuing to feed hay,” she said. “Luckily we put up enough last fall that we’re not purchasing hay.”
She estimates they’re behind on getting the cattle out on pasture by two to four weeks.
It’s hard to say whether rising beef prices have created more demand for Greenfield beef, because the beef itself is unique, she said.
“The Highland beef is different than any other beef,” Ms. Steward said. “It tastes like beef used to taste,” she said, because of the slower growth.
As the chairman of the beef marketing committee for the American Highland Cattle Association, Ms. Steward has set out to prove that Highland beef is truly different from other beef.
“We’re working with the University of Missouri to actually quantify what makes Highland beef different. We’ve been doing scientific studies, we have samples coming in from all over the U.S.,” she said.
The person leading the study, Dr. Bryon Wiegand, has preliminary data from the 125 samples he’s collected so far. Mr. Wiegand tests the Highland beef samples on three aspects: lipid profile, the shear force, and the palatability.
Blindfolded panelists are given Highland beef and other beef samples to see if they know the difference.
“The preliminary data shows that Highland beef is tenderer of industry standard, regardless of how it’s raised, who raised it, whether it was grain finished or grass finished, or exactly how old it was,” Ms. Steward said. “The fibers are aligned differently in Highland muscle than in other beef breeds.”
That tenderness is measured by the meat’s “shear force.”
“That’s done with a steak that they tear apart with this shear force machine,” Ms. Steward explained.
“So we’re now going to be able to talk about empirical data instead of just saying, ‘you’re going to love this! It’s so tender!’”
That unique character, coupled with the longer growing time of each steer, seem to put Highland beef in its own category of pricing.
“It’s different reasons,” Ms. Steward said, of the rising cost of Greenfield beef. “But it’s really not all that different when you talk about putting the animals out on the grass and not having enough feed for them.”
“I think probably that may be the universal competent of the increased cost, that it just is costing more all the time to raise these animals. We can’t get them to grow any faster.”
Back at the C&C, Mr. Sweeney said customers were buying less beef once the price started to get much higher, around the New Year.
“Now it’s kind of leveled itself back out,” he said. Still, people are buying more of other meats, like chicken, he said, and even pork, which is also getting more expensive.
“Four weeks ago, pork loins were $1.69 a pound,” he said. “Then for one week they were at $3.15 a pound.
“Pork chops went from $3.99 to $5.99,” he said.
Mr. Sweeney said he didn’t get an explanation from suppliers on that price jump, but he suspects it’s due to the outbreak of porcine epidemic diarrhea virus, or PEDv.
PEDv has killed millions of piglets since it was first identified in the U.S. last May, according to the USDA’s Economic Research Service.
Mr. Sweeney said the price of pork has started to come back a bit, but the USDA predicted in February that 2014 pork production would be reduced by 0.7 percent.
Mr. Currier said pork prices are up at Currier’s, too.
“Pork loins were like $1.79 to $1.99, now they’re 2.99 per pound,” he said. “It’s crazy.”
According to the CPI, the price per pound of center cut bone-in pork chops rose from $3.67 in February to $4.10 in March. In March of 2013, that price was $3.65.
Both men said the price of chicken has crept up as well.
“We were buying boneless chicken for $1.27 a pound, then just yesterday it was $1.95 a pound, Mr. Sweeney said.
“Normally, we do the bulk bags for boneless breast for $1.99 a pound,” said Mr. Currier. “Now it’s $2.59.”
Though the price of just about everything is going up, customers are pretty much buying the same as they always have, Mr. Currier said.
“I think they’re really watching the sales,” he said.
So when will the prices come down, if at all?
Mr. Sweeney thinks the price of beef won’t come down any time soon.
“The summer months are coming, the cooking months are coming, and the beef packers know this,” he said. “If they can get the suppliers to have a higher price, they’re going to say, well ok, people have been paying this the last three months, so they’ll pay it the next six months.”
Come Memorial Day weekend, “I wouldn’t be surprised to see $4.99 hamburger again,” Mr. Sweeney said.
Ms. Lewis thinks the upcoming season could make the difference.
“It’s getting to be the time that corn is planted, so these next few weeks will dictate the price of grain, the price of feed for the next season,” she said. “So we’ll see what happens.”
Mr. Butterfield said a price rebound would take two years, “if it rebounds.
“Takes nine months to get a calf, then 14 to 18 months to get to slaughter,” he said. “But on the same token, are there enough females out there to bring the herd back?”
“Record high supermarket beef prices across the country are here to stay for the coming months,” predicts the USDA’s Food Price Outlook report for 2014, released in March. “Wholesale pork prices increased by 8.2 percent, indicating that meat prices, in general, are going to be high for U.S. consumers this summer.”
contact Natalie Hormilla at [email protected]