Record beef prices bring good and bad news

SANDERS COUNTY - Consumers may continue to opt for less expensive white meats like chicken and pork as cattle prices continue to rise. But while sticker shock affects shoppers in the grocery store, ranchers are in a position to turn a profit as the price for feeder cattle soars.

The U.S. Department of Agriculture released a statement at the end of January that the nation’s cattle inventory has fallen 2 percent since the beginning of 2013. The 87.7 million head of cattle is the lowest number of animals on hand since 1951, when the U.S. had 82.1 million cattle and calves.

Cows and heifers that have calved are down 1 percent, 38.3 million compared to 38.5 million in January 2013, which is the lowest inventory since the 36.8 million cows and heifers in 1941. The calf crop from last year is also down 1 percent, at an estimated 33.9 million head, the lowest since 1949 when only 33.7 million calves were born.

It can take up to three years to get market-ready cattle from heifers that are retained for breeding, a much slower pace than other meat animals. This means ranchers and the beef industry have a long, slow haul ahead to return herd sizes to what they were prior to 2013.

Keith Steinebach, the local butcher at McGowan Grocery Store has seen the recent price increase first hand.

“Depending on the cut there is anywhere from 10 to 20 percent increase,” Steinebach said. “Right now it is your grounds, chucks, and cross ribs – mostly your middle cuts – that are going up. The premium cuts like your New York, T bone and rib steaks are holding their own right now.”

According to him, the cuts of meat that are more expensive than normal are the ones that are more popular in winter, such as roast. Barbecuing season, however, might bring higher prices for steaks and hamburger due to high demand and lack of supply.

There are different reasons why the beef prices are on the rise, but the simple one is less stock.

“The cattle supply is the lowest it has been in 50 years,” Steinebach said.

According to a USDA report, beef and veal prices are expected to rise 3 to 4 percent above where they were in 2013. The report cites 2012 droughts and unusually cold weather across the U.S. for diminished herds and rising production costs.

“Retail beef prices are expected to average higher in 2014 than they did in 2013,” a report released Jan. 17 stated. “However, consumer acceptance of the higher prices will be influenced to some degree by the anticipated increase in pork and poultry supplies.”

The beef prices will not only impact the local butchers but will also affect local restaurants that serve beef on the menu.

The Circle diner manager Joe Gamboa has heard of the impending higher beef prices but does not believe it will be a long-term problem. He said The Circle will still sell the same products at the same price.

However Phyllis Shively, owner of the Thompson Grill restaurant in Thompson Falls, has concerns about the beef becoming more expensive.

“As the beef prices go up, that will definitely impact us because our best selling items are our hamburgers,” she said.

Shively described what would happen if the beef prices reached a certain high point. She said they would have to raise their prices on the menu in order to make ends meet which might drive customers away. The snowball effect would be detrimental.

As of now, Shively said the restaurant is doing fine.

“We have not seen too much of a difference so far,” she said. “This is a slow time of year so we are not ordering a lot of food and supplies right now.”

This period could be compared to the calm before the storm. Shively received an email from her meat supplier – Food Services of America (FSA). The message was a warning that prices were going to go up.

Although increased beef prices may cause problems for consumers, one thing is certain – local beef producers in the area will be reaping in the rewards.

John Halpop, MSU agriculture extension agent for Sanders County, said the county has two types of beef producers – both of which will benefit.

“Producers are going to make more money,” Halpop said. “The prices are almost at historic highs right now and that’s great.”

Halpop explained the county has had approximately 20,000 head of cattle before. Although, Sanders is not a leading beef producing county in the state, the numbers are still noteworthy.

“It’s a very significant part of our cash in Sanders County,” Halpop said.

Prices are expected to stay strong for quite a while, although no exact date could be projected.

According to Halpop, most of the agricultural land for beef sits in the Hot Springs, Lone Pine and Camas Prairie area, although Dixon is also a popular spot for ranchers.

“All of those producers know what they are doing. If they are still doing it, they are doing something right,” Halpop said.

Although now the beef producers have good news, it’s important to keep in mind that these high prices are not going to last forever.

“The prices are terrific but they’ll come down again,” Halpop explained. “Something will happen – a drought or a natural event. It ebbs and flows.”