Beef Prices Are Going To Stay High — Here’s Why
Cattle ranchers believe that beef prices will remain high as inflation, high energy prices and droughts are making it more expensive to raise cattle, according to Reuters.
While grain prices have fallen as Ukraine’s exports have returned to the global market, the price of feed remains higher than it was last year, according to Reuters. This, combined with a decline in the number of cattle available for slaughter, is raising the cost to slaughter cattle, leading to a 10% increase in ground beef prices compared to last year, Reuters reported.
“The prices are here to stay for a while,” Glenn Brunkow, a Kansas cattle and sheep farmer, told Reuters.
Brunkow also noted that he was paying 40% more on sheep feed, and that the prices were also impacted by the increased cost of diesel driving up the cost to bring an animal to slaughter.
“People grossly underestimate how much the price of diesel fuel affects the cost of transporting beef and growing cattle feed,” E.J. Antoni, a research fellow at The Heritage Foundation, told the Daily Caller News Foundation. “All these costs are ultimately passed on to consumers in the price of the final product.”
Brent Nelson, economist at the American Farm Bureau Federation, also stressed that the cost of beef is not solely influenced by the cost of grain when speaking to Reuters.
“There’s really a lot of distance between the price of those grains and the price of those products at the meat counter,” Nelson told Reuters.
While some farmers have been cutting back on herd sizes due to increased costs, droughts have also been responsible for the death of thousands of cattle in Kansas alone, according to NPR. While cattle ranchers aren’t obligated to report the loss of cattle, the Kansas Department of Health and Environment confirmed the death of 2,000 cattle in Kansas, NPR reported.
There were 98.8 million cows on U.S. farms in July 2022, down 2% from last year, and the lowest level in seven years, according to the U.S. Department of Agriculture in July.
While the price of beef at the grocery store has gone up, profit margins for meat processors have fallen, Reuters reported. Tyson Foods, a large meat processing company, saw its second quarter margins drop to 10.2%, down from 22.6% from the same time last year, according to Reuters.
Tyson anticipates the margins on beef will further fall to approximately 5%, Reuters reported.
Beef prices set to surge further as farmers sell off cattle herds. More breeding stock is being sent to the sale barn amid soaring input costs and drought conditions.
We have to do everything we can to protect our food supply and production.
BUY AMERICAN BEEF!
— Mayra Flores (@MayraFlores2022) August 1, 2022
Despite the high price of beef, imitation meat producer Beyond Meat has seen its prices rise even higher, prompting layoffs of 4% of their workforce last week, according to The Wall Street Journal. Beyond Meat CEO Ethan Brown said inflation had driven the cost of a pound of imitation beef to $8 per pound, while ground beef was $5 per pound, stressing his company’s commitment to bringing the cost of their plant-based product in-line with actual meat, according to the WSJ.
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