To paraphrase a Paula Cole song, where have all the cows gone?
At the start of 2014, U.S. ranchers had 87.99 million head of cattle, the lowest total since 1951. Long periods of drought in California and Texas are largely being blamed for the declining herd figures, so it's not like the numbers should come as much of a surprise. Neither should rising beef prices hitting consumers and restaurants (and restaurant customers, of course). Analysts have forecast that beef prices will increase this year and for years to come.
Other factors, including rising costs for fuel and feed and increased demand for beef in developing countries, have also helped push beef prices higher and higher. "Really, the story’s pretty simple, and it begins back in 2007, 2008," Ricky Volpe, research economist at the U.S. Department of Agriculture, said in a Marketplace interview recently. "In both those years, we saw basically every macroeconomic factor that influences food prices start working in the same direction to start driving up food price inflation."
Regardless of the fact that rising beef prices make sense and shouldn't really come as a surprise, shoppers and restaurant owners are being smacked with sticker shock lately when attempting to round up brisket, steaks, chuck, ground beef, and pretty much every other part of the cow. In the most recent Department of Agriculture report, the average retail price of fresh beef was measured at $5.04 per pound, up more than 50¢ over a two-year span and the highest price ever recorded.
What's especially alarming to consumers is that beef prices have continued on their upward trajectory through the early part of the year, a period that is traditionally a lull in the market in between two peak-demand times, the winter holidays and summer barbecue season. "Beef really didn't drop much since the holidays," the owner of one Milwaukee meat market told the Journal Sentinel. "Even the (beef) dog bones, those have gone up quite a bit," he said. "We used to give those away."
Steakhouses and other restaurants that lean heavy on beef are being squeezed as well. “How much have prices gone up in a year?" John Sanford, owner of BBQ on the Brazos in Cresson, Texas, asked before answering his own question in the Dallas Morning News. "Try in a month -- prime brisket had gone up 50 cents a pound since December. Beef prices are killing everybody, and I mean everybody, in the barbecue business.”
Analysts expect that it will be several years before America's cattle herds increase substantially in size. Until then, we should get used to the idea that beef prices will keep soaring, perhaps at a rate of 7% or 8% per year.
Some think those estimates are on the low side. Sanford told the Morning News, "“I think beef prices will go up over 10 percent this year," and that while he hasn't raised menu prices yet, he will probably have to do so soon. Given the relentless of rising beef prices, he may even do what was once unthinkable: The restaurant might break with a longstanding tradition and finally (gasp!) put chicken on the menu.