BEEF Daily

Is Beef Now A Luxury Item Rather Than A Budget Meat?

RSS

As beef prices skyrocket, how will our consumers be able to afford our product, and what does that mean for beef producers?

It’s certainly a good time for the beef industry. Bull sales have been on fire. Cull cows are worth a pretty penny. Just try buying a bred heifer these days; an open cow is pretty costly to replace. Last week at my local auction barn, fed cattle were going for $153/cwt. It’s an exciting time to be in the cattle business, but how are these high prices impacting our consumer?

When I read articles that report chicken is surpassing beef in sales, I honestly can understand why. Taste superiority aside, chicken wins hands down when it comes to sticking to a budget. I can buy a whole fresh chicken at the low price of $0.69/lb., but a pound of 93% lean ground beef will run me $4.99/lb. And if you’re looking to buy a decent steak at the grocery store, you better have your pennies stacked up. A New York Strip costs $12.99/lb.!

 

Subscribe now to Cow-Calf Weekly to get the latest industry research and information in your inbox every Friday!

 

Without a doubt, our beef-loving consumers are starting to feel the pinch, and this can’t bode well for the future of our product.

Yesterday, TIME magazine carried an article entitled, “Beef, It’s What’s No Longer Affordable For Dinner,” written by Brad Tuttle.

Tuttle writes, “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 USDA report, the average retail price of fresh beef was measured at $5.04/lb., 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. 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.”

Despite high prices, beef has continued to fare well in the market. As BEEF Cow-Calf Weekly columnist Troy Marshall pointed out in his Jan. 23 piece, “Did You Ever Think You’d See $1.50 Fed Cattle?” virtually everyone was surprised by beef’s demand strength last year, while pork and poultry struggled.

He attributed some of the strength to further liberalization of the Japanese market, and added this: “I also think we’re finding that, at today’s lower consumption levels (for beef) , consumers are not nearly as willing as they were previously to substitute.” He goes on to say: “When Americans were consuming 70 lbs. of beef on a per-capita basis, I think consumers were more price-sensitive and willing to exchange other proteins for beef. At today’s per-capita consumption levels, however, they aren’t as willing to substitute. And if that continues, we should be bullish regarding our ability to sustain these heady price levels for quite some time.”

Time will tell which way consumers ultimately roll, but what is the price point at which beef consumers balk? What strategies should we employ to broaden beef’s retail appeal and keep it at the center of the plate? Share your thoughts and suggestions in the comments section below. 

 

More articles to enjoy:

B-PIKE Program Offers Vet Students Real-World Experience In Feedlot & Stocker Cattle

Experience Winter Wonderland On The Ranch

USDA Estimates 16% More Beef Cows in 10 Years

Discuss this Blog Entry 7

Stephen (not verified)
on Mar 6, 2014

If we keep bringing it up and keep saying it is I'm sure some will think of it that way. If u tell people something often enough they will believe it.

Anonymous (not verified)
on Mar 6, 2014

Cadillacs have always cost more than bicycles......

W.E. (not verified)
on Mar 6, 2014

What strategies should we employ to broaden beef’s appeal and keep it at the center of the plate? More cattlemen should try direct-marketing grassfed beef. Notice the word "retail" is missing. In a vertical cattle operation, at $1.55 per pound liveweight, an all natural grass finished steer can compete with grain finished in our local market, and keep our customers both satisfied and healthier. We do the extra work to the benefit of many in our local economy. Here in the upper south, we can finish steers on grass two ways: We can calve in the fall, keep the calves through two winters and they will finish after three or four months on grass, or we can calve in the spring, keep them through two summers, and they'll finish on stockpiled fescue in the fall. It will work (provided spring ever comes.) The customers love our Hereford sired beef, and come back for more. The challenge is to begin by selecting seedstock that do best on grass, not too big, not too lean, adapted to local forages and balanced with the local environment.

Don L (not verified)
on Mar 6, 2014

WE is right on. Took this thought to heart years ago. Just retire and have bought two bred Galloway cows to start my herd. Moderate framed and finish well on grass. Looking to expand with some commercial cows and cross with Galloway.

Joe Bob (not verified)
on Mar 7, 2014

Why are we apologetic for producing a superior product that commands higher prices? For years we have been behind the cost of production, living off our land inflation! The young generations could see this and left for jobs in the cities, creating the oldest producers since records have been kept. If we are going to attract new capital and producers our business mdel is needs to show sustainability at profitable levels. Niche markets have their place and will work for some, but our business model needs volume to garner the efficiences modern technologhy allows. Car makers don't make them one at a time nor can we. Are $150 finished too high with $50-75,000 pickups?

rachael bannister (not verified)
on Mar 11, 2014

I have not purchased any commercially grown beef in years.
If I am going to eat beef at all which is perhaps 4 times a year it is from locally raised and processed small herds.
I keep my hard earned grocery money local.
There is such a thing as pricing something our of the market.

Terry Church (not verified)
on Mar 16, 2014

Yes prices may seem high at the supermarket, but look at the costs involved to get it there. Also there is supply and demand, that is another factor. We must remember that cattle numbers have been down for some time. US cattle producers have superior product that is safe and not only wanted in the US, but also in the foreign markets.
I can see how a family on a tight budget may have to choose chicken over beef. The beef industry needs to find a way to stay on the dinner tables of tight budgeted families, to be able to compete with the chicken and pork markets with these families.
I personally hope that everyone that wants beef will be able to get beef in some form, weather ground or steak.

Post new comment
or to use your BEEF Magazine ID
What's BEEF Daily?

BEEF Daily Blog is produced by rancher Amanda Radke, one of the U.S. beef industry’s top social media “agvocates.”

Contributors

Amanda Radke

A fifth-generation rancher from Mitchell, SD, Amanda grew up on a purebred Limousin cattle operation in which she and husband Tyler are active. She graduated with a degree in agriculture journalism...

Sponsored Introduction Continue on to (or wait seconds) ×