Number of factors lead to rising costs
By Burton Speakman
Customers should temper expectations for a great buy on their favorite cut of steak or even ground beef for the family because prices are expected to increase for all beef products, analysts say.
A number of factors, including dry conditions, a shortage of cattle and rising costs for the limited amount of grain available, will push prices higher over the next few months.
There may be a slight reduction in prices temporarily as farmers sell their cattle to avoid having to pay the rising costs to keep them, said Joel Matthews, owner of Matthews Cattle Company in Canfield.
There are more cattle in the Mahoning Valley that owners will have to make decisions about, said Chad Bailey, ranch manager for Matthews Cattle. The number of beef cattle has been increasing in the Valley over the past few years.
“Since a number of farmers in the area have received oil and gas [lease] money, they have gotten out of dairy cattle and moved to beef cattle,” he said.
Increased feed costs are leading to debates about what to do with cattle — keep them and buy more feed or have them processed, Bailey said.
Bailey and Matthews talked last week about ways to secure additional hay to feed the herd. The two want to continue to increase the size of the beef cattle herd, which is currently at 110 head.
The shortage of cattle because of the ongoing drought locally and nationwide will increase prices for beef. The price will increase as much as the public is able and willing to pay, Bailey said.
“The only thing that may save us is exports,” Bailey said.
Henry Nemenz, owner of three IGA stores and seven Sav-A-Lot stores, said his industry already is seeing an influx of beef from Mexico and more lower-grade meat being offered to reduce costs. The beef from Mexico is typically $3 to $4 a pound cheaper.
Prices for American beef already have started to rise due to drought conditions in 2011 in the West, he said.
“I’ve been in this industry for more than 50 years, and I’d never heard of Mexican beef until last year,” Nemenz said.
These lower-quality and Mexican beefs do not have much fat and therefore are dry and tough when cooked, he said.
There are a lot of people who do not know what to look for when shopping for beef, Nemenz said.
They can receive some information by looking at the label, but the labels typically say produced in the United States or Mexico, he said.
The dry conditions that are reducing the local corn crop are directly impacting the area’s beef producers, said David Marrison, agent for the Ohio State University Agricultural Extension in Trumbull and Ashtabula counties.
“The corn crop has been hurt, and there won’t be enough to go around,” he said. Corn is prime feed for beef cattle.
A larger portion of the U.S. had moderate drought conditions or worse than at any other time in the 12-year history of the U.S. Drought Monitor, according to a release from the National Drought Mitigation Center at the University of Nebraska-Lincoln.
The overall supply of beef has gone down not just in Ohio but nationally over the past few years, said John Grimes, beef coordinator for the OSU Agricultural Extension.
“When you look at the drought map [National Drought Mitigation Center], the areas that have been hardest hit are some of the top cattle-producing states,” he said.
This is the second year in a row for severe drought in the top two beef-producing states of Texas and Oklahoma, Grimes said. The most-severe areas this year have just moved further north to impact other cattle-producing states.
There also is more demand now for corn than ever before between exporting, new uses and lower-than-average production, said Anthony Bush, vice president of the Ohio Corn and Wheat Growers Association.
It does take some time before the situation impacts consumers. Typically, the lifespan of cattle is 12 to 18 months, Grimes said.
“The current amount of beef being produced in this country is the lowest its been in the last 50 years,” he added.
The U.S. traditionally has exported a lot of beef, but the expectation is imports will continue to grow as the U.S. supply shrinks. The strength of the dollar also will have a lot of impact on how much is imported, Grimes said.