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Low supply of beef driving up prices

  • The Wichita Eagle
  • Published Friday, May 16, 2014, at 7:58 p.m.
  • Updated Sunday, May 18, 2014, at 7:24 a.m.

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Record high beef prices driven by low supply are steering some customers to other meat options at the grocery store.

“If something is higher like steak or hamburger meat, I’ll go to the cheapest thing I can find,” said Linda Gourley as she left Dillons at Central and West Friday afternoon. “That’s just all there is to it, because I won’t pay the high price.”

Data from the U.S. Department of Agriculture show the retail value for fresh beef has increased from an average of $3.96 per pound in 2008 to $5.49 per pound in April 2014.

“This is the highest-priced product I’ve ever seen,” said Alan Waggoner, owner of Yoder Meats, which processes and sells a variety of meat in Yoder, Wichita and Maize. “It’s certainly uncharted territory.”

It’s all about supply and demand. Low supply means there’s greater demand, pushing prices higher. And the U.S. is experiencing a “historically low inventory” of beef, Waggoner said.

“We’re still feeling the effect of the drought two years ago, which caused many farmers to liquidate their herds since there was not as much hay and corn feed prices increased,” he said.

In Kansas, feedlots are feeding the fewest number of cattle since 1999, according to government reports.

The National Agricultural Statistics Service reports that feedlots with capacities of 1,000 or more head had 2.01 million cattle on May 1, which is down 3 percent from the same time last year.

The waning supplies have caused Cargill Beef – one of the country’s biggest meatpackers – to lay off an undisclosed number of workers in its Dodge City slaughterhouse. Last year, it closed its Plainview, Texas, slaughterhouse.

Meanwhile, Arkansas-based Tyson Foods – one of the biggest meat processors of chicken, beef and pork in the U.S. – reported that its second quarter net income more than doubled.

The prices likely won’t go down anytime soon.

“The bottom line is we’re going to see higher prices for next three years or so until those cows have calves, those calves are raised, fed, go to market and are harvested to produce beef,” Waggoner said.

Other meats

It’s not just beef that’s seen a price increase. Thousands of piglets died recently from a virus, limiting the pork supply, and chicken prices also have gone up.

“We’re seeing people buy less,” said Shane McGuire, sales manager at Indian Hills Meat and Poultry, 1200 N. Mosley, a wholesaler for restaurants and individuals.

“We’re seeing people slashing their budget because prices have gone up. When the beef went up, people jumped to pork. Once pork went up, they jumped to chicken. It’s causing a little bit of a problem.”

But pork and chicken will recover faster than beef, Waggoner says, since those animals reproduce more quickly than cows. They also grow faster.

McGuire said he thinks prices might start to drop off a bit after Labor Day and grilling season.

Food prices also have an impact on other areas of the market. When people spend more of their money on the essentials, they tend to spend less on luxury items, Waggoner said.

In an effort to control prices, some retailers may sell cheaper beef cheek meat in their ground beef, Waggoner said.

Until prices come back down, consumers like Gourley are going to keep checking advertisements and clipping coupons.

“We really look before we buy,” she said.

Contributing: Associated Press

Reach Kelsey Ryan at 316-269-6752 or kryan@wichitaeagle.com. Follow her on Twitter: @kelsey_ryan.

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