High Prices: The Beef Over Beef

Americans like hamburgers, but maybe, not so much anymore.  The numbers are in and ground beef again, has hit another all-time high of $4.24 a pound in February.  That's twice the price of late 2009 when it was selling for $2.19 a pound.

Ground Beef Prices - Bureau of Labor Statistics

The problem with beef prices is that there is less being produced while the demand is still high.

Until demand falls, or the supply increases, prices will continue to rise. So, theoretically, cattle ranchers should want to increase production to take advantage of this.  So why do beef supplies just keep falling? This drop in supply has actually been accelerating since late 2012.  In actuality, more cattle farmers are giving up raising cattle because energy and feed prices are increasing too fast.  Also, the severe 2014 winter and the drought in the Southwest have taken their toll; but only in the last couple of years.  Additionally, some ranches have to be sold off to land developers in order to pay the government its 40% estate tax (death tax).  Often a price too high for any of the heirs to pay and still operate the ranch profitably.

The truth is that the tax policies and the cost of fighting climate change are killing the beef market.  Feed corn has become more costly due to the increased production of ethanol for fuel.  Energy prices -- especially under Obama -- have increased faster than inflation as producers of electricity move to abandon coal ahead of harsh restrictions.  The real worry for U.S. beef producers is that high prices in this country may attract an onslaught of imported beef which, in turn, could only further decimate our own beef production.   

Lastly, a crustacean alert!  Lobster, at just $2.89/lb (in 2013), may quickly replace that Saturday afternoon BBQ'd hamburger. 


References:

BLS: Ground Beef Prices: http://data.bls.gov/pdq/SurveyOutputServlet

US Beef - Bloomberg: Another Year of the Chicken: U.S. Beef Supply Will Fall Again in 2015: http://www.bloomberg.com/bw/articles/2014-11-18/us-beef-supply-will-fall-again-in-2015-chicken-demand-will-rise

Ethanol pumping up food prices - USATODAY.com: http://usatoday30.usatoday.com/money/industries/food/2011-02-09-corn-low_N.htm

Food and Electricity Prices Rise to RECORD HIGH AGAIN!: https://www.youtube.com/watch?v=AKOHJTijgsY

Cost per pound of lobster: https://www.google.com/search?q=cost+per+pound+of+lobster&ie=utf-8&oe=utf-8