If your plans for this weekend include barbecuing a platter of pork chops and sizzling some steaks, get ready to pay up: Meat prices have skyrocketed nearly 10 percent compared to this time last year.
Oddly, the rising prices come at a time when feed costs have fallen dramatically, which should bring meat prices down. Feed costs are markedly lower—almost $3 less—this year than they were last year, when they were noticeably up from a drought the year before. Yet shelf prices are still high.
Additionally, two factors that might seem like likely culprits—the drought affecting the western United States and an E. coli recall on beef—both haven't had much of an impact. The drought will likely raise meat prices down the road, but that hasn't happened yet: Feed and meat prices are set far in advance in the futures market. Last year was a good year weather-wise, so this year's prices remain unaffected. As for the E. coli scare: You'd think that the meat industry would be hard-pressed to sell beef to shoppers, bringing prices down. But consumers seem to be shrugging it off, and demand hasn't fallen.
So what is causing the spike in meat prices? The answer is consumers.
“Consumers are feeling better about themselves and their income situation and willing to pay up for good meat,” says Bob Young, chief economist at the American Farm Bureau Federation. But, he says, there aren’t enough fancy cuts of meat to satisfy all the people who want them, which means grocery stores can hike up prices.
“I think that given the stronger demand, folks are going to find not quite the cut they want for the price they want,” Young said. “They might have to downmarket a bit.”
The high prices don't seem to be just a hiccup in the market, warns Young: Meat consumers should expect this price jump to be the norm for potentially three years.
“We’re talking at last 18, 24, maybe even 36 months,” Young said, almost apologetically. “It takes a long time for beef production to turn around. You’re talking 18 months before the calf is ready to breed, then 7 or 8 months before she delivers.
What about making up for the increased demand with supplies from abroad?
“We don’t tend to import high cut beef,” Young said. “We get a little bit of product from Australia. Mexico has pork but they’re going through drought issues. Canada has started doing some more slaughter but they don’t have much. Brazil has some disease issues.”
Young did say one thing to ease meat lovers’ anxiety: What little we do import tends to be hamburger meat, which means barbecue bashes featuring burgers may be cushioned from the pricing boom.
That said, steak tends to be all-American—and that means pricey.
“No one really grows steak the way we do,” Young said. “You can’t really go anywhere else for this. It’s the way our beef is raised: when you go out and want that nice, juicy steak, you need grain in that animal for that marbling and other flavorful properties.”
Americans also have some competition from emerging economies whose rising incomes and expanding palate mean a taste for some meaty fare.
“Our exports are doing reasonably well,” Young noted. “Japan, China, and a number of other markets have been pretty good to us. We’re at the stage where we’re exporting one in 10 animals. The U.S. has emerged as a strong meat exporter.”