Beef Pricing Questions, Answered
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Suggested Lead: We recently spoke with Trevor Amen, manager of marketing for the National Cattlemen’s Beef Association, contractor to the Beef Checkoff Program, who gave us an update on why beef prices are increasing. We also asked him what’s impacting “record” prices as opposed to natural rise due to inflation?
Amen 1: “Supplies are cyclically tight right now. Tough winter weather greatly impacted performance in feedlots. Average carcass weights were as much as 26 lbs/head lighter than last year and are currently running about 18 lb lighter. Each pound (weekly change in carcass weight) equates to 1,000 fewer cattle per week coming to market. Beef trade also has a significant impact on supply. The great news is that U.S. beef exports are up 20 percent. However, the weak dollar has negatively impacted our ability to attract as much import business as we have in years past, which makes us more reliable on what’s produced in this country. On the demand side, we’re starting to see a rebound in protein demand in both foodservice and retail channels.” (44 seconds)
Amen also tells us how beef price increases compare to other proteins.
Amen 2: “We’re not alone. Wholesale prices are up for all meats. Pork is reaching record highs at 30%. Turkey prices at wholesale are up over 20%. Beef prices are up 15% and chicken is up around 10% over a year ago levels.” (14 seconds)
So what does this mean for producers?
Amen 3: “As business owners, America’s farmers and ranchers have watched their cost of business increase considerably over the past few years, so they are encouraged when they see higher prices as it positively impacts their margins. The margin has improved, but it’s still not to where it needs to be to see widespread profitability across the industry. Although there are no signs of this yet, we finally have an economic incentive to rebuild the beef cow herd in the United States. And it will take years to accomplish this after several years of economic hardship.” (28 seconds)
So while many Americans are still hurting economically, Amen tells us what the beef industry is doing to help consumers and channel partners deal with price increases.
Amen 4: “Cattle farmers and ranchers have always been sensitive to economic challenges our consumers face as they seek to purchase a high-quality source of protein. Value is a driving force behind innovative programs that bring new beef cuts to market and provide consumers with great savings when shopping the meat case. In fact, during the height of the recession, we worked side by side with retailers to create significant savings through increased beef promotions. And the opportunities for savings continue. It is anticipated that nearly 300 million consumer packaged goods and more than 100 million beef specific money saving coupons will be distributed through the various beef promotions in 2010.” (39 seconds)
For information on other efforts being funded with your beef checkoff investment, visit the checkoff-funded www.BeefRetail.org or www.MyBeefCheckoff.com.
The Beef Checkoff Program was established as part of the 1985 Farm Bill. The checkoff assesses $1 per head on the sale of live domestic and imported cattle, in addition to a comparable assessment on imported beef and beef products. States retain up to 50 cents on the dollar and forward the other 50 cents per head to the Cattlemen’s Beef Promotion and Research Board, which administers the national checkoff program, subject to USDA approval.
Funded by the Beef Checkoff.
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