August 3, 2014

Short supply of beef and pork sends prices soaring

Soaring meat prices are hitting producers, suppliers and consumers across the country.

Soaring meat prices are hitting producers, suppliers and consumers across the country.

The price of beef and veal shot up more than 10 percent from June 2013 to June 2014, according to the most recent Consumer Price Index. Pork prices rose by 12 percent.

The largest price increases in three years are driven by one main thing: supply. Drought has thinned herds of cattle. Disease has struck pork.

While demand is high and technology allows more producers to get more meat than ever out of cattle, the domestic beef supply is at a 63-year low, according to beef industry experts and U.S. Department of Agriculture data.

Tony Toso, a cattle rancher at Cotton Creek Ranch in Hornitos, said cattle supply is estimated to be similar to levels in the late 1950s and early 1960s. With today’s much larger population triggering a higher demand, a spike in price is inevitable, he said.

According to experts, the beef supply could be a problem for several years.

“You only get a calf a year from a cow,” Toso said, “so it’s going to take sometime to dig out of this hole.”

Indeed, a cow can give birth to only one calf a year, and the calf can take 18 months to reach its required weight before it’s sent to market. With the lowest cattle population in over half a century, cattle farmers are reluctant to sell much of their herds as they rebuild them, experts said.

The drought that started in 2011 in many major cattle-producing states, including California and Texas, cut down the grazing space for cattle. That forced farmers to sell animals to feedlots to be slaughtered.

Dan DeWees, a cattle rancher in Merced, said he’s had to cut his herd by 30 percent and has sent his cows to market earlier than usual because financially it was the smart thing to do.

“It’s very costly; the price of water went up four times,” DeWees said. “And it will continue to be a problem until we get sufficient rain.”

The economic recession and price shocks in cattle feed have also contributed to the beef supply problem. Currently, cattle feed costs about $300 a ton. Before the drought, ranchers were paying less than $200 a ton, DeWees said.

Consumers haven’t seen the worst yet. According to experts, beef prices are expected to continue rising until 2016 before consumers can expect any relief at the checkout counter.

“Just wait for the final impact, DeWees said, “by next spring, it will really hit the grocery stores.”

Meanwhile, pork farmers in more 40 states have reported cases of a pig virus called porcine epidemic diarrhea, an illness most fatal to newborn pigs. The virus has hit many pork farmers in Midwest states and North Carolina harder than others. The nation’s pig population is at its lowest since 2006.

However, rebuilding isn’t a problem for pigs: Sows give birth to several piglets at once. But the pig virus appeared for the first time about a year ago, killing thousands of newborns, according to the USDA.

Tim Stroda, the president and CEO of the Kansas Pork Association, emphasized that PEDv can’t affect humans.

But it cuts down on the pork supply. As a result, bacon and breakfast sausage prices were 14 percent higher this May than they were in May 2013, the largest year-over-year increases since June 2011, according to Labor Department data.

A fast-tracked vaccine is expected to be available for pork farmers around September, but there’s a concern that the disease might return once temperatures drop in the fall and winter, experts said.

Until researchers distribute the PEDv vaccine to farms, breakfast establishments are feeling an impact.

At Bacon’s Bistro & Cafe in Hurst, Texas, a 20-year-old family-run establishment outside Fort Worth, the wholesale price of a 15-pound case of thick-cut bacon is 15 percent higher this month compared with the same time last year.

Owners Adam Daily and Eva Burrull-Daily estimate they’re spending an extra $200 weekly on bacon now compared with a year ago.

The Dailys moved the bistro into a new building across the street last October, and they didn’t want to raise prices and have customers think that was related to the new building. But with pork costs rising, they expect to bump up their prices sometime this summer.

“Pork-wise, we’re at the highest price levels in the four years that we’ve had the restaurant,” said Daily, who’s 40. He later added: “We’ve held on knowing eventually we’re going to have to make that increase.”

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