Expect Higher Meat Prices This Summer, Says Farm Bureau

Summer grilling season will cost meat lovers a few more dollars this year, according to the American Farm Bureau Federation (AFBF). Wholesale meat prices climbed higher during the first quarter of the year and retail meat prices quickly followed suit.

“Retail prices for beef and pork cuts have steadily pushed into new record territory,” said John Anderson, AFBF’s deputy chief economist. “For pork, the average retail price per pound in March was higher than the prior four months and eclipsed the record level set last fall. Consumers saw the sixth straight month of new record retail prices for fresh beef products, [reflecting] a 23% increase compared to the 2010-2012 average,” he explained.

Retail pork prices are currently 18% higher than in 2010-2012, while chicken is up 9%.

“Farmers and ranchers are raising smaller numbers of hogs and cattle. This is the key factor contributing to higher retail meat prices, a trend that is likely to continue through the summer and, at least for beef, into next year,” Anderson said.

The long-term effects of searing back-to-back droughts in 2011 and 2012 resulted in less feed available for cattle, and ultimately forced a substantial decline in cattle numbers that is now resulting in lower beef production. Year-to-date beef production is down by close to 5%, according to the Agriculture Department.

According to the U.S. Drought Monitor Index, at least half of Texas, two-thirds of Oklahoma and Kansas, nearly all of New Mexico, Arizona and Nevada, and all of California are in severe to exceptional drought. With no drinking water, and thus no grass for grazing, and facing soaring dairy-hay prices, ranchers are sending their cattle to slaughter or to other parts of the country for feeding. This added expense will manifest itself at the supermarket cash register—and drive some ranchers out of the cattle business.

Six Week Loop

“In a normal drought, we would see fire-selling for 30 cents a pound,” said Stan Bevers, agricultural economist with Texas A&M AgriLife Research and Extension in Vernon, TX. “Everyone would flood the market with cows.” Instead, cull cow prices are over $1 per pound because demand for beef has remained high despite record-high prices.

Meanwhile, the feeder cattle market is booming. In May, at an auction in Oklahoma City, 11,000 head from Oklahoma, Texas, Arkansas and Kansas were sold to buyers in northern states planning to turn them out on grass. The steers weighed between 550 and 600 lbs. and sold for between $2.17 and just under $2.29 per lb.

Porcine Epidemic Diarrhea virus, or PEDv, is expected to result in a 2% decline in 2014 pork production, according to USDA, further influencing retail prices for bacon, ham, pork chops and other products.

The good news for consumers is that, although they will pay a bit more for meats this summer, there will be plenty of everyone’s favorites to go around.

“Meat supplies will continue to be plentiful,” said Anderson.