The Price of Beef

BEEF_snoot-May14A couple of months ago a cattleman over in the Rainy River area advised us to keep an eye on the price of beef in the grocery stores.  “The price of beef on the hoof out here is so high that farmers are loading their animals onto trucks and sending them out West,” he said, “rather than going to the trouble of sending them to the local abattoir.”

“Watch the pricing in the grocery stores,” he advised. “It’s going to go up.”  Lo and behold:  beef set a record price in March, selling at $5.72 a pound on the national market.

What that means for us is that lots of our local cattlemen aren’t selling their beef locally.  Faced with the choice of either going to the trouble of sending their animals to Thunder Bay Meat Processing for slaughter and direct sale to local customers at retail prices OR walking them up a ramp onto a freight truck and waving bye-bye for only a tiny bit less money, they’re picking the easier route.  Who can blame them?  We’re not paying them extra for their trouble.

BEEF_3-may14We’ll come back to that in a bit, but meantime:  what’s behind this?  Based on our reading, a number of factors have been suggested, among them:

  • the rising price of fuel translates into rising prices for feed
  • the rising price of fuel translates into rising prices for meat processing and transport
  • good old supply and demand

The first two factors are pretty much self-explanatory, but let’s look at the supply-demand scenario, because it has definite ramifications for us here in Thunder Bay.

After – or even during – the Bovine Spongiform Encephalitis (BSE or Mad Cow Disease) crisis just over a decade ago, many beef farmers – whether heartbroke or just broke – liquidated their herds and got out of the business.  Canada’s beef inventory alone has decreased by about 25% since 2005; the US’ by about 11%, bringing us to a tipping point which, people are suggesting, has been worsened by the cost of fuel and now by the stresses of the winter just past.  Fierce cold and drought conditions increase herd losses and reduce birthrates:  we’ve got even less beef than we thought we did.

So prices are going up in the grocery store and at wholesale.  What does that mean for us?  You’re not seeing prices go up at the Market, are you?

The farmers who have stayed in business since BSE tend to have done so for one of two reasons.  One, either they’re large enough that they’ve been able to continue making a reasonable profit.  The other is that it’s what they’ve always done, and they’ve sucked up the new wage conditions and figured out how to make it work.  Rising prices at the grocery store mean rising prices at the farm gate.  This jump in price means some of them are making enough money on beef right now that they actually might turn a tiny profit on the farm this year.  If you love your local farmers, please cheer for them.  For them, this is the best news possible.

For eaters, it could mean the beginning of a new pricing trend.  Market friends, there’s competition.  We don’t mean farmers competing for your business; we’re talking about customers competing for farmers’ products now.  How’s that for turn-about?  If beef demand is rising to the point where farmers have their choice of buyers, just like most shoppers they’re going to choose the buyer who offers them the best price and the least effort.  

Today’s forecast for summer BBQ:  If Thunder Bay wants to continue buying local beef we need to seriously think about paying more than the people out West are offering.  Our beef farmers deserve at least as good a wage from us as they’d get from the stockyards.

Author: administrator

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