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|Paynesville Press - October 22, 2003|
Live cattle prices reach record high last week
Cattle prices hit an all-time high in central Minnesota last week - which is good news for cattle producers, but bad news for consumers.|
Throughout the past year, live cattle prices have steadily climbed, in part because of a drought in the western United States and in part because of a ban on Canadian beef because of mad cow disease.
But when the price climbed to $1.20 per pound last Monday, local beef producer and cattle trader Jack Hennen was shocked. "I've never seen anything like it before," he said. "Two weeks ago, I sold cows for $1,100 each and I said 'Wow.' This week...cows from the same pen brought $1,500 each."
And although the price was back to about $1.00 per pound by the end of the week, it is still significantly higher than in previous years, said Greg Supan, assistant manager of the Central Livestock Association, which operates a livestock auction in Albany.
Just over a year ago, beef prices were at a near-record low when fed cattle (beef cattle, usually raised for beef production) brought $0.60 per pound, said Supan. After a case of mad cow disease in Alberta prompted closing the U.S. border to live cows and beef last May, the the supply of beef began to dwindle and U.S. beef producers have not been able to keep up with demand because a three-year drought in western states - large beef producing states including Kansas and California - forced many producers to feed out and sell their herds.
Adding to the beef shortage is the fact that selective breeding has produced dairy cows that can produce large quantities of milk while having fewer calves, so fewer dairy bulls and steers are making their way to market and fewer spent dairy heifers are being slaughtered, added Hennen.
"It's simple supply and demand," said Hennen. Packers don't have enough cattle to fill their beef orders, so they up the price to lure producers to the market, he said. While beef production is down as much as 18 percent nationwide, demand remains high.
The USDA reported that Americans ate an average of 67 pounds of beef per person in 2002, up two percent from 2001 when the average consumption was 66 pounds and almost four percent higher than 1993 when consumption was 64 pounds.
Some of the increase in beef demand could be attributed to the popularity of high-protein, low-carbohydrate diets such as the Atkins Diet, said Meeker County Extension Educator Dave Schwartz. He believes the popularity of these diets sends a message to consumers that beef is a viable alternative to poultry or fish for health-conscious people. He thinks demand will continue to increase.
Going on a high-protein diet could be costly in the future.
Dave Schrupp of C&G Meats in Paynesville said that his cost of beef has gone up dramatically this year, and he has no choice but to pass the cost on to his customers. His price for rump roast went up 80 percent in the last three months.
According to Schrupp, prices are the most volatile he has ever seen. One of his wholesalers said as soon as he hangs up the phone after an order the price will go up.
In May, the retail price of sirloin at C&G was about $3.99 per pound Now it is $4.99. A one-pound ribeye steak was about $7.49 in May, said Schrupp, who expects his next shipment of ribeyes to cost as much as $9.99 per pound.
Prices could go even higher. "We would like to hold the price down, but there's no way we can do that anymore. We just can't afford it," he said.
Schrupp believes some consumers will turn to other meats. He expects an increase in poultry and pork consumption with beef prices so high.
Cattle prices probably won't fall significantly in the near future, said Hennen. Although The United States did open up its border to allow in some boxed, boneless cuts of young beef from Canada, there is no indication when live cattle will be allowed into the country, he said.
Because many western cattle producers got rid of their herds, including heifers, Hennen estimates that it will take at least three years for them to recover. They killed the factory, so to speak, he said.
In the meantime, prices will remain high and could go higher still. "How high will it go? There's no rules," said Supan.
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