Published on 07/17/03

High demand, mad cow scare raises beef prices

By Brad Haire
University of Georgia

If you like to eat beef, you may have noticed it’s costing more this summer. Consumers in other countries like fine U.S. beef, too. And they’re using their money to fight for it.

With the smell of outdoor cooking filling the air, summertime is “The Grilling Season.” The U.S. beef industry sees Memorial Day through Labor Day as the high-water mark for their demand each year, says Curt Lacy, a livestock economist with the University of Georgia College of Agricultural and Environmental Sciences.

Summer demand

It’s not unusual for the high demand of summer to raise retail prices for shoppers. But this year, prices are noticeably higher than normal, Lacy said.

The average retail price for grade A beef cuts, like steaks and roasts, is $3.61 per pound, about 30 cents higher than this time last year, he said. (Beef prices are about 80 cents higher than they were in the summer of 1994.)

The main reason for higher prices is simple: Consumers in other countries like to cook out, too. And U.S. beef is popular around the world.

“U.S. consumers are having to compete against consumers in other countries for that U.S. beef,” Lacy said.

Canada’s beef is also popular around the world. It normally exports as much as 60 percent of its cattle supply each year.

But not this year.

Beef scare

In May, Canada’s beef industry was slammed when mad cow disease, a devastating cattle disease, was discovered in a single cow in Alberta. Since then, Canadian beef has been banned or hit with high tariffs in other countries.

But world consumers still want their beef. And the U.S. industry has stepped in to help supply that demand. Domestic prices have risen because of it.

The good news for U.S. shoppers is that beef prices have probably peaked for now, Lacy said. Prices will begin to moderate in the second half of summer.

The United States’ main global customers are Japan and Mexico. The U.S. industry supplies Japan 811 million pounds, or 45 percent of its annual beef consumption, and the bulk of Mexico’s consumption, 394 million pounds, each year.

Lacy predicts U.S. cattlemen will export even more to these countries this year because Canada was also a supplier of their beef.

Low weight

Domestic U.S. beef prices would be higher this year even without the Canadian beef problem, Lacy said, because U.S. production is down.

U.S. cattlemen are selling more cattle, but the weight of the individual animals is lower. The average weight of a steer sold this time last year was 1,252 pounds. It’s 1,221 this year.

“When producers get these higher prices, they’ll try and move the cattle as quick as they can,” he said, even the lower-weight cattle.

Right now, U.S. cattle producers are getting about 75 cents per pound for finished animals. That’s about 12 cents more than at this time last year.

Even with higher prices, Lacy said, Georgia cattlemen should still keep a sharp eye on how and when they sell and look at new marketing opportunities.

Brad Haire is the former news editor with the University of Georgia College of Agricultural and Environmental Sciences.