Prices rise in beef industry

Premium ContentMouse over Home then click on Premium Content for information.

Jennifer Moody looked at the steaks in the Hy-Vee meat case like a teen driver looks at Porsches in the showroom window.

Then she bought a pound of hamburger. A little something special — for meat loaf, she explained. More often it is chicken or fish in the Omaha shopper's cart.

"Once in a while," she said, glancing again at the $10-a-pound T-bones, "I'll walk by and go, 'Well, can't afford that.' "

It's not a rare reaction these days, even in "The Beef State." Tough times are being especially tough on the burger-and-steak crowd.

Retail beef prices are near record levels after increasing 10 percent last year, according to the U.S. Department of Agriculture. Some analysts say they could go up another 10 percent this year — more than double the inflation rate for all food.

At the root of the situation — the start of the supply chain — is a skimpy U.S. cattle population: 91 million, the fewest since 1952, the USDA reported in January.

Yet that's just part of a complex upheaval going on in the beef industry in an era of worry about world food supplies, climate change and intense competition for land and water. Although it's cold comfort if you're just lusting for cheap filets to slap on the grill, analysts see hope for growth in the beef biz, which is still Nebraska's biggest economic sector.

Consider:

>> The cattle census is low because Southern ranchers, especially in top-cow-state Texas, have thinned herds during the worst drought in a century. There's too little grass to feed the critters. And many of the survivors have turned Husker.

That is, Texas ranchers have been snapping up leases on Nebraska's lusher pastures and moving their cattle 600 miles north, following routes cowboys used in the 1800s.

While the size of Texas' herd fell by 11 percent last year, its biggest drop in nearly 150 years of record keeping, Nebraska's grew by 4 percent, the USDA said. Now Nebraska is home to 7.1 percent of all U.S. cattle, its largest share since 1867, and Texas has 13 percent, its smallest share since 1986.

That dramatic migration probably isn't permanent but will be slow to reverse, said Rick Rasby, a University of Nebraska beef expert who specializes in cow-calf operations.

>> Beef has always been right in Nebraska's wheelhouse, now even more so. A big reason is under your feet: grass.

The state's got a lot of it, especially in the Sand Hills. It's not economically useful for many things except making beef, but it's perfect for that: Such forage is the raw material that those protein factories called cows are uniquely suited to use.

Economists call this — along with plentiful water, nearby packing plants and good shipping location — comparative advantage. It has tipped further in Nebraska's favor, for the time being, because the state has escaped the worst of the drought and has something of a Plan B: its irrigation resources, Rasby said.

However, not everyone in the industry is equally positioned to benefit, said Jeff Stolle, vice president of marketing for Nebraska Cattlemen. Middlemen — feeders, packinghouses, grocers, restaurants and others who sit between the rancher and you, the eater — still face tight profit margins, "quite a challenge," he said.

Ranchers, comparatively, are in the catbird seat, Stolle said.

Even so, it's no time to party, said Dave Wright, a fourth-generation rancher near Ewing, at the east edge of the Sand Hills, and president of Independent Cattlemen of Nebraska. Ranchers now hold such valuable merchandise — calves and cows — only because years of hard times made the animal numbers shrink.

"We have this because we've eliminated herds," Wright said, and rebuilding them takes a lot of time and entrepreneurial daring.

Survivors like him know their improved profit margins are fragile and have much ground to make up. In 1979, he recalls, 12 steers sold at enough profit to buy a new pickup. Now it would take 50, he said.

"I don't want to sound doom and gloom. We are enjoying this," he said. "But I've seen the past. ... We all smile, but it's a nervous smile."

>> Consumer demand for beef, although fallen from its heydey of the 1950s and '60s, is strong — otherwise it couldn't support the prices that make you gulp at the meat counter.

And industry analysts foresee it growing stronger, largely because foreign beefeaters increasingly are outbidding Amercians.

"It is an international marketplace. The rest of the world is clamoring for our beef," said Jim Robb, director of the Livestock Marketing Information Center, a public-private research group. Eight years ago, 2 percent of U.S. beef was being exported, he said. Last year it was 11 percent.

"The need for animal-based protein is growing," following a historical pattern for developing economies, he said.

Moreover, even domestic demand shows hints it could shoot upward again, Robb said. He called it "the Food Network effect."

In today's media landscape, interest in ultra-quality or artisanal products has proliferated with celebrity chefs. Beef could be next on the what's-hot list, he said.

"Foodies are a factor."

Much depends, though, on economic recovery, both here and abroad, Robb and other analysts said.

"We are truly at a bit of a key time."

The prices? They're likely to stay as high as the steer statue gazing out over 72nd and F Streets from the roof of Anthony's Steakhouse.

"I can chart them for you by the week," Anthony's chef Doug Rowe said with a vexation that had nothing to do with the dinner rush.

"There's nothing, really, that you can do about it," he said. Other kinds of restaurants can alter their menus or adapt their recipes, but a steakhouse has nowhere to hide: He knows one thing keeps the customers coming, and it can't be camouflaged.

Contact the writer: 402-444-1140, roger.buddenberg@owh.com

« Metro/Region

Share