Extension: Costs driving up retail beef prices

COLLEGE STATION – Rising feed and transportation costs continue to keep retail beef prices edging higher, a Texas AgriLife Extension Service economist said.

“One of the big stories this year as we start 2008 is we’re seeing higher prices for consumer beef, whether it’s at the grocery store or restaurants,” said Dr. David Anderson, AgriLife Extension Service livestock marketing economist.

The annual average retail beef price for 2007 was $4.16 per pound, which was 5 percent higher than 2006 and exceeded the previous 2005 record of $4.09 per pound, according to U.S. Department of Agriculture-Economic Research Service data. Factoring into the high beef prices is record-priced crude oil, which is increasing transportation costs for many beef suppliers, he said.

“There are higher costs of getting it to the store,” Anderson said. “When we talk about $100 per barrel oil, it ripples through the economy. Everything you get at a restaurant or grocery store, we have to get it from somewhere else.”

Another reason is a leveling of beef production across the U.S., Anderson said. With fewer cows and calves in national inventory and increased export demand for U.S. beef, “that’s keeping pressure on beef prices,” he said.

Meanwhile, profit margins have also been tough for stocker producers. Recent USDA data indicated there were fewer calves on wheat pasture.

“There were not a lot of calves on wheat pasture this year, so what is a seasonal low may hold up, and we could see some moderation in the springtime that we usually don’t see. Consequently, we could see some heavier calf weight prices over the next couple of months simply because there’s not that much supply.”