MW continues:
Don Close, a cattle economist with Rabo AgriFinance says he thinks prices this year could rise 7-8% and roughly the same amount in 2015. Kevin Good, a senior analyst at cattle research firm CattleFax, says that “higher prices will continue through 2015 or 2016.
The bigger beef bills have been partially due to the fact that the cattle herd in the U.S. — the largest beef producer in the world — fell to an estimated 63-year low, according to a Bloomberg survey. “Cow numbers were down…the lower supply meant higher prices,” says William Hahn, an agricultural economist with the U.S. Department of Agriculture. And the dry spell in Texas, the nation’s largest cattle producer, is exacerbating the issue of smaller herds. Plus, in 2012 and 2013, grain prices were particularly high, says Close.
That said, cattle herds are beginning to increase, says Good. But “it’s not like poultry…it takes a longer time for a cattle to be ready for slaughter.” Indeed, a calf born in the spring of 2013 would be bred in 2014, might have a calf by 2015 and that calf couldn’t come to market until 2016, he explains. That means that the herd growth won’t translate into a ton of new supply for a while.
Good says that ground beef may see especially steep price hikes. He thinks that while steak retail prices could climb 5-10% in 2014, ground beef could climb 10 — 15%.
I interviewed a statistician at the Bureau of Labor Statistics on the discrepancy between the BLS' and US Dept. of Agriculture's measurement of beef and veal inflation:
ReplyDelete"Another example where the BLS doesn’t meet other agency’s inflation measurements is the U.S. Department of Agriculture. According to the BLS the average price of beef and veal increased 20 percent over the past five years. However, according to the USDA, beef prices have increased 26 percent over the past five years. I asked a statistician at the BLS about this discrepancy and he said “I would expect those numbers to be a little closer together.” When even the federal government gets different numbers on the same products, how could this possibly be an accurate measurement of inflation?"
Full article:
http://www.forbes.com/sites/perianneboring/2014/02/03/if-you-want-to-know-the-real-rate-of-inflation-dont-bother-with-the-cpi/
lol
ReplyDelete"err, durr, beef prices are up cuz there's less cows lol"
And the meat/agriculture industry just happens to be one of the most highly regulated industries... but that has nothing to do with it. Nor does printing $100 billion/month out of thin air. Naw. Less cows.
Whats crazier is that the BLS guy thought 20% and 26% were reasonable numbers!
ReplyDeleteAs f they weren't already high enough.
ReplyDeleteMy local Trader Joe's, still one of my favorite values, just raised the price on 85/15 ground beef sharply, I think from $3.49 to $3.89, and their double IPA went from $1.99 to $2.29
ReplyDeleteBill- they are capitalist rapists to raise their prices by 10% on things you need!
DeleteI think you should encourage everyone to picket...and then go in and buy meat and beer that is about to expire!
This increase in beef was expected. The two year drought forced many cattlemen to reduce their herds significantly because hay (and other feed) was too costly. To stay in business in the short term, the cattle were butchered to save on feed costs. Until the herds can be rebuilt, we will pay higher prices.
DeleteNot saying this market isn't suffering from regulation, just that this increase in price was a direct result of nature.