Beef prices hit all-time high
Cattle herds at level last seen in 1951
Come grilling season, expect your sirloin steak to come with a hearty side of sticker shock.
Beef prices have reached all-time highs in the U.S. and aren’t expected to come down any time soon.
Extreme weather has thinned the nation’s beef cattle herds to levels last seen in 1951, when there were about half as many mouths to feed in America.
“We’ve seen strong prices before but nothing this extreme,” said Dennis Smith, a commodities broker for Archer Financial Services in Chicago. “This is really new territory.”
The retail value of “all-fresh” USDA choice-grade beef jumped to a record $5.28 a pound in February, up from $4.91 the same time a year ago. The swelling prices are roiling the beef supply chain from rancher to restaurant.
The nation’s cattle population has fallen to 87.7 million, the lowest since 1951, when there were 82.1 million on hand, according to the USDA.
“We’re dealing with chronically low herds,” said Richard Volpe, an economist for the USDA. “Beef prices should remain at near-record highs this year and into 2015.”
Norm Langer managed to go two years without raising prices at his famed Los Angeles delicatessen.
Last week, he reluctantly began printing new menus showing a 50-cent increase for sandwiches at his 67-year-old restaurant.
Langer said beef prices are the main reason his wholesale food costs have risen 45 percent in the past two years — much of it passed from his longtime supplier, R.C. Provision.
The half-century-old Burbank, Calif., company prepares corned beef, pastrami, roast beef and chili for Los Angeles restaurants. It’s been an increasingly difficult endeavor, with slaughterhouses driving up their prices for brisket and navel, an extra-fatty portion of the belly crucial for making pastrami.
“For any profitability, you have to mark it up more and more,” said R.C. Provision’s general manager, Jerry Haines, who has watched profit margins dwindle to about 1 percent from 5 percent.
The biggest fast-food chains aren’t immune to the price pressure either. In October, McDonald’s said its Dollar Menu would morph into a so-called Dollar Menu & More, which mixes $1, $2 and $5 items.