Summertime! If you’re like many people, you’re probably thinking about sunshine, swimming pools, and backyard barbeques. This year though, that backyard barbeque could be a lot more expensive. Why? The price of steak, a staple for many grillers, has risen significantly and is expected to rise even further. What’s going on? Well, blame it on the shrinking number of cattle roaming the ranges. Persistent drought conditions together with pandemic related supply chain issues and higher prices on everything from feed to labor have increased the cost of raising cattle, prompting some ranchers to reduce their stock. And that means it’s not just steak prices that are rising, the price of beef in general is higher meaning that hamburgers will also be pricier this summer. In fact, the current supply of beef cattle has reached a 10-year low.
Vegetarians may well rejoice at the news, anticipating a summer filled with meatless grilling options. With prices on beef up as much as 20 percent from 2020 levels, many steak lovers may be forced to choose alternative products for their backyard barbeque. Will things be better next summer? That remains to be seen. Many ranchers are pulling back on herd replacement and enlargement, noting that the costs of increasing their herds are just too high. Rebuilding a herd takes time suggesting that even if costs drop, beef prices could remain high well into next summer and beyond. What does this all mean for your summer plans? Well, hopefully you’ll be enjoying the sunshine while sitting poolside, but maybe consider throwing a cauliflower or portobello mushroom steak on the grill instead of a beef steak.
Discussion Questions:
1. Using the concept of supply and demand, discuss the price of beef and where it is likely to go moving forward. What does your response suggest for the price of substitute products?
2. Reflect on the link between higher beef prices and inflation. How are the challenges facing cattle ranchers today both a product of, and a contributor to, current inflationary patterns?
3. Discuss price elasticity as it relates to the price of beef. How high can beef prices go before consumers change their buying behavior?
Sources| WSJ:https://www.wsj.com/articles/beef-prices-high-summer-barbecue-12a08905?mod=Searchresults_pos1&page=1; CNN: https://www.cnn.com/2023/04/05/business/beef-supply-prices/index.html; Bloomberg: https://www.bloomberg.com/news/articles/2022-03-01/u-s-beef-prices-are-set-to-rise-further-as-ranchers-costs-soar; Photo by Vincent Keiman on Unsplash