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Published: Tuesday, 4/17/2012 - Updated: 2 years ago

Prices for beef up, are likely to remain high

Local grocers, restaurants pass on boosts to customers

BY TYREL LINKHORN
BLADE BUSINESS WRITER
Restaurants and grocers report prices of top-quality beef have jumped considerably, in some cases more than 30 percent, since 2010. Restaurants and grocers report prices of top-quality beef have jumped considerably, in some cases more than 30 percent, since 2010.
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Try not to have a cow, but high beef prices are likely here to stay for a while.

Smaller U.S. cattle herds and increasing feed and fuel costs have pushed some cattle producers out of the business over the last half-decade. And because of last year's extreme drought in the cattle cradle of the Southwest, many ranchers liquidated herds they couldn't afford to feed. Meanwhile, the export market for U.S. beef remains strong.

In response, prices have risen significantly since 2010, with some cuts jumping more than 30 percent.

The average retail price in March for USDA Choice-grade beef was $5.05 a pound, according to the U.S. Agriculture Department's Economic Research Service. Choice-grade round steak was $4.81, up 13 percent from two years ago. Choice-grade boneless sirloin was $6.53, up 16 percent. And ground beef was at a record $3.02 a pound in March, 11 percent higher than last year and 35 percent more than in 2010.

Cuts of the top-quality, high-grade beef typically sold in high-end restaurants and specialty steak houses have gone up even more, and some restaurant owners have raised prices despite the still-recovering economy.

Gus Mancy, co-owner of Mancy's Steakhouse, said he is paying about 20 percent more than he was late last year for cuts of beef from which butchers carve steaks such as porterhouses, strips, and filets.

"You always see that spike right before Christmas, but the spike happened and nothing mellowed out after that," Mr. Mancy said.

His family's steakhouse raised prices 5 to 7 percent to offset some of those costs at the beginning of this year. He said he expects to hold his prices through the year, though he said they may have to look again toward the end of the year.

"All food is going up. Beef is a commodity just like chicken, and corn, and peanut butter, and oranges. We're seeing 8 to 12 percent increases in almost every commodity we buy. A lot of it is due to the fact that gasoline prices are headed back up," Mr. Mancy said.

Jim Sautter, owner of Sautter's 5-Star Markets in Sylvania and Waterville, said he's seen prices of some cuts of beef rise 20 percent.

He said that although he's done his best to keep prices low, there's little grocers can do when prices jump as they have.

"There's a lot that goes into that steak on your plate before you've grilled it. I'm hoping at some point when more people jump back into raising beef that'll drive the prices back down, but you never know these days."

He said he plans to run weekly specials on different cuts of steak through the summer.

Experts said beef prices should eventually fall back somewhat, as more normal weather patterns return and better corn crops cause feeding costs to decrease.

Also, cattle production is somewhat cyclical in that high prices will entice more people back into production, eventually lowering the price that consumers pay.

But the turnaround won't be quick.

"It takes a long time to see herd sizes recover," said Matt Roberts, an agricultural economist with Ohio State University. "This liquidation we saw, it may take two or three years before we see big U.S. cattle numbers recover from that drought."

Beef prices normally rise during the summer grilling season, but Mr. Roberts doesn't expect anything extraordinary.

Kevin Good, a senior market analyst with Colorado-based industry tracker Cattlefax, said the industry is starting to turn the corner from liquidation to expansion.

Although U.S. supplies are expected to be tight for at least a couple more years, imports are growing.

The Agriculture Department projects 2.2 billion pounds of beef will be imported this year.

"We're going to have ample product on the market, but it still would suggest we're going to have year-over-year price increases, especially for hamburger, especially the leaner grinds," Mr. Good said.

He expects a single-digit percentage increase this year in overall prices.

Hamburger may go up more. Ground beef has been rising significantly, and the recent kerfuffle over lean, finely textured beef -- what became known as "pink slime" -- is likely to add to what consumers pay. Many national supermarket retailers and restaurant chains promised customers they would stop selling the safe-to-eat but unappetizing additive.

But buyers in search of ground beef, especially lean varieties, could end up paying more.

"Once you take that out of the mix, if you're wanting lean ground beef, there aren't a lot of other good alternatives other than grinding lower-fat cuts, which are going to be more valuable cuts," Mr. Roberts said. "It will have an effect. I don't think anybody's figured out yet how big of an effect."

Mr. Roberts said some estimates by people who closely follow the cattle market say it may take 1 million head of cattle to replace the meat that was being replaced by lean, finely textured beef.

Contact Tyrel Linkhorn at: tlinkhorn@theblade.com or 419-724-6134.



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