May 9, 2014

 

 

Texas, the largest cattle-producing state in the US, is facing its fourth year of drought, pushing beef prices to record highs, with beef and veal prices spiked by 1.9% in March and now sit at 7.4% over the same time last year, the USDA Economic Research Service reported.

 

"The drought of 2011 was epic. It was a horrible time when there was virtually nothing left to feed the animals," Texas Farm Bureau spokesman Gene Hall said.

 

Since May 2009, wholesale beef prices have climbed by more than half from US$1.49 per pound to US$2.28, according to Texas Department of Agriculture spokesman Bryan Black.

 

Black said that over that same period, the average retail value of choice beef has increased 34%, from US$4.25 to US$5.72 per pound.

 

Texas farmers and ranchers produced 6.3 billion pounds of beef in 2012 which contributed 15% of total beef production nationally, he said. In addition, Texas facilities processed 8.1 billion pounds of beef in 2012, 19% of the US total.

 

Hall said the drought is the major contributing factor in the price increase.

 

"It's a classic supply-and-demand situation," Hall said, adding that the demand for beef remains high and the supply of beef is dependent on the amount of rain that douses the state this year.

 

AccuWeather.com Senior Meteorologist Dan Kottlowski said that many areas in the region have also been experiencing ongoing drought conditions for years, contributing to the reduction in the amount of feed available for the animals, including corn, which is used to feed some cattle.

 

Black said that since January 2011, the total number of cattle and calves in Texas has declined by 2.4 million head to 10.9 million head while beef cow numbers have dropped 1.1 million head over the same period to 4.35 million head.

 

With the price of beef to remain at record highs for the foreseeable future due to the drought, the demand for beef has waned little, Hall said, but added higher prices may deter some consumers.

 

Tyson Foods reported double profit due to price increases of beef, according to Reuters.

 

In addition, national restaurant chain, Chipotle, is increasing the price for their beef entrées by 4-6%, the Huffington Post reported.

 

Hall said Texas cattlemen are a devoted group of individuals who understand prices need to come down in the future, but that will be dependent on rainfall. Black agreed with this notion.