Market News: Beef Prices Escalate to New High

Beef Prices Escalate to New High

Editor’s Note: With current headlines like, “Worst Drought in a Lifetime Forces Slaughter, Sale of Cattle” and “Uncharted Territory in California Drought: Difficult Decisions Weigh on Ranchers,” it is hard not to notice the drought’s stranglehold on the state of California and its devastating impact on livestock and cattle ranchers. It is no surprise that it has also prompted record beef prices. 

Here’s a message from Mark Shelley, owner of Tassajara Natural Meats and a vendor at the MPC Farmers Market.

The good news: Tassajara Natural Meats is staying in business. The bad? In order to do so I have to raise my prices. I’d like to tell you why.

It is a strange tale of severe drought in California, the price of corn and soy in the midwest, and a shortage of cattle for the feedlots — kind of a perfect storm. Here’s how it works.

Let’s start with the pathway for a typical steer that ends up in the butcher section of your supermarket. All calves start out on a “cow/calf” ranch. The calves are born on the ranch and raised with their moms for about 8 months. We have lots of cow/calf ranches in Central California. After the calves are weaned, virtually every calf that isn’t kept for replacement is taken to an auction where beef companies buy them. Using semi-tractor-trailers, the calves are trucked either to more pasture or directly to the feedlot. Once at the feedlot, calves are raised for about 6 months where they double their weight—going from 600-700 pounds to 1200-1300 pounds.

In part, because of droughts across the country, the total number of cattle has declined over the last decade—to the lowest number since 1999. This reduced number has caught up with the feedlots. With the low supply, the demand has driven the price they are willing to pay the rancher up—dramatically so this year. Because the price of corn and soy has gone down, the feedlots can afford to hold the animals longer and get them fatter, thus offsetting some of the higher price they paid for the animals. Even so, the average retail price for beef has gone up about 25% since 2008—to the highest prices ever.

As a small, local purveyor of grass-fed beef, what does this have to do with me? I have worked with the same rancher for close to 20 years. My deal with him is that when I take my animals off the pasture I pay that day’s auction price. That has always worked pretty well—the price I’ve paid has slowly gone up over the years, but I’ve absorbed it. This year is different. The price I will have to pay this year is over $1 per pound more than last year—almost double. And that translates to more than $3 per pound for my final cost (about one third of the total weight of the animal becomes saleable beef). It will cost me three dollars per pound more to provide you with the same quality meat this year than last.

What I need to do is meet you part way. I am planning on raising my prices on average $1 per pound. I am not sure how long I will be able to hold the increase there. The long range forecast for rain is not good. Climate change is real and happening, and the models predict that there will be less rainfall here in California in the future. And that is one reason why it is more important than ever to eat the kind of grass fed meat that I and other local purveyors provide. Our methods provide the best meat with the least input of carbon. We bring you meat you can feel good about eating. You know that the animals are raised with the best care on phenomenal coastal land. We do the best to provide you with beef that is raised with respect for the animals, the land, our climate, and your health.

Thank you for your continued support.

— Mark Shelley, Tassajara Natural Meats