Perusing my local grocery store’s meat department recently, I noticed 80/20 ground beef at $7.99 per pound, which was up by more than a dollar a pound in the last week or so. It seems like prices of nearly everything are higher these days and on Tuesday night, in his State of the Union address, our president forewarned us they are going higher yet.

Certainly, gas is higher and other food items besides meat and poultry continue to rise. Is it corporate greed forcing these prices up, the Ukrainian War, something else — or a combination of it all?

Unlike a few posturing politicians, I don’t think it’s blatant corporate greed. I do think that costs are up for meat and poultry producers as well as processors, retailers and food service operators for a variety of well-documented reasons led by inflation which are passed on up the food chain to consumers.

Is it a worthwhile meat marketing exercise to explain to consumers the reasons for higher meat and poultry prices, or will such efforts be met with an “eyes glazing over” moment as consumers don’t care why, they just want prices to recede? Or, has the Ukrainian war overshadowed it all and provided an excuse not to explain? There are a myriad of factors influencing meat and poultry production costs that consumers need to understand. These factors must be communicated in a way that will hasten understanding and dampen consumers’ desires to cut back purchases.

Various meat industry trade groups have tried to explain the causes of higher prices to politicians, with little effect, but not so much to consumers. Consumer education starts with explaining how the drought has impacted production. And, as my friend and cattle industry guru John Nalivka of Sterling Marketing predicts, the drought creates a scenario of lower cattle numbers and when hitched to the herd liquidation we saw in the West this past year, creates the “perfect storm” for higher beef prices. But there’s more.

Higher feed costs for grains and how those farmers must also raise prices to continue their livelihoods and how higher gas prices impact feed and animal transportation costs serve to fan the flames of higher beef prices. Adding to the problem is the lack of labor and the ability to retain production workers in this escalating worker-wage environment. The overarching cost determinant forcing higher prices is inflation-induced. How high inflation will go and what the current administration and Federal Reserve will do about it are currently unexplained, but something needs to be done. All of these and more have caused food prices to rise and, to remain in business, meat and poultry companies must raise prices commensurately.

While some politicians are shouting “corporate greed,” that is more a function of increasing margins, not necessarily increasing prices. Consumers need to know the facts about increasing costs causing increased prices. In my view, using beef checkoff dollars to explain these facts is a better use of these funds than lecturing consumers that beef is what’s for dinner, because it clearly is not for those who are contemplating cutting back on higher-priced beef purchases.

It is a function of our economic system that when prices rise above a tolerable level demand starts to shrink. When will meat and poultry reach that point? Well, we may already have reached it. The first consumer reaction to higher prices is not a stoppage of purchases but a lessening of them. Consumers may also switch to less expensive but similar items, which has always raised ground beef sales. So, expect to see a sales slippage in the higher priced beef cuts. Will consumers stop buying beef entirely? No. But they may switch to less expensive proteins.

In the final analysis, like other times of drought coupled with inflation, as John Nalivka explains, there will be a reduction in the cow herd and subsequently number of commercial cattle available for slaughter forcing higher beef prices.

Please remember, war or no war, you put a bull with a cow, and you get a steak 23 months or so later. It will probably take that long for the beef side of the protein industry to recover to more conventional times and prices.

Meat prices: How high is too high?

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