Short supply of beef and pork sends prices soaring

07/25/2014 3:53 PM

07/25/2014 3:54 PM

Smokeys BBQ in Fort Worth needed to do something.

The price it paid for brisket jumped by more than 50 percent in just six months. It had cut its staff from 13 to seven. The only thing left was to raise prices for its customers, the first time in three years. A pound of Smokeys brisket went from about $13 to $16. Pork spare ribs jumped from $22 to $27.

“We had to raise our prices. We had to adjust,” said owner Rosco Carrasco, who’s 47, noting his own costs. “If they continue to go up at this pace, we'll have to do it again.”

Soaring meat prices are hitting producers, suppliers and consumers across the country. The price of beef and veal shot up more than 10 percent from June 2013 to June 2014, according to the most recent Consumer Price Index. Pork prices rose by 12 percent.

The largest price increases in three years are driven by one main thing: supply. Drought has thinned herds of cattle. Disease has struck pork.

While demand is high and technology allows more producers to get more meat than ever out of cattle, the domestic beef supply is at a 63-year low, according to beef industry experts and U.S. Department of Agriculture data.

Meanwhile, pork farmers in more than 40 states have reported cases of a pig virus called porcine epidemic diarrhea (PEDv), an illness most fatal to newborn pigs. The virus has hit pork farmers in Midwest states and North Carolina harder than others. The nation’s pig population is at its lowest since 2006.

Although swine populations probably will rebound soon, experts said, the beef supply could be a problem for several years.

“We’re seeing unprecedented price levels,” said Derrell Peel, an agricultural economics professor at Oklahoma State University. He added: “Ultimately, everyone will pay part of that impact.”

The drought that started in 2011 in many major cattle-producing states, especially Texas, cut down the grazing space for cattle. That forced farmers to sell animals to feed lots to be slaughtered. The economic recession and price shocks in cattle feed also contributed to the beef supply problem, Peel said.

Beef prices will continue rising until 2016 before consumers can expect any relief at the checkout counter, Peel said.

Rebuilding isn’t a problem for pigs: Sows give birth to several piglets at once. But the pig virus appeared for the first time about a year ago, killing thousands of newborns, according to the USDA.

Tim Stroda, the president and CEO of the Kansas Pork Association, emphasized that PEDv can’t affect humans.

But it cuts down on the pork supply. As a result, bacon and breakfast sausage prices were 14 percent higher this May than they were in May 2013, the largest year-over-year increases since June 2011, according to Labor Department data.

At Bacon’s Bistro & Cafe in Hurst, a family-run establishment, the wholesale price of a 15-pound case of thick-cut bacon is 15 percent higher than last year.

Owners Adam Daily and Eva Burrull-Daily estimate they’re spending an extra $200 weekly on bacon now compared with a year ago.

The Dailys moved the bistro into a new building across Texas 26 last October, and they didn’t want to raise prices and have customers think that was related to the new building. But with pork costs rising, they expect to bump up their prices sometime this summer.

“Pork-wise, we’re at the highest price levels in the four years that we’ve had the restaurant,” said Daily, who’s 40. He later added: “We’ve held on knowing eventually we’re going to have to make that increase.”

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