040224 Demand Keeps Beef Prices High

February 22, 2004

Evansvile, IN (Courier Press Editorial) - I can remember reading news stories last fall about how beef prices were going to plummet, but so far we haven't seen any sign of it at the supermarket.

If you'll recall, the nation's beef industry was put into a tizzy last year after mad-cow disease was found in Canada. Imports of Canadian beef into the United States were halted.

Then, in December, a case of mad cow was found in Washington state, and exports of U.S. beef to other countries were halted.

Together, these events were supposed to cause a mad-cow scare that would reduce demand for beef. Falling demand typically means falling prices.

Instead, prices on most cuts of beef have risen at the meat counter in the past six months. If you can find a supermarket that sells extra-lean ground beef for $2 a pound, I'd like to know about it.

What gives?

Phil Anderson, head of the Indiana Beef Council, cites several reasons. The most interesting is the latest dietary fad - the Atkins diet.

The Atkins diet, which became a craze as quickly as any I can remember, says we can lose weight by eating fewer foods with carbohydrates.

Many Americans have taken this to mean they can eat nearly an unlimited amount of protein-rich meats, including beef, just as long as they stay away from breads and pastas and other high-carb foods.

This new desire for meat has helped offset any drop in demand related to the mad-cow scare.

But high beef prices also have other causes. Anderson and other beef industry folks say the U.S. beef supply typically follows cycles of abundance and shortage. Right now, we're apparently in a shortage cycle. Figures from the U.S. Department of Agriculture seem to support that. The USDA says the nation's cattle count was 103.5 million in 1996. It now stands at about 96 million. The USDA also says this year's calf crop is the smallest since 1951, and predicts it'll take at least a couple of years to get the cattle population back up to earlier levels.

Anderson said this shortage of cattle is actually made worse by the ban on imports of Canadian cattle. Our neighbors to the north typically supply about 8% of the U.S. beef supply.

Put all these ingredients together and what do you have? Demand for beef has increased, partly because of the Atkins diet craze. Meanwhile, the supply of beef is down, both for cyclical and temporary reasons.

It all adds up to a supply-and-demand pinch that keeps beef prices high.

By Alan Julian


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