050528 Beef Demand Pushing Cost to All-Time High

May 30, 2005

Los Angeles, CA - Backyard grillers across Southern California will have a serious beef with their steak prices this summer.

There aren't enough cows to keep up with demand. The high-protein diet craze left a lingering taste for beef in consumers' mouths. Cattle feed prices are high. Even fuel prices are forcing up the price of beef to near-record high prices at the time diners are firing up the barbecue.

"Sometimes you get that craving for a steak," said Kelly Vandever, a 39-year-old sound mixer working in Burbank. "But then you see the price and think, uh oh, that's not such a good idea."

Though there's some relief in sight later this year, the retail price for a pound of choice beef hit an average of $4.25 a pound according to the USDA's Economic Research Service's most recent data -- just pennies from the all-time high.

"It's hard to find a good steak for under $10 a pound, and that's not even for choice," said Brian Money, assistant meat manager for Handy Market in Burbank. "You get a few steaks, that's going to add up pretty quickly. It's just amazing what people are paying. I was in another store the other day and saw two steaks for 70 bucks."

Handy has been selling its choice cuts for around $10 per pound, using them as loss leaders to build customer traffic. While the average price should decline as beef stock improves, USDA livestock economist Ron Gustafson doubts the average price will dip below $4 any time soon.

"Supplies are tight, so we're going to be paying pretty high prices for beef," he said. "It'll come off a little, but it's going to be up there for the rest of the year."

With prices like that, financing a special dinner can be a major investment. At Jim's Fallbrook Market in West Hills, prime New Yorks and rib-eyes ring up close to $19, a range co-owner Pat McQuaid calls "pretty darn high."

"The people who used to get a steak once a week get it once a month," McQuaid said. "Hey, I'm the same way. You're still gonna have steaks when the family goes over, but maybe you'll cut back on going to the movies."

But David Saul can't just serve beef on special occasions. He's vice president of Junior's Restaurant in Westwood and he uses several thousand pounds of beef a month. When his costs go up, he can only eat them for so long before prices follow.

"We go through 700 pounds of corned beef a week, so even with 10 cents a pound increases, that's a lot of money," the restaurateur lamented. "I use brisket, pastrami, skirt steak, ground hamburger -- that's gone ballistic! It went from $1.70 a pound to over $2.20 a pound. Ultimately, things are gonna change. We're in business to make a profit, just like everyone else."

Rather than forking over nearly ten bucks for a pound of steak at her local market, Willie Osterburg opted for a pair of pork chops instead. The Burbank retiree rolled her eyes and swore off beef.

"These prices are ridiculous!" she marveled. "Look at that! $9.98! I'm surprised people are buying at all."

Even though this is part of a usual cycle that comes around every 10 years or so, prices have even industry observers thinking that beef isn't what's for dinner.

"For the holidays, if you're used to grilling a steak, you're still gonna do it," said Mike Miller, director of research for Cattle Facts, a beef market analysis service in Denver.

"But for every day of the week, given the price, relative to chicken or pork, it makes an awful lot of sense to take a hard look at something else. Isn't it terrible that I'm saying that? But that's what's going on."


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