Why US Beef Prices Are Climbing — and the ‘Green’ Connection

by | Feb 21, 2013

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Many cattle ranchers in the US say their cattle—and, in many cases, their businesses—are literally living “from rain to rain.” While this situation seems to be getting very little attention in the media, it is extremely serious for both ranchers and the consumers who enjoy their products. The circumstances are comparable to someone living “from pay check to pay check” with no savings, spending their entire paycheck and often more before the end of the month, and typically counting the days before their next check arrives.

Many cattle ranchers are facing these difficult conditions due to the severe droughts that have struck much of the US over the past three to four years. Grazing lands are so dry that there is little or no moisture accumulation to help during droughts or significantly hot summer seasons. Worthwhile grazing areas dry up while ranchers and their cattle wait for the next rain, often causing them to eagerly count the days before the next rainfall arrives.

This situation is not just affecting cattle ranchers, their businesses, and their cattle. It hits US industry right in the pocketbook. The nation’s overall cattle herd shrank by 2 percent last year, to under 90 million head, as ranchers faced dwindling supplies of feed and water. This is the lowest it has been since 1952. And unfortunately, the states most impacted are the very states best known for raising cattle:

  • Texas
  • Oklahoma
  • Colorado
  • Wyoming
  • Missouri
  • Tennessee
  • Indiana

The end result can be predicted by the basic economics of supply and demand. As consumer demand for beef increases or stays the same while supplies in cattle-producing states dwindle, prices will go up. In fact, these issues pushed consumer prices up at least 6 percent last year, and forecasters estimate they will rise by another 3 to 4 percent this year. Some say prices would have gone up even more if it wasn’t for the fact that beef today are heavier and tend to produce more meat.

Another facet of the problem is that hay and grain harvests across much of the Midwest and Plains states have been poor recently, causing livestock producers to pay historically high prices for feed—another cost that is passed on to the consumer. One Kansas cattle rancher, Mark Harms, says he has seen feed and related costs jump as much as 60 percent in recent years, all tied in one way or another to the ongoing drought.

Options for handling this situation, at least for the moment, are complicated. In some cases, human drinking water is being diverted to agricultural purposes to help grow feed for cattle. However, looking at this situation with a much broader perspective, we see that this is very much a sustainability issue. The true lesson here is that companies need to learn to conserve water whenever possible. But even more importantly, they must start using water much more efficiently. There is a significant distinction between the two needs.

Conserving water means reducing water consumption during a water shortage. These reductions generally last for only a year or so until drought conditions lessen. Water efficiency, on the other hand, is not impacted by current conditions. According to the US Environmental Protection Agency, “Water efficiency means using improved technologies and practices that deliver equal or better water service with less water.” A perfect example of this is new restroom technologies that use far less water than government mandates—or, in some cases, no water at all.

As far as cattle ranchers are concerned, all we can hope for is that the situation does not worsen, and current drought conditions eventually abate. But whether or not we are personally suffering the effects of water shortages, companies must begin to reevaluate where and how we use water and attempt to use less on a permanent basis.

Niki Bradley is customer service and marketing manager for Waterless Co.

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