"Beef prices soar with drought" by Joe Taschler
The Daily Press
March 11, 2014
Recent droughts have decreased the national supply of beef, driving prices up. In fact, the supply is the smallest it's been since 1951. The average retail price for beef is now $5.04, the highest price in recorded history. Usually, calves graze on grass, but drought requires farmers to find another food source. According to Kevin Kester, "'Hay prices are just going through the roof.'" Cattle producers have had to sell a lot of cattle. This should have made meat prices lower, but the demand for beef and protein sources has gone up dramatically with the growth of the middle class around the world. There is now a high demand for and a low supply of beef, so prices are very high.
This past week in class, we have learned about demand and the factors that affect it. In this case, people around the world have experienced an increase in income, so demand for meat has gone up. However, the supply of meat has gone down because of drought, so prices are higher than ever before. This is a less than ideal situation for producers and consumers alike. Producers want to raise and sell more cattle, but cannot because of a limited food supply. Consumers want beef, but high prices may discourage people from buying it.
This situation could have an affect on other aspects of the economy as well. Some supermarkets have raised prices for consumers because of the higher prices they must now pay. At some point, all stores may have to raise their prices. Restaurants are also affected by the price increases. One thing is clear: the supply of beef cannot be replenished overnight. It takes time for cattle to mature enough to be sold and eaten.
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