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Houston, TX 77002
Category: Community Venues
Region: Downtown/ Midtown
SIDEBAR:Meat Market: Sorry State
BLOG POST: More Expensive Meat in 2012: The Rising Cost of Beef
In 2011, after ranching for more than 16 years in East Texas, 57-year-old Ronnie Bartley, done in by drought, divorce and rising feed costs, sold off more than half his herd of hundreds of cattle. Facing bankruptcy, he laid off his two best employees — his sons, both in their thirties — who've had to change careers and leave the cattle industry.
Maybe, like many of the people in Dirgin and across the state who've lost their livelihoods as a result of the drought, they'll head into the oil fields. Or, as Bartley once did, work for the local power plant that — in normal weather — is cooled by nearby Martin Lake, which is looking severely dry itself these days.
The truth is that despite recent rains and increasingly distant memories of Central Texas wildfires, the 2011 drought has taken a more drastic toll on the U.S. beef supply than many people realize. The U.S. Department of Agriculture reported on January 3 that "80 percent of the rangeland and pastures in Texas remain in very poor to poor condition." Meanwhile, during the worst of the drought over the summer, more than 80 percent of Texas cattle ranchers had to cull or liquidate their herds. And this year isn't looking any better.
Tough news for a state which has long prided itself on its image as cattle country, and where, in fact, cattle ranching accounts for an enormous portion of our state's total agriculture industry. It exceeds the value of all other Texas crops — from cotton to corn — combined.
And tough news for consumers. Thanks to the drought, far more cattle than normal have been sold off, and the drought means that no new stock can or will be brought in until the pastures, and ranchers' finances, recover. The resulting low supply eventually led to record costs for both live and feeder cattle: Futures for both have been trading at record highs of $120 and $130 per hundredweight respectively. (Unfortunately, of course, the ranchers who sold off so many of their cattle or got out of the business aren't able to benefit from this sudden price rise.)
Record costs are being passed on to grocery stores and restaurants and the people who go to them. What economists call "forward contracts," or advance sales, are already trading higher than that for 2012. Many experts in the industry are predicting that this trend — like the drought — will only get worse in the year ahead.
Increasingly, U.S. meat is being exported to places where buyers are more willing to pay the higher prices. "Right now, 49 percent of that beef is leaving our country," Bartley says, headed overseas to ever-growing beef markets like Japan and Europe, making our limited domestic supplies even more expensive.
It's not only prices that change. There will be fewer offerings available of higher-grade meat, some predict.
So if you've never fixed barbed wire, or dodged piles of manure, or tossed a bale of hay, don't be too quick to think that ranching in Texas is just somebody else's hardscrabble life that has nothing to do with yours.
Even though most of the restaurants and grocery stores the Houston Press contacted about their beef prices didn't want to say a lot, many industry officials say there's probably no way to avoid higher prices and fewer choices. And once prices go up, it's rare that they go down.
The drought of 2011 that's expected to extend into 2012 and even, some say, longer, is about to hit you right in your burger with all the fixings.
The short, clipped, noncommittal statement from Kroger is virtually identical to that from H-E-B: "Certain aspects of local commodities such as produce and cattle have been affected by the drought," reads the e-mail.
"The drought has contributed to changes in the cattle landscape and prices; however, other industry factors such as sourcing and competition have also been influential," it continued. "Heading into 2012, Kroger will continue to offer an assortment of quality beef at the competitive prices that our shoppers know us for."
Neither grocery store would consent to an interview by phone, preferring instead to e-mail their statements on sharply rising beef prices through their respective PR agencies. But this was at least an improvement on their competitors: Fiesta, Randalls and its parent company, Safeway, did not respond to requests for comment. Their silence speaks volumes about the issues these stores are preparing to deal with in the coming year.
The grocery chains' silent treatment mirrors the strategy of many large restaurants, whose proprietors have remained mum when asked about their own plans for the rising beef prices.
Chipotle has been one of the very few national restaurant chains to address the cattle crisis. CFO Jack Hartung admitted to Businessweek last July that Chipotle plans to increase menu prices at most of its restaurants this year.
And in a report from December, Market Vision President John Barone warned industry media outlet Nation's Restaurant News that the drought has resulted "in less overall beef, even less choice-grade beef and higher prices in 2012." He added: "This situation may not improve in 2013."
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