For all you steak and hamburger lovers, the grim times are likely to continue. The February 2014 average cost of retail beef has reached $5.28 per pound, a level that hasn't been seen since 1987. Roast beef prices have hit $12 per pound at our local supermarket deli. The alternatives of chicken and pork are also rising in price, with pork especially hard hit by a virus that has limited supply. Is it time to head off to the produce aisle? It may be, at least for a while.
The supply of cattle has been decreasing for eight years now, due to awful drought conditions in the southwestern US and other difficulties in the supply chain -- all while beef exports are rising. The cattle supply is just now beginning to recover (assuming this year's weather co-operates), but it takes several years for increased supply to reach your dinner table – so expect higher prices for the foreseeable future.
How can you, the consumer, keep higher beef prices from busting your budget?
- Bargain Hunting – If you aren't already conscious of your local supermarket circulars, you should be. Take advantage of any beef sales, and freeze portions that would spoil before you get a chance to use them.
- Change Cuts – Use less expensive cuts of beef, or buy them less often as more of a treat. Several trendy, but less expensive, cuts of beef have become more popular in recent years, including hanger steak and flatiron steak. Additionally, some old-time favorites like tri-tip roast offer tremendous flavor and value if prepared right. (Often, this means marinating for hours before cooking to enhance tenderness.)
- Alter Portion Sizes – Consider buying smaller cuts. If you are making hamburgers, make them just a little bit smaller, or if you are adding meat to other dishes such as pasta, reduce the portion a bit. Over time, you may be surprised at how much you save.
- Bulk Purchasing – This could be just a question of taking advantage of sales, but if you have the freezer space, you can save significant money by purchasing a half-cow or similar larger quantity locally and having a local meat processor produce cuts to your specification. Even in urban areas, you should still be able to find this service available to you.
- Switch to Alternate Meats – Try altering your ratio of meals toward more pork, chicken, turkey, or fish and less beef until the prices change. Increasing fish intake is likely to have health benefits as well. More than a decade ago, the pork industry ran a successful ad campaign that championed pork as “the other white meat.” While the campaign may be old, the suggestion to replace beef with pork occasionally still makes sense.
- More Meatless Meals – You can get protein through other sources such as beans and eggs, or tasty meat substitutes like “tempeh” -- while increasing vegetable consumption and dishes containing pasta or rice. You don't have to be a full-fledged vegetarian to mix up your diet.
- Eat Out Less Often – Rising beef prices are expected to raise prices at restaurants and fast food outlets, and that increase may not be applied directly to beef products – it may be spread more thinly over all dishes. Eating out 10% less often may compensate for the higher prices you pay for beef at home and may even save you some money overall.
It is possible that beef prices, much like oil prices, will tend to reset at a much higher level as people adjust to an extended time of higher prices and scale back their habits accordingly. However, it's more likely that over an extended time, the cattle supply will recover and prices will stabilize.
Use this time to examine your eating habits and try to adopt a lifestyle with less red meat by compensating with other healthy alternatives. Who knows, you may like the new lifestyle and naturally cut down on expensive red meat – and if others follow suit, lower overall demand may lower beef prices, making that occasional hamburger or steak a tasty and affordable treat. That may be a problem for beef producers and investors in cattle futures, but seems like a win-win situation for consumers. If you want more credit, check out MoneyTips' list of credit card offers.
To see how the price of beef affects you from an investing standpoint, see "Beef Prices Soaring."