Producers Blame Drought Fallout
The Texas drought that peaked in 2011 has subsided, but its effects are still being felt among consumers, most notably in the beef industry. "We'll continue to see probably a 2-3% increase in the price of retail beef over the course of this year," says Russell Woodward with the Texas Beef Council. He tells KTRH the effects of the drought here in Texas and across the entire Midwest over the past two years are largely to blame. "Feed, fuel, fertilizer, all of those things are more expensive," Woodward explains. "So (the industry's) margins have been tight and will continue to be tight."
The biggest problem is with the price of corn, which makes up more than 90% of animal feed, according to the Texas Cattle Feeders Association. The drought has placed a large strain on corn growth and production, especially in the Texas Panhandle. The USDA estimates the average price of a bushel of corn rose by more than a dollar between 2011 and 2012. The other factor in corn prices is the government's mandate on the use of corn for ethanol, which has driven up demand even while supply has dwindled. Woodward says it all comes down to how much it costs to raise and feed the animals. "The amount of product we have available to use as a feed source is limited, and demand is higher," he says. "Therefore, those costs go up and it gets passed along to consumers."
While beef costs are expected to rise for at least the first half of the year, there are still some cheaper options for consumers. Woodward recommends tri-tip, top sirloin, and flat-iron steaks as lower cost beef products for families. He also notes that the higher prices will allow beef producers to rebound from the drought more quickly and eventually get prices back down. "We'll start to rebuild the herd and we'll have additional supply 2-3 years out," Woodward says. "So we should see the price of beef stabilize as we move down the road."