Beef prices are soaring. The cause? Supply and demand.
The drought out west has reduced the American cattle herd to its lowest level since the early 1950s. The U.S. Department of Agriculture expects beef prices to rise four percent this year.
As we found out, the west and our region need significant rainfall, or the cost for the consumer will keep soaring.
Andy Smith takes time to look over some of the new arrivals on the Smithfield Farm in Russell County. Most of the calves were born back in January, but to reach a size big enough to be a part of your dinner table takes more time than you think. "From the time you retain heifers back into the herd, to the time they've got a new calf ready to be harvested, to put food on the table, that's a 30-month time frame. That's two and a half years," Smith said.
This cattle operation hopes that the current higher prices being paid for beef will remain that way before this next generation reaches maturity. "You've got kind of perfect storm as far as creating these rising prices in our neck of the woods. You've got drought and a tight supply. We have a good export market overseas. We've got the smallest beef herd since the early 1950s," Smith says.
Those higher prices are finally letting operations like Smithfield Farms see some profitability, and demand for their product is still high. "The miraculous thing to me is demand is still held up. People are still eating beef and of course pork and chicken; they've all gone up together," John Henry Smith adds.
That supply will remain low unless the weather cooperates. Drought out west is the main driving force behind the higher prices, but the same holds true for our region. "We usually have those big April rains to put the creeks to the top of the banks, fill the ponds and all that. We have not had them. The hay crop looks awful right now, just awful," John Henry said.
And that's next winter's feed, which could affect supply again.
Andy Smith will take all of the issues with him when he heads to the National Cattlemen's Association meeting in Denver later this year.
When he does speak at the Cattlemen's Association meeting, Andy Smith will talk about locking in these high prices just in case something should go wrong between now and the fall.