Is there a magic wand to solve the problem of high beef prices, as well as high pork and chicken prices? Actually yes, begin by returning to the gold standard or at least don’t allow the Fed to target interest rates or increase the money supply. Remove the wild swings in the market and make investment more certain. The second day, release vast amounts of federally-controlled land and eliminate the ethanol program that diverts corn into our gasoline. Peace in Ukraine and the Middle East would unleash more food and fuel for the human population and this translates to improvements for the people directly impacted and to the general world population.
In September 2023, we looked at the high price of beef and how big government has been bad for the American family budget. With stock indexes even higher, the situation for beef consumers is even worse.
In the US, the price of hamburger meat ended last year near a record high of $5.60 per pound. Just 5 years earlier—prior to covid—it was $3.88 per pound. From the early 1980s to 2000, hamburger meat averaged $1.50 per pound. That means that over that 40+-year period, hamburger meat is four times as expensive.
While that seems like a big increase—and it is—the rate of increase is only slightly higher than what the government claims has been the increase in consumer prices in general over the entire period as measured by their Consumer Price Index or CPI. So, beef has been a fairly accurate barometer of the impact of government and Federal Reserve policies undermining the household economy. The most rapid increase in beef prices and consumer prices in general have come in the aftermath of the Trump-Biden covid spending sprees and, of course, the vast money printing by the Federal Reserve unleashed in 2020.
Like most businesses, raising cattle and related businesses have faced significant increases in costs due mostly to inflationary forces. Grains used to feed cattle are impacted by monetary inflation. There was a huge upward spike in grain prices from the Fed’s covid monetary inflation. Often blamed on Russia’s invasion of grain-producing Ukraine, grain prices actually peaked around the time of the invasion, leveled off, and even subsequently declined as the world economy contracted. Even though grain prices have retreated, herd size must have come under enormous pressure with the covid inflation as grain price surged, herd size retreated. Beef consumption also retreated in the post-GFC inflationary contraction.
With prices relatively high, and grain prices and herd sizes having retreated, beef producers are in a temporary sweet spot, but consumers and others along the supply chain, such as processors and wholesalers remain soured. It is a tough competitive business, subject to the cycles of uncertainty.
Another largely-unnoticed inflationary impact on beef supply and prices is the Fed monetary policy.
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