The worldwide rising costs of food may affect the price of beef in the near future. The continuing rising costs of food staples hiking up the price of Alberta steaks could be a reality by the fall.
The root of the problem is the soaring cost of grain. Farmers are seeing and feeling the effects of the grain prices with their cattle. Feeding their cattle grain to fatten them up for slaughter is taking a toll on their wallets.
Consumers could soon be seeing the results of the toll in their supermarkets when buying beef products.
Feeding cattle the expensive grain means that the animal is more costly when it is grown and the feedlot operator needs a higher price in order to recover the costs.
The rising grain prices is also forcing frustrated farmers to make huge decisions about whether to fork out more money for feed or keep their cattle for another year and hope for the costs to go down.
Erik Butters, chair of the Alberta Beef Producers, voiced his frustrations in a press release and is concerned with the hits that farmers are taking.
“If there’s any fear of running out of gas for our SUVs, we’re willing to burn food in them. And now we’re starting to see the consequences of that,” said Butters. “It’s very difficult for the cattle sector to respond to the double whammy of escalating feed costs.
You know, we could sort of manage one of those, but when you get hit with them both at the same time, it’s a difficult situation.”
The decision for farmers is tough. If they buy the increasingly expensive grain for their cattle, the farmers costs, as well as the price to consumers, rises.
If the producers choose not to feed grain to their cattle, they lose their competitive advantage and will be keeping their cattle eating grass for another year.
“You have to do without a year’s income, if you decide to let the cattle graze,” said Butters. “And of course, to say goodbye to a paycheque for an entire year, especially in a very difficult situation to start with, is not an easy thing to do.”
With feedlot operators battling with the increased prices of grain, competition with the United States, high-cost labour and the impact of the high Canadian dollar, in order to break even higher costs need to be passed along to Canadian packing plants.
At the beginning of May, in Canada, wholesale values for AAA high-end meats got $163 per 100 lbs., the same price as AA cuts. The prices for last year were $192.49 per 100 lbs. and $182.34, respectively.