![]() ![]() ![]() And because of the competitive dynamics, the first company will have to lower their prices as well." When costs come down, if one meat company decides to keep their prices as-is, the next meat company will lower prices. "When you sell a commodity, it's hard to generate outsize profits. "There's not much differentiation between one company's meat versus another's," he says. "Maybe we could see higher prices continuing for the next month, maybe two months, but it looks like we're close to the peak."Ĭonsumers likely shouldn't worry about prices staying high indefinitely, Sundaram says, citing the competitive nature of the beef industry and the similarity of the products the different companies sell. "Wholesale prices are slowly starting to moderate," he says. There are "promising signs" that meat prices have crested, Sundaram says. The administration has pledged to enforce antitrust laws to battle anti-competitive practices in the meat industry, and the USDA recently began releasing market reports on what beef processors pay in an effort to increase transparency. "These record profits and dividend payments come at a time when consumers are paying more to put food on the table, workers are risking their health and safety to keep America fed, and farmers and ranchers are also facing unprecedented droughts, wildfires and other extreme weather events that put their herds and farms at risk," the brief says. Though the brief acknowledges supply and demand issues as factors that have caused prices to go up, it also blames the four major conglomerates that control 82% of the nation's beef production - compared to 25% in 1977 - saying that the lack of competition has resulted in not only sky-high prices, but also record profits for them. The White House recently released a brief acknowledging that President Biden "understands that families have been facing higher prices at the grocery store recently." Is the government doing anything about it? He adds that carbon dioxide, which is used in ground beef production to keep meat cold, has almost doubled in price over the past year. So much goes into beef production, and all of those costs have gone up, which affects the cost of a hamburger or a steak," Lively says. "Think about the amount of polystyrene that is used to put out the meat. Scott Lively, co-founder of organic beef company Raise American and author of the recently released book "For the Love of Beef: The Good, the Bad and the Future of America's Favorite Meat," calls the current situation "a perfect storm of a lot of things that have happened."įrom the prices of the chemical fertilizers that help grow the feed that cattle eat to the cost of the materials used to package meat for sale to consumers, every aspect of the beef supply chain has become more expensive. "The demand side got even stronger as the months progressed in 2021, whereas the supply side of things got worse."īut Sundaram emphasizes that it would be incorrect to say a single factor has led to the price increases. ![]() ![]() "You have this huge imbalance of supply and demand which is causing the prices to skyrocket," Sundaram tells CNBC Make It. This reduced production came as demand for beef returned from both consumers and restaurants, forcing prices higher. That, coupled with uncertainty about the future, caused farmers to scale back their production at the time, which Sundaram says "can affect production more than a year, year and a half down the road."Īt the same time, processing facilities have dealt with labor shortages that have reduced their capacity to process meat at the same clip as before the pandemic. The slowdown left farmers with nowhere to send their beef, which resulted in them having to cull cattle and other livestock. Many of the factors that led to beef's dramatic price increase can be traced back to 2020, when Covid shut down production plants and hobbled the nation's meat production capabilities. ![]()
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