In Brief .
Bad news for meat lovers. American Farm Bureau Federation economist Brent Nelson warns that tight beef will mean a surge in consumer prices this summer, including for the beloved hamburger.
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Nelson explained to CNN that it takes 18 to 24 months for a head of cattle to mature be processed into marketable beef. "24 months later, when these tight supplies are starting to hit the markets, we're seeing it combined with inflation, and that's why we're really seeing these price increases."
The economist said the cost of supplies for beef producers has rise substantially due to inflation, taking a bite out of the industry's profitability. Nelson added that Russia's invasion of Ukraine last year pushed feed prices up, placing further strain on beef producers.
Meanwhile, drought conditions have pummeled key beef production regions, exacerbating the crisis for producers.
"Supply costs like feed are way up for producers," said Nelson. This causes a profitability pinch. Drought and profitability have caused a lot of guys to really burn into their equity that they've spent their entire lives building." A tough market has led many cattle growers to sell off their livestock, further contributing to the reduction in cattle supplies and tightening the availability of beef.
On the beef outlook for summer 2023, Nelson said the upcoming grilling season means a surge in demand for beef. Memorial Day weekend is when temperatures start to rise and people start using their outdoor grills. Price increases follow.
The dire situation not only affects consumers, but also inflicts harsh losses on cattle growers. Nelson explained that the ongoing price squeeze erodes the equity that beef producers have painstakingly built over decades. "When this happens," he said, "people start to get out of the business when the going is good. That's why we've had a lot of cattle going to market and a reduction in cattle supplies, which results in tighter beef supplies."
According to Nelson, consumers should brace themselves for higher prices in the short term, as the beef industry grapples with tight supplies, increased demand, and soaring production costs.