Beef Prices

DR. ANDREW P. GRIFFITH

KNOXVILLE, TENNESSEE 

The all fresh retail price of beef in June was a little over $7.57 per pound. This is the highest price on record, and it has been aided by reduced beef production, inflation, and strong beef demand. The $7 price level is not a new level. In fact, the first time the all fresh beef price exceeded $7 per pound in a month was May 2020 when society was battling coronavirus and empty meat counters! However, by July of the same year, the price had dipped below $7 and stayed there until June 2021. Since June 2021, the all fresh retail price of beef has exceeded $7.

The reason this is important is because consumers are becoming accustomed to the higher price levels. This does not mean retail beef prices will never decline below $7 per pound, but there will likely be strong price support at this particular level as everything is relative. For example, there are people buying $70,000 passenger trucks today, and many in the older generation have never paid that much for a house. In other words, there are people paying more for a truck to ride around in than they paid for the place where they eat and sleep and have done so the past 30 years. This has happened because truck prices have been creeping higher for decades, and consumers have become accustomed to it.

Slow and gradual change seems to be more acceptable than rapid change. However, in periods of inflation, rapid change is easier to accept because the price of most goods is increasing rapidly all at once. When this price action happens, consumers tend to purchase more before the price increases further, which exacerbates the problem and results in higher prices. Thus, beef prices have taken advantage of inflation during a time when beef demand is strong and beef production is declining.

The question that will always remain to be answered is if consumer demand for beef will hold. At this point and based on observation, it appears consumers are willing to continue paying higher prices for beef. This does not mean consumers are not aware of prices being higher or that they are not changing consumption patterns. All consumers have a finite income, and all goods compete for the consumer dollar. The advantage beef has over some consumer goods is that people have to eat. People do not have to own a bass boat unless it is used to catch their meal. But, the point is made that food is a necessity. Despite food being a necessity, consumers can make choices to shift dollars within the food category. When beef prices increase, it is common for consumers to shift consumption from higher valued products such as steaks to lower valued products such as roasts and ground beef. Consumers could even shift away from beef altogether, but this is unlikely.

The point of this discussion is that despite record high retail beef prices, there is little reason for concern as it relates to consumers moving away from beef. A good place to start when thinking about this subject is one’s own consumption patterns. A good question to ask is, “How have I changed my beef consumption as retail beef prices have increased?” It is likely there are many consumers who have acted in a similar manner, which provides insight into expectations. Thus, if a person falls into the category of moving from steak to ground beef then hope persists. Alternatively, if a person is in the group that moved from steak to soy burger then maybe there is reason for concern for beef prices.

This brings me to my last thoughts. Why do people who do not want to eat meat call plant-based patties “burgers”? Similarly, why would a person call something almond milk or soy milk if they don’t really like milk? I can think of several other confusing ideas similar to these, but they are not all socially acceptable to discuss so I will leave them to each reader’s imagination. But, the question remains, if a person is a self-proclaimed vegan or vegetarian, which I have no problem with someone making that choice, why use a name associated with meat to describe a food product? These are the type questions that consume all my time, talents, and efforts! I could be better at my job if I did not spend my time pondering such. ∆

DR. ANDREW P. GRIFFITH: University of Tennessee