Beef prices on the rise

2012-02-05T02:00:00Z 2012-02-06T11:30:21Z Beef prices on the riseBy JESSICA HOLDMAN | Bismarck Tribune Bismarck Tribune

The auctioneer’s voice sounds through the sales barn at Kist Livestock, “Sold: $1.70.” Cattle ranchers would not have seen these kinds of prices a year ago. In fact, they've never seen them before.

The price of beef is at a record high. Crystal Springs rancher Jason Schmidt said he is getting three times as much as he did five or six years ago. Before the first of the year, he sold his steers for $1,200 a piece, a price he would have paid on bulls a decade ago.

Feeder calves have been selling for about $1.85 to $1.95, according to Mike Herman, Kist Livestock field representative. He said prices started climbing around last July but now they're really jumping. They've been increasing almost every week since Jan. 1.

"It seems like there are plenty of buyers for them even at the price they are," Herman said.

The high prices are a result of high demand on a low supply. Ranchers have been reducing herds since 2007 due to high feed costs, said Tim Petry, North Dakota State University Extension Service livestock marketing economist.

U.S. cattle and calves totaled 90.8 million head as of Jan. 1, according to United States Department of Agriculture statistics. This is about 2 percent below the 92.7 million head in the supply chain a year ago. This is the lowest it's been since 1952.

Along with record high prices, beef exports are at a record high.

"There are economies in the world that are increasing faster than the U.S., particularly in southeast Asia," Petry said.

A cheap U.S. dollar is making products cheaper overseas.

Last year's drought in the southern U.S. has added to a decrease in supply. The land could not support the same number of cattle and many had to be slaughtered.

The weather has helped North Dakota ranchers, though. With a mild winter so far, Jack Reich of Zap has not had to feed much of his hay.

"We have a lot of grazing fields and grass but we're not always able to utilize it," he said.

With a surplus in feed, Reich is even considering planting corn to sell instead of grain to feed.

Reich has also saved on fuel costs because he did not have to spend four to eight hours a day pushing snow like last year.

Now that beef prices are up, ranchers can afford to buy more expensive feeds, fix up buildings and buy new machinery.

"People are more comfortable and willing to do the work and take the risk with these prices," Schmidt said.

Towner rancher Jason Zahn lost more calves than usual this year. The higher prices have made it easier for him to make up the loss.

Zahn is now planning to expand his herd this year by holding 100 heifers back to breed instead of selling them. As ranchers like Zahn do this, it will pull more heifer calves out of the supply chain and help keep prices at their current rates for longer.

Reich is having his annual bull sale in a couple weeks and is hoping the high prices will prompt more ranchers to buy.

While high prices are good for ranchers, they are affecting buyers in different ways.

For Chad Berger of Mandan, business is booming. He buys cattle for his feedlot and sells them later. The higher demand is helping sell all of his stock. In contrast, Brian Gader buys directly for other feedlots and ranchers. His customers want the lowest price possible, so the higher cost is making business harder.

Petry said he expects prices will remain high through 2012 at least and could last two or three years.

Higher prices will eventually trickle down to the grocery store as well.

"There are only so many dollars in the consumers' pockets," Reich said. "If prices go up too fast, it's hard for consumers to adapt."

The difference is the prices don't change at the supermarket as quickly as they do at the farm level and retail prices have still not caught up, according to Petry.

While worried about his customers, Reich is still glad for the market increase.

"It's nice to once and a while feel good about your chosen lifestyle," he said. "It's a shame when the people out making the food food can't make money."

Now Reich is feeling better about passing the ranch on to his four children.

"We want to be able to retain the next generation in this," he said. "It's encouraging for them when they see their parents and grandparents happy about things."

Reach reporter Jessica Holdman at 250-8261or

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