Expansion in the country’s beef cattle herd is bringing cheaper meat prices to the grocery store just in time for the summer grilling season, but those reduced prices might get some scrutiny on Capitol Hill.
U.S. Department of Agriculture data show the price of ground beef is down about 30 cents per pound compared to last year. Cheaper feed, falling land prices and increased consumer demand for meat over the past three years spurred the nation’s beef producers to raise more cattle, said Lee Schulz, a livestock economist at Iowa State University. “We’ve seen increases in beef production really start[ing] in late 2015 and into 2016,” Schulz said. “That increase in production will lead to lower prices.”
Still, he said prices have dropped a bit quicker than expected.
“What many of us thought would be a much longer, prolonged process to get to this new price level, really occurred in the last three months of 2015,” Schulz said.
As summer heats up, other kinds of beef like steaks and ribs should also have lower prices than last year, Schulz said. But, he added, increases in pork and poultry production are also expected.
“Reduced prices will benefit consumers,” Schulz said. “Competition at the retail meat case for the consumer’s dollar will be aggressive.”
But those lower prices prompted U.S. Sen. Chuck Grassley, R-Iowa, to request a Government Accountability Office study of the cattle market.
“We’ve seen unbelievable volatility in cattle prices during the last year,” Grassley said.
During a U.S. Senate agriculture committee hearing on the state of the livestock industry last week, Tracy Brunner, president of the National Cattlemen’s Beef Association, testified that given the price variability, farmers and ranchers need to have confidence in the futures market so they can use it to manage the risk from fluctuating prices.
“The integrity of our market forums is very important, for without futures contract integrity, our industry will abandon their use,” he said.
Brunner specifically asked the government to stay out of that marketplace.
“Today we ask for no direct action from our government in our cattle marketing systems and forums," he said.
Schulz says farmers know when they produce more meat they’re likely to see lower prices.
“I don’t see anything as far as market collusion or price fixing or anything like that,” he said. "The market is just adjusting to changes in supply and demand."