How much Americans will pay for a steak is going to be tested in the near future.
So far, U.S. consumers have continued to devour ribeyes and burgers even amid rising prices. In fact, the willingness to pay up for meat during the pandemic has been “phenomenal,” analysts at Rabobank said in a report. Still, the current price tags don’t reflect the full brunt of higher production costs from feed to fuel. It remains to be seen whether consumers will continue to buy beef with the same gusto as it gets even more expensive.
American shoppers may start “substituting to other proteins or reducing their overall consumption,” the report said.
Average prices for U.S. beef at grocery stores are at records. For example, boneless sirloin steak in January 2022 was $10.83 a pound in the U.S., which is the most for the month in Bureau of Labor Statistics data going back to 1989.
Adding to the uncertainty is how Russia’s invasion of Ukraine might weigh on the global beef market. The war is already causing a surge in prices of grains used to feed cattle. That’s adding to weather challenges like drought in South America and ongoing supply-chain woes, which are contributing to higher costs for ranchers and threatening to worsen meat inflation.
“From land to labor to inputs, everywhere you look, costs for meat producers are higher,” said Ted Schroeder, an agricultural economist at Kansas State University.
Overall, Australia, which is recovering from drought, is expected to see a production gain in the first quarter, as is Brazil. Cattle volumes in China and Europe are expected to “contract slightly,” while the U.S. herd holds steady, the report said.