The Boomerang

Beef prices are up as much as 20%, prefacing a rise at the grocery store. Pork and chicken are on a similar trend. Two reasons: the decision to turn corn into ethanol has raised the price of corn to the feedlots, bumping the price of beef which eats almost nothing but for their 6 to 9  months in the lots; as a result, ranchers began thinning their herds because the packers were taking the increase in the downstream costs out on the producers, as usual; so the stockmen took the unusual step of selling their heifers and mature mother cows to market rather than using them to re-stock their herd. The trend finally caught up with the packers – a smaller herd to bid on, higher prices to the rancher. Just desserts for the oligopolists. They were pushing down so hard on the ranchers that they forced a market reaction that has back-fired on them. Fewer calves to bid on, real competition on price, good for the stockmen. Let the packers eat cake, I say.

The feedlots and packers are taking it on the chin with this double whammy of high grain prices and fewer cattle to bid on. The average consumer is the ultimate one to suffer — higher prices for meat and fish at the grocery.

The good news? Our price is staying the same. We aren’t dictated to by the oligopolists and you’re not either. Sometimes the little guy wins. It’s a good thing.

JVF