Why drought on the prairies is making your steak more expensive
Calgary –
Ask John Wildenborg if he thinks Canadians will probably be paying extra for steak throughout future barbecue seasons, and the proprietor of Calgary specialty butcher store Master Meats does not hesitate.
“Prices are definitely going to go higher, no ifs, ands or buts about it,” he mentioned.
“It keeps me up at night, actually, thinking about coming into the summer and where prices are going to be. It’s not a good situation.”
Beef — whether or not within the type of a juicy burger or a basic tenderloin steak — is a mainstay of many Canadians’ diets. Its recognition is the explanation why shopper demand for beef has traditionally remained robust, even via durations of financial downturn when Canadians have much less cash of their wallets.
But the business of beef is altering, largely as a result of consecutive years of extreme drought throughout North America’s predominant cattle-producing areas. From parched southern Alberta to water-scarce east Texas, ranchers have been downsizing their herds as a result of a scarcity of grass for grazing. The ensuing shortfall in cattle provide is decreasing general beef manufacturing and serving to to push retail beef costs greater.
“A 10-ounce New Yorker right now … would cost around $20. Three years ago that was maybe a $15 steak,” Wildenborg mentioned.
“And this is usually the slow time of year for beef, but wholesale prices haven’t dropped off at all since Christmas. I’m paying 40 per cent higher than I was last year at this time.”
Food in gneral, as shoppers know, has elevated in worth over the past three years as a result of COVID-19 pandemic and an general rising value of dwelling. But whereas inflation is beginning to average in quite a few meals classes, the drought issue means beef costs should not.
“When you talk to producers, whether it’s in the Canadian provinces or key cattle-producing regions of the United States, many producers will tell you they’ve had to experience two ‘hundred-year droughts’ back-to-back over the course of 10 years,” mentioned Lance Zimmerman, a Kansas-based senior beef analyst with Rabobank.
“Add to {that a} international pandemic and all of the challenges that go together with that, and we’ve had a 10- to 15-year interval that’s been significantly difficult for lots of cattle producers. It has led to loads of liquidation.
Liquidation is when a rancher makes the choice to dump a larger proportion of heifers and cows for slaughter fairly than retaining them to develop his or her herd. Ranchers could determine to do that due to a wide range of components, together with excessive enter prices, restricted labour availability and excessive rates of interest, in addition to the challenges related to long-term drought.
In Canada, the dimensions of the nationwide cattle herd has been declining for years, a pattern that continued final yr amid a punishing drought in Western Canada. This nation’s beef cow stock fell in 2023 by 1.5 per cent to three.66 million animals — the bottom degree since 1989.
South of the border, U.S. Department of Agriculture figures present an much more dramatic story. There, the nationwide cattle herd has been contracting for 5 years, reaching 28.2 million animals in 2023. That’s the smallest variety of cattle the U.S. has seen since 1961.
Fewer cattle means much less beef manufacturing, which interprets to fewer exports in addition to greater costs on the retail counter.
“Unfortunately for the consumer, those prices are going to ratchet higher,” mentioned Zimmerman.
“On a U.S. basis, retail beef prices are currently about US$8 a pound, and by our estimation, over the next several years we can expect another dollar-and-a-half increase, quite easily.”
In southeast Alberta, close to the tiny group of Jenner, rancher Brad Osadczuk shipped a few of his cattle east to Saskatchewan final summer season to graze on rented pastureland. It was the one method he may feed them as a result of his personal grassland was solely depleted by drought.
“This past year was the worst year for drought in adult life and I was born in 1971,” Osadczuk mentioned. “Our native prairie just never turned green.”
While Osadczuk was capable of keep away from decreasing his herd measurement, he mentioned many ranchers in his space have been selecting to not exchange cows after they promote them for at the very least the previous 5 years.
“We’ve been mitigating drought for a long time,” he mentioned.
“So we’re kind of at a point in this part of Alberta where our herds are pretty small already.”
Even if the present drought cycle had been to finish this yr, cattle numbers cannot rebound in a single day. That’s why specialists say the brand new period of upper beef costs is right here to remain, at the very least for some time.
“This isn’t a short-term thing,” Osadczuk mentioned.
“For a feminine calf that’s born at present, it is 4 years earlier than that feminine can have its personal calf that may find yourself within the meals chain.
Anne Wasko, a Saskatchewan-based market analyst with Gateway Livestock, mentioned North American cattle and beef provides will stay tight for a number of years, and far is driving on Mother Nature.
“We’re going to be looking at smaller supplies in ’24, ’25 and possibly out as far as ’26,” she mentioned.
“We truly need moisture, first and foremost, to turn this boat around.”
This report by The Canadian Press was first revealed Feb. 25, 2024.
