Beef prices soar | High beef prices and consumers’ demand for value are putting beef sales on the back burner
LETHBRIGE — Brent Chaffee hopes the tumultuous times experienced during his tenure are over as he hands over the reins of the Alberta Cattle Feeders Association to a new administration.
An increasing number of feedlots in North America have called it quits in recent years because of elusive profits.
“There have been enough years with marginal returns that people tend to get out when there is not enough money in it,” Chaffee said in an interview at the association’s annual meeting in Lethbridge Jan. 22.
Page Stuart of Highland Feeders at Vermilion replaced him as chair of the association after two years on the job.
Canfax reports that Alberta feeds 70 percent of the country’s cattle. The number of feedlots with a capacity of 1,000 head or more has dropped to 164 in 2012 from 172 in 2011 and 186 in 2010. About a dozen lots have a capacity of 20,000 head or more.
Feedlots in Alberta and Saskatchewan had 990,330 cattle on feed in January, down from slightly more than one million in December.
“I hope the industry is done contracting,” Chaffee said.
“Consolidation is not a bad thing if you get the right players involved moving the industry forward.”
Record prices are being paid for all classes of cattle, yet few producers are interested in expanding.
U.S. fat cattle cash prices recently soared to a record $150 per hundredweight, but at some point consumers will not pay more for beef, agricultural economist Bill Mies of Texas A & M University told the International Livestock Congress in Denver, Colorado, Jan. 14.
He said a chuck roast sells for $3.25 per pound at Sam’s Club, a U.S. members-only supermarket owned by Walmart , while pork loin is much cheaper at $2.16.
“That chuck roast better eat like the best chuck roast you have ever eaten in your life or the next trip into Sam’s will be a pork loin going out the front door,” he said.
Robin Murphy, the meat buyer for HEB, a 300 store grocery chain in Texas, knows consumers are discerning and looking for variety, whether it is organic, antibiotic free, Certified Angus Beef or some other branded product. However, he also knows consumers have limited budgets.
The company’s consumer tracking has found that a lower income family is willing to pay $5 for a package of meat while a middle income family may pay $10 to $15.
As well, consumers are just as likely to buy ground beef as they are fancier meat cuts.
“A steak on the grill is not as prevalent as it used to be,” Murphy said.
These societal changes are contributing to the stagnation of the cattle cycle, she added.