Nalivka: Retail Beef Prices
We have heard repeatedly the past six months about how much meat and poultry prices have increased at the supermarket – and they have. However, the problem I have is how much of the entire story is left out of that brief news statement about how inflation is wreaking havoc with consumers as retail meat prices have gone higher. So, let’s take a brief look at those prices.
USDA calculates a value monthly for beef sold in retail (supermarkets). From this value it tracks those retail dollars flowing through the supply chain and the spreads between price spreads between the retail, wholesale, and the producer. This information is mandated by law, and enough said on that for now except to reference the data. I am using the calculated retail beef value and all fresh beef value from this data for my discussion of beef prices over the past year. I can write a rather lengthy opinion on the USDA beef price spread series, but I will leave that for another time.
USDA’s retail beef value in October averaged $7.42 / lb. Again, this is a calculation for the value of all beef in the retail meat case. It is down 6% from October 2021 which happens to be the all-time high value for the entire series which starts with January 1970. The all-fresh retail beef value averaging $7.24 / lb. in October was down 4% from the year-earlier record high price. These are probably the values quoted by the news media as they are easily accessible and don’t involve going through all of the reported retail prices. However, the more relevant prices are featured prices on the ads that are reported every week and provide a much more realistic picture of retail meat case activity. I would contend that in these times of high meat prices, the largest share of beef at retail is bought on ad prices with more retail featuring being used.
Taking a look at USDA’s retail feature report for last week, the featuring rate at stores sampled for this report was 71.1% compared to 66.6% a year ago. Taking a quick look at a couple of featured ad prices last week, bone-in ribeye roasts which pick up with seasonal demand going into the holidays were featured nationally at a weighted average price of $9.61 / lb. compared to $10.80 / lb. a year ago and $8.39 / lb. for the same week in 2020. Ground beef (80-89% lean) nationally had a featured price of$3.85 / lb. compared to $4.26 / lb. a year ago and $3.47 / lb. in 2020.
The point is that there is more to retail meat prices than making the statement that meat prices in the supermarket are up 13% this year. There are numerous factors going into the price equation other than a quick news item about inflation. But even more so, beef producers don’t have to apologize for the price of their final product if you produce a consistent, quality product that consumers want to buy.
