Cattle producers getting less for beef but retail prices not dropping accordingly

By: Yvonne Colbert

Cheverie’s mother does the shopping. “She won’t say, “Let’s have a steak” because the prices are too high,”‘ Cheverie told CBC News.

She says her mother usually shops for beef at discount stores, like Gateway Meat Market in Dartmouth.

“We find Sobeys or Superstore just too high-priced unless it goes on sale,” she said, adding her mother checks flyers for sales and when she finds one, she buys in bulk and freezes the meat.

No big price drop expected

Beef prices aren’t regulated in Nova Scotia and are based on what the market will pay. Those in the industry say while prices at the store will likely drop a bit, there won’t be any dramatic cuts in the near future.

Brad McCallum, managing director of the Nova Scotia Cattle Producers, said last year saw record high prices for farmers. They have since dropped 25 to 30 per cent.

McCallum said beef farmers get approximately $2.14 a pound for finished animals going to market.

He says it’s hard to say whether the price paid to farmers will drop further but he expects they likely will level off between now and spring.

“We don’t expect them to drop a lot but we’re in a time of year when a lot of cattle are coming onto the market and lower demand for beef” with the barbeque season winding down, he said.

Brenna Grant, manager of Canfax Research Services, a division of the Canadian Cattlemen’s Association that provides analysis of beef markets and trends in North America, said retail prices in Canada peaked in March 2015 and have softened slightly.

“As of July they’re down one per cent from last year but they really have been fairly steady over the last 12 months and we are anticipating them coming down further over the second half of the year,” she said.

Yield part of reason for price discrepancy

Russ Mallard is the president of Atlantic Beef Products Inc. in Albany, P.E.I., the only federally inspected beef plant in the Maritimes.

He said there’s a reason for the big difference between what cattle producers are paid and the price charged by stores. It’s called yield.

“Farmers gets paid for the entire animal but by the time you take it apart, process and ship it under strict safety guidelines, there’s a lot less beef,” he said. In fact, the yield can be as little as 58 per cent of the entire animal.

Mallard expects prices paid to farmers will decrease as the number of cattle in North America increases.

“For the consumer it’s good news in the sense beef prices will come off,” he said.

But he said prices don’t automatically drop right away at the store because there’s always a certain amount of beef already in the system.

He said it works both ways. “There’s a bit of a lag if beef prices start to go up, beef prices don’t always show the increase the next day either.”

Retailers aim for gradual price changes

Grant, the researcher, agrees.

“They [retailers] really try to keep those prices as steady as possible for the consumer but when we had the big rally in cattle prices in 2014 and the first half of 2015 the retailers were in a position of playing catch-up and they could only increase consumer prices by so much every week and every month over that time period,” she said.

Grant said retailers try to recoup their losses, but don’t want prices to yo-yo, either.

Copyright © 2017. All Rights Reserved.