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Wednesday, June 12, 2024

Beef prices soar to record highs amid persistent supply shortages

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With beef prices at an all-time high, an employee at Hannam Chain Butcher Shop in Koreatown prepares for this weekend’s beef sale. [Sangjin Kim, The Korea Daily]

Beef prices are at an all-time high. This has led to an increase in the price of beef products such as hamburgers and steaks at retailers, as well as beef sold in markets.

According to the U.S. Department of Agriculture (USDA), the retail price of beef is currently $8 per pound, up more than 60 percent from less than $5 before the pandemic.

According to the wholesale butcher industry, wholesale beef prices have risen steadily since the pandemic, with an average increase of more than 20 percent and a jump of more than 40 percent for LA Galbi (Korean BBQ Short Ribs).

Even though wholesale prices have increased by more than 40%, LA Galbi currently sells for between $13.99 and $15.99 per pound in LA Korean groceries, which is 20-30% higher than last year. This shows that Korean markets have absorbed some of the increase in wholesale prices. While there are differences by cut, overall beef prices have risen by an average of more than 20 percent, making consumers reluctant to buy beef.

“High prices have caused consumer spending to cool off, and we are unable to apply the increase in wholesale prices to the selling price,” said Young-kyo Kim, director of Hannam Chain Butchery. “We are holding a beef sale event this weekend to reduce the burden on consumers.”

The surge in beef prices, following that of pork, has diminished the demand for meat at restaurants and markets. Industry insiders anticipate that beef prices will remain elevated for the foreseeable future due to the closure of several LA-area slaughterhouses over the years and the decline of large Korean American-owned meat wholesalers.

Currently, only four or five wholesalers remain, and it is likely that wholesale price increases will persist for some time within the LA Koreatown area. In essence, there’s no room for beef prices to decrease due to a confluence of factors such as soaring prices, diminished supply from livestock crises, depleted hay stocks due to drought, and elevated labor costs.

The U.S. Department of Agriculture (USDA) mentioned in its September Livestock, Dairy, and Poultry Outlook that beef production for the second half of this year is anticipated to decline by 180 million pounds from August through year’s end.

“The escalating costs of land, water, and labor, in conjunction with frequent droughts, are exacerbating challenges for livestock farmers in the states,” said Namsoo Kim, CEO of Sam Chang Foods. “Persistent droughts in major cattle-producing states like Texas and Kansas have precipitated the most significant reduction in cattle numbers in decades, subsequently impacting beef supplies.”

Hay, a crucial resource for cattle rearing, faced substantial depletion due to severe drought last year, causing the hay stocks to plummet to 71.9 million tons in December, a record low since 1954. According to the USDA’s May data, farms are currently holding 13% less hay in stock compared to the previous year.

“Given that the demand for beef is expected to exceed supply for several years, we project that beef prices will escalate to historically high levels, potentially reaching unprecedented peaks for cattle over the next 18 months,” said Brian Earnest, the lead economist for animal protein at the farm credit association Cobank.

BY EUNYOUNG LEE, JUNHAN PARK    [lee.eunyoung6@koreadaily.com]