Bad News at the Grill as Beef Prices Hit All-Time High

Outdoor chefs are in for an unhappy surprise as the summer grilling season approaches: The cost to fire up a backyard barbecue is going up.

The price of wholesale beef hit an all-time high Friday and there is no indication it will decline this year. While the price of beef alone is up at least 5 percent, that summer cookout is going to feel much more expensive to any serious barbecue aficionado buying good-quality meat.

"His meat has gone up. His buns have gone up. Everything's gone up," said Jim Early, the founder and president of the North Carolina Barbecue Society. Once you count all the fixins—ranging from brisket and chicken to barbecue slaw and salad—the price has doubled from just a few years ago. "The only thing that stayed the same is cabbage," he said.

There are many causes for the increase, which has been edging up slowly. On Friday, the wholesale price of a USDA cut of choice beef reached $201.68 per 100 pounds. The previous high, $201.18, was set in October 2003. That was when all Canadian beef imports were prohibited after its first confirmed case of bovine spongiform encephalopathy, also called mad cow disease. That peak turned out to be a short-term blip and the prices dropped by 30 percent by the end of the year.

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Now, "it's a whole different scenario," Kevin Good, a senior analyst with CattleFax, told NBC News.

The U.S. cattle and calf herd is at its lowest level since 1952 and cattle producers have been hard hit by poor pasture conditions, a poor hay crop, drought in the Southern Plains and late freezing weather, according to a USDA economist. Those problems will linger at least until the second half of 2014, he said. Until then, that tight supply means higher beef prices, particularly for better cuts of meat.

More of that U.S. meat is also going overseas as foreign demand rises.

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Among the increasing costs to raise cattle is a doubling of corn prices due to its demand for use to produce ethanol. The use of corn ultimately results in better barbecue if it is mixed into the cow's diet, Early said. "That's what they feed to the cows for the white fat, which is what we want," Early said. "If they feed them $8 corn, that's going to run our prices up."

Early said the price increases won't be as obvious to anyone buying factory-raised meats, which often use growth hormones to speed the fattening process and cut other costs. But as the big farmers are better able to absorb the pitfalls, the smaller farmers get nudged out of the business, further tightening the supply of those most choice meats. "They can't make it," Early said of the small farmers. "All it takes is something like a drought like they've been having and the yields go down."

Although everything's going up, there are ways to make your dollar go farther even when you're not springing for filet mignon. Early suggests finding a good butcher who knows how to cut the meat in a way to enhance flavor. Also, find recipes or take a class to learn how to get the most flavor out of the cheaper cuts, Early said.

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"The public will adjust to it, like they have for $15 movie tickets," Early said.

While the public is indeed paying for more expensive beef, there are also signs they are slowly making changes."U.S. consumers are eating less beef" than six years ago, Good said.

Tyson Foods on Monday said it sold 3.9 percent less beef in the quarter that ended March 31 compared with a year ago. Its beef prices went up 6.5 percent over that same period, the company said. "Consumers," Tyson said in its quarterly report, "opted for the relative value of chicken."

When it comes to grilling, hamburgers are still the No. 1 choice, according to the 24th annual Weber GrillWatch Survey. Hot dogs, steaks and chicken pieces were also popular. But the new trend of the past three years is the increasing use of vegetables in addition to meats, said Mike Kempster, the executive vice president at grill maker Weber.

People are becoming flexitarians and going meatless more often. Health and costs are factors, especially for women cooks, Kempster said. "The guys just want the beef," he said.

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It's not just at home where consumers will feel the sticker shock. Overall restaurant menu prices have gone up, boosted in large part by the rise in beef, said B. Hudson Riehle, senior vice president of the research division for the National Restaurant Association.

Nationally, menu prices were up 2.3 percent in the first quarter of this year compared with the first quarter of 2012, Riehle said. At that same time, wholesale food prices went up 2.6 percent, meaning restaurant owners have been absorbing some of the costs and not passing it all on to the price-sensitive consumer.

A recent beef and pork survey by the Technomic food trend consultancy found that 46 percent of diners said they have noticed beef prices going up, but only 21 percent said they are already ordering less beef.

"Consumers aren't changing their behavior," said Kelly Weikel, a senior consumer research manager at Technomic. But it's not going to take much more for them to order something different at a restaurant. When the price increases $1.50 to $2 more, 49 percent of beef-eaters said they'll make a switch, according to the survey.

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