Inflation is surging, and consumers' finances are feeling the pinch from all angles. One product in particular that's become more expensive: beef.
The price of beef and veal increased 20.1% between October 2020 and October 2021, recent data from the Bureau of Labor Statistics shows. It's far outpacing the increasing price of pork, which is 14.1% more expensive than it was at this time last year.
Here's what's causing beef prices to skyrocket, and why experts believe there might be relief coming around the corner.
"All meat prices are up, but beef prices are up disproportionately higher than the rest of the protein prices," says Arun Sundaram, an analyst at Wall Street research firm CFRA.
Here's how the increase in beef prices compares to the price increase of other proteins over the past year, according to BLS data.
- Beef and veal: 20.1%
- Pork: 14.1%
- Chicken: 8.8%
- Fresh fish and seafood: 11%
- Eggs: 11.6%
The slowdown left farmers with nowhere to send their beef, which resulted in them having to cull cattle and other livestock. That, coupled with uncertainty about the future, caused farmers to scale back their production at the time, which Sundaram says "can affect production more than a year, year and a half down the road."
At the same time, processing facilities have dealt with labor shortages that have reduced their capacity to process meat at the same clip as before the pandemic. This reduced production came as demand for beef returned from both consumers and restaurants, forcing prices higher.
"You have this huge imbalance of supply and demand which is causing the prices to skyrocket," Sundaram tells CNBC Make It. "The demand side got even stronger as the months progressed in 2021, whereas the supply side of things got worse."
But Sundaram emphasizes that it would be incorrect to say a single factor has led to the price increases.
Scott Lively, co-founder of organic beef company Raise American and author of the recently released book "For the Love of Beef: The Good, the Bad and the Future of America's Favorite Meat," calls the current situation "a perfect storm of a lot of things that have happened."
From the prices of the chemical fertilizers that help grow the feed that cattle eat to the cost of the materials used to package meat for sale to consumers, every aspect of the beef supply chain has become more expensive.
"Think about the amount of polystyrene that is used to put out the meat. The tray and pads from the supermarket. So much goes into beef production, and all of those costs have gone up, which affects the cost of a hamburger or a steak," Lively says. He adds that carbon dioxide, which is used in ground beef production to keep meat cold, has almost doubled in price over the past year.
The White House recently released a brief acknowledging that President Biden "understands that families have been facing higher prices at the grocery store recently."
Though the brief acknowledges supply and demand issues as factors that have caused prices to go up, it also blames the four major conglomerates that control 82% of the nation's beef production — compared to 25% in 1977 — saying that the lack of competition has resulted in not only sky-high prices, but also record profits for them.
"These record profits and dividend payments come at a time when consumers are paying more to put food on the table, workers are risking their health and safety to keep America fed, and farmers and ranchers are also facing unprecedented droughts, wildfires and other extreme weather events that put their herds and farms at risk," the brief says.
The administration has pledged to enforce antitrust laws to battle anti-competitive practices in the meat industry, and the USDA recently began releasing market reports on what beef processors pay in an effort to increase transparency.
There are "promising signs" that meat prices have crested, Sundaram says.
"Wholesale prices are slowly starting to moderate," he says. "Maybe we could see higher prices continuing for the next month, maybe two months, but it looks like we're close to the peak."
Consumers likely shouldn't worry about prices staying high indefinitely, Sundaram says, citing the competitive nature of the beef industry and the similarity of the products the different companies sell.
"There's not much differentiation between one company's meat versus another's," he says. "When you sell a commodity, it's hard to generate outsize profits. When costs come down, if one meat company decides to keep their prices as-is, the next meat company will lower prices. And because of the competitive dynamics, the first company will have to lower their prices as well."
Lively agrees, saying he expects prices to settle down as the supply chain begins to stabilize and "excuses" for the high costs begin to "wear thin" with consumers.
"I think we're out of excuses, and I think there should be some price relief coming to the consumer after the first of the year," he says.
Until prices settle down, Lively says there is one thing that consumers can do to make sure they're getting the best deal on their beef. Each pagkage of meat is marked with a USDA mark of inspection as well as an establishment (EST) number, which tells you where that product was produced.
Looking up this number on Google can help you find out if the meat is worth the upcharge, or if it's something "from one of the big four packers that has been relabeled," Lively says.
"The label will give you a lot of information," he says. "There could still be differences [if the EST numbers match up], but it's a good indicator that you're dealing with just a brand rather than something that came from an actual family farm."