CALGARY - John Wildenborg thinks Canadians will be paying more for steak during future barbecue seasons, and the owner of Calgary specialty butcher shop Master Meats doesn’t hesitate.
Prices are going to go higher, no ifs, or buts about it, he said. It keeps me awake at night thinking about coming into the summer and what prices are going to be. It’s not a great situation.
Beef – is a mainstay of many Canadians’ diets, even in the form of a classic tenderloin steak or juicy burger. Its popularity is the reason why people’s demand for beef has historically remained strong. Even during periods of economic downturn when Canadians have less money in their wallets.
But the business of beef is changing, in large part due to consecutive years of extreme drought across North America’s main cattle-producing counties. From parched southern Alberta to water-scarce east Texas, ranchers have been cutting down on their herds due to a reduction of grass for grazing. The resulting shortfall in cattle supply is dropping overall beef production while helping to push retail beef prices higher.
A 10-ounce New Yorker presently would cost around $20. Three years ago, that was around $15 a steak, says Wildenborg.
And this is generally the slow time of year for beef, but wholesale prices haven’t reduced all since Christmas. I’m paying 40 percent higher than last year.
Food in general, as customers know, over the last three years, has increased in price due to the COVID-19 pandemic and an overall rising cost of living.
When you talk to producers, whether it’s in the Canadian provinces or key cattle-producing regions of the United States, many producers say that they’ve had to experience two hundred-year droughts back-to-back during a period of 10 years, said Lance Zimmerman, a Kansas-based senior beef analyst with Rabobank.
Add to that a global pandemic and all the challenges that go along with that, and we’ve had a 10- to 15-year period that’s been mostly challenging for many cattle producers and it has led to a lot of liquidation.
Liquidation is when a rancher decides to sell off a greater quantity of heifers and cows for slaughter rather than keeping them to grow in his herd. Ranchers may decide to do this because of many factors, including high input costs, limited labor availability, and high-interest rates, as well as the challenges related to long-term drought.
The size of the national cattle herd, in Canada has been decreasing for years, a trend that continued last year amid a punishing drought in Western Canada. In 2023, this country’s beef cow inventory dropped by 1.5 percent to 3.66 million animals, and this was the lowest level since 1989.
South of the border, U.S. Department of Agriculture figures show an even more dramatic story. There, the national cattle herd, for five years has been contracting, reaching 28.2 million animals in 2023. That’s the lowest amount of cattle the U.S. has seen since 1961.
Less cattle means less beef production, which translates to fewer exports as well as higher prices at the retail counter.
Unfortunately for the customer, those prices are going to ratchet higher, says Zimmerman.
On a U.S. basis, retail beef prices are presently about US$8 a pound, and according to our estimation, over the next few years, easily we can expect another dollar-and-a-half increase.
Last summer, in southeast Alberta, near the small community of Jenner, rancher Brad Osadczuk shipped some of his cattle east to Saskatchewan to graze on rented pastureland. This was the only way he could feed them since his grassland was down by drought.
This past year was the worst year for drought in adult life and I was born in 1971, says Osadczuk, our native prairie never turned green.
Though Osadczuk was able to avoid reducing his herd size, he said that in his area most of the ranchers have been choosing not to replace cows after they sell them for at least the past five years.
For a long time, we’ve been mitigating drought, he said.
Even if the existing drought cycle were to end this year, cattle numbers can’t rebound immediately. That’s why authorities say the new era of higher beef prices will be there for some time.
This isn’t a short-term thing, says Osadczuk.
For a female calf that is born today, its four years before that female can have its calf that can end up in the food chain.
Anne Wasko, a Saskatchewan-based market analyst with Gateway Livestock, said, for many years, North American cattle and beef supplies will remain tight, and much is riding on Mother Nature.
We’re going to be looking at smaller supplies in ’24, ’25, and possibly out as far as ’26,” she said. First and foremost, we truly need moisture, to turn this boat around.
