Been a while since one of these updates, but from this week's blurb, looks like we will have higher beef prices with us through the summer, even though live cattle is still in the 130 range as it has been all year. Nuts!
"TRANSPORTATION WOES
Beef is not a product that is manufactured one place then sent directly to the consumer. The path of animals, then beef, through the food chain is a long and circuitous route that relies at each turn on transportation to move from Point A to Point B. This translates into significant added costs to the beef product at the store.
The journey might start with a calf raised in Florida that is sold to a cattle rancher in the Texas Panhandle for grazing, then transported to a local feedyard, then to a local beef plant. The beef cuts then are sent to a grocer’s distribution house, then to a retail store, then packed into a grocery bag for the trip to the consumer’s home. Each leg of the journey from birth to plate involves costly transportation and those costs are skyrocketing.
The story of inflation always seems to focus on gas and food. Pick up any news source and you will find stories chronicling the new highs [either all time or decade records] for fuel. Fuel surcharges are placed on delivery costs for each segment of the journey for beef to the table. Those transportation costs represent an ever increasing percentage of the food dollar and of the gross sales price of beef. These direct costs are further impacted by indirect transportation cost of feed and all the other inputs into the beef production sector.
Unfortunately, beef has more transportation costs associated with it than the competing meats. Both poultry and pork are produced in more contained production facilities where the animals are birthed, grown and harvested within close proximity to each other. They also, because of the nature of the meat product, allow processing facilities to take the ultimate product closer to consumer ready packaging at the processing plant. Many of these meat products are shipped directly to retail stores where they are presented pre-packaged as received.
Beef processors also are now being called on to further process beef cuts and deliver more portion control processing at the plant. Everyone is struggling to overcome labor shortages. The transportation costs can be mitigated by these actions but ultimately the only solution is lower fuel costs. With the summer driving season in front of us and the Ukraine war still raging, relief may not happen soon."
"TRANSPORTATION WOES
Beef is not a product that is manufactured one place then sent directly to the consumer. The path of animals, then beef, through the food chain is a long and circuitous route that relies at each turn on transportation to move from Point A to Point B. This translates into significant added costs to the beef product at the store.
The journey might start with a calf raised in Florida that is sold to a cattle rancher in the Texas Panhandle for grazing, then transported to a local feedyard, then to a local beef plant. The beef cuts then are sent to a grocer’s distribution house, then to a retail store, then packed into a grocery bag for the trip to the consumer’s home. Each leg of the journey from birth to plate involves costly transportation and those costs are skyrocketing.
The story of inflation always seems to focus on gas and food. Pick up any news source and you will find stories chronicling the new highs [either all time or decade records] for fuel. Fuel surcharges are placed on delivery costs for each segment of the journey for beef to the table. Those transportation costs represent an ever increasing percentage of the food dollar and of the gross sales price of beef. These direct costs are further impacted by indirect transportation cost of feed and all the other inputs into the beef production sector.
Unfortunately, beef has more transportation costs associated with it than the competing meats. Both poultry and pork are produced in more contained production facilities where the animals are birthed, grown and harvested within close proximity to each other. They also, because of the nature of the meat product, allow processing facilities to take the ultimate product closer to consumer ready packaging at the processing plant. Many of these meat products are shipped directly to retail stores where they are presented pre-packaged as received.
Beef processors also are now being called on to further process beef cuts and deliver more portion control processing at the plant. Everyone is struggling to overcome labor shortages. The transportation costs can be mitigated by these actions but ultimately the only solution is lower fuel costs. With the summer driving season in front of us and the Ukraine war still raging, relief may not happen soon."
