Beef prices expected to increase

Demand for beef is rising, while cattle supply is at a 50-year low.

Gary Stelzer Cattle pictured Thursday, Feb. 2, 2012 at the Gerber family farm in Wayne Township, Butler County, Ohio.

ENLARGE PHOTO

Staff photo by Gary Stelzer Father and son, Jerry and Gary Gerber, run a cattle farm in Wayne Twp., Butler County.

ENLARGE PHOTO

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By Skip Weaver, Staff Writer Updated 9:41 PM Saturday, February 4, 2012

WAYNE TWP., Butler County — One local cattle farmer described the expected increase in beef prices this year as much like the stock market.

“When you are selling, that brings more money in,” said Gary Gerber, 42, who operates an 1,800-acre farm and approximately 600 head of cattle with his 74-year-old father Jerry in Butler County’s Wayne Twp. “But when you go to replace those costs, it’s more expensive. So essentially you’re just trading dollars.”

A recent report from the U.S. Department of Agriculture indicates the 2012 cattle supply will be the smallest since 1952, which, in turn, will drive up beef prices for a second straight year. Beef prices are expected to increase between 4 percent to  5 percent.

“There are a whole lot more people now and the demand for beef is higher than it’s ever been,” said Greg Meyer, an Ohio State University Extension Educator in Warren County.

“But we’re not all of a sudden going to magically make more cows, so it means for at least the foreseeable future we can expect to pay more for hamburgers and steaks.”

The USDA report said there were about 91 million head of cattle in the U.S on Jan. 1, which is down 2 percent from a year ago and at its lowest level since 1952.

“Everything runs in cycles and the ag industry is at the top of the cycle right now,” Gary Gerber said. “Feed costs have gone up the last two or three years. Grain and everything is historically high, but I look for it to trend down in the next year or year and a half. It’s just a gut feeling.”

Meyer agreed.

“Eventually, it will trend back down,” he said. “That’s the way markets work, but it is going to take a while to fix this cycle.”

In January 2011, the USDA projected the reduced beef production to last through this year, and then rise from about 31 million at the beginning of 2011 to more than 34 million by 2020.

“We raise a small number here compared to other parts of the country, but it still effects us,” he said.

Jerry Gerber said they have approximately $750,000 in cattle on the farm.

“The return on our investment isn’t worth much, but neither is money in the bank,” he said. “It’s a big gamble. That’s what it is. It makes you wonder where it’s going to end. Can it drive itself too far? But we’re still planning on being in business.”

The reason behind the dip in cattle, according to the USDA report, stems from the severe drought states such as Texas and Oklahoma suffered last year. The drought left ranchers in those states with minimal supplies of grass and water to feed the animals, which were then sold to feedlots or slaughterhouses.

Southwest Ohio did not experience those severe drought conditions leaving local cattle farmers in better shape.

“If you can keep your feed costs in check, there’s never been a better time to be in the beef cattle industry,” Meyer said.

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