Meat prices reflect supply, demand

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By Bryce Roberts

Consumers may be in the driver’s seat when it comes to higher meat prices. Indications are that retail meat prices may rise to record highs later this year, according to a University of Kentucky agricultural economist, and it all rests on that bedrock of free market economics – supply and demand.

Between 2000 and 2008, the beef, pork and poultry industries were producing record high quantities. Normally, with supply high, prices would tend to be lower, but demand was also high – driven by a strong economy and positive attitudes toward meat, some of which grew from dietary trends like the Atkins diet. In that time period, per person consumption of meat was more than 220 pounds annually, said Lee Meyer, extension professor in the UK Department of Agricultural Economics. So strong demand from consumers forced prices up to record levels.

Fresh beef prices hit $4.11 per pound and pork prices rose to $3.03 per pound in September 2008, and two months later, chicken prices climbed to $1.79 per pound.

“Then two things happened,” Meyer said. “First, as corn was moved into the ethanol fuel channel, prices escalated and livestock producers began losing money because their feed costs were so high. Initially, more livestock went to market, increasing the supply. Second, the recession hit and meat demand declined because of the weak economy.”

The combination of the two resulted in a price drop last year; beef and pork dropped 8 percent, and chicken prices were down 6 percent.

“But as producers lost money, they reduced production, and so less meat is now on the market,” he said. “In addition, the economy is recovering, and consumers have a much more positive attitude. Tight supplies and stronger demand suggest higher prices.”

Meyer foresees slaughter cattle and hog prices being near record levels this year, but ultimately, consumers hold the key to consumer prices. If the economy recovers and consumers spend more on meats – especially in restaurants – he sees prices possibly moving to record levels later this year.

“Chicken prices might be an exception. Weaker exports could leave more chicken on the domestic market, and that higher supply could give consumers some relief,” he said.

Field day

George, Sandi, and Franklin Deutsch will host a Mum, Fruit, and Vegetable Production Field Day on their farm August 23.  We’ll look at some mums that are part of a research plot in cooperation with the University of Kentucky and will also look at their fruit and vegetable production as well.  The program will begin at 5 p.m.

    There will be activities for kids and a meal will be served.  We ask that you register by August 17 by either calling our office (477-2217) or registering online at spencerextension.com

Please visit our website for more information on the field day, including directions to the Deutsch farm.

District board meeting   

The Spencer County Cooperative Extension Service District Board will meet on August 10 beginning at 7:30 p.m. and it will be held at the Extension Office, located at 66 Spears Drive.  Business to include setting tax rates for FY 2010-11.   

Feel free to contact me at your Spencer County Cooperative Extension Service at 477-2217 or you can email me at broberts@uky.edu.  You can visit the Spencer County Extension Services’ website at www.spencerextension.com.