Roller Coaster Ride of Ground Beef Prices
July 1st, 2020
Consider humble ground beef: burgers, meatballs, chili. The fattiest kind is usually cheaper. But this spring, the pandemic brought the price of the fattiest ground beef up and then beyond the leanest. Jayson Lusk is an agricultural economist at Purdue University.
“Of course, different market factors and forces can sometimes alter those two relationships,” Lusk, Said.
Schools and restaurants tend to use fattier ground beef. But after they closed and states issued stay at home orders, all ground beef prices inched up.
Lusk says that’s likely because ground beef is also popular with even reluctant home cooks. Health-conscious families often select a leaner–more expensive–option, like 93 percent lean.
Then, a few weeks later, COVID-19 infections at meat-packing plants forced closures. And that’s when things got interesting. The wholesale price shot up then for all ground beef. Some fast-food chains stopped selling certain burgers.
Attorney Lawrence Silverman specializes in competition law in Miami. He says in times of crisis, retailers can’t jack up their prices—in most states, that would violate anti-price gouging laws. But what they can do is limit how much they let their customers buy.
“The anti-gouging statutes are solely based on pricing, they don’t cover allocation in times of shortage and they don’t cover quantity limitations,” Silverman, Said.
The week of May 15, the 73 percent lean ground beef had a wholesale price 70 cents higher than the leaner 93 percent. Usually, the leaner meat is at least a dollar a pound pricier. And both were selling for more than 5 dollars a pound, wholesale. Silverman says during the pandemic when most places had declared states of emergency, food would be considered a necessity. Retailers would be willing to pay more to keep meat on their shelves.
“For today, the resellers are doing whatever they can to try to get supply. The question of whether or not they overpaid, nobody’s going to have time to think about that until this calms down,” Silverman, said.
At some future date, he says there may be legal questions about whether wholesalers took advantage of the situation.
At Sky View Beef in north-central Iowa, the end of May is a time for cutting hay and putting it up for winter feed. Co-owner Laura Cunningham, who made this recording, has had a very busy spring.
“In a period of 11 days, I did the amount of business that I typically do in a year,” Cunningham, said.
She doesn’t take her cattle to a major packing plant. Instead, she books the animals into local meat lockers and sells directly to consumers.
Cunningham says as her phone rang off the hook, she and her husband made a conscious decision not to raise their prices.
“We didn’t need to scale up. Could I? Yes, there was definitely a demand for it. But I don’t believe in that kind of a model to sustain a business that we want for the long term,” Cunningham, said.
While some shoppers switched to buy from farmers like Cunningham, others replaced ground beef with ground pork or skipped meat altogether.
Heading into summer, ground beef prices are coming down. And the order between fatty and lean has been restored: the leaner stuff is again more expensive.
But things aren’t all back to normal. Processing plants can’t move as much meat through with new COVID-19 worker safety measures. And employees may still be getting sick.
So as with all things pandemic: Don’t take off your seat belt just yet. This roller coaster ride of meat prices probably isn’t over.
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