“If I’m a cattle feeder, I have to buy the calves and I have to buy the feed, and I know that, or at least I have a estimate of what the price I’m going to get for that animal at the end is. We have a future’s market for live cattle, for fed cattle.”
THE FEED YARD’S ANSWER TO HIGH FEED COSTS IS TO PAY LESS FOR THE OTHER INPUT, CALVES. THE LONG PRODUCTION PROCESS SLOWS DOWN PRICE SIGNALS MAKING THEIR WAY THROUGH THE SYSTEM.
“To get from when that calf is conceived, to all the way through to the calf being born, to it going through its lifespan, to getting to a fed cattle weight, takes time. That calf, it takes over two years, from the beginning, to the time that you get that steak on your plate, and so that’s a long production process, so there’s a time lag.”
GROCERY STORES AND RESTAURANTS RESIST PASSING ON PRICE INCREASES.
“Those drastic price changes, swings from week to week, is something that basically consumers don’t like to see and the stores don’t like to see it either, but there’s also another component of that and that is it costs money to change the price. Think if you go to a restaurant, and you look at the menu. You have to go reprint a whole new set of menus for a restaurant chain that is nation wide.”
ULTIMATELY, LOW CALF PRICES AFFECT THE AMOUNT OF BEEF BEING PRODUCED.
“There’s a competetive marketplace there with companies bidding and negotiating all the way through. It’s not a situation where you just pass on that cost increase to the final consumer. There’s a time lag and a process where that happens. Consumers do pay more down the line, but often times, in cattle anyway, it’s because we produce less beef in response to higher costs.”
I’M JOE BROWN, TRACING THE JOURNEY OUR FOOD MAKES FROM THE FARM TO OUR TABLES, FROM THE GROUND UP.