Cattle shortage keeps retail prices high

By RON TSCHIDA, Chronicle Staff Writer

Market prices for fed cattle dropped 15 to 20 percent after mad cow disease was discovered in a single Washington-state dairy cow in December, but lower slaughter prices haven't translated into lower costs at the retail meat counter.

"No they haven't," said Dennis Grant, meat department manager at Town & Country Foods in Bozeman.

That's because beef supplies remain tight and consumer demand is still strong.

"Packers went to a two- or three-day kill (week), so we're short cattle," Grant said. "That's probably not going to change. We were short of cattle even before the mad cow thing came up."

At Town & Country, a pound of 86 percent-lean ground beef retailed at $1.79 Thursday.

A combination of factors pushed beef prices to record highs last December.

First, an ongoing drought in much of the West has pushed cattle inventories to a seven-year low, according to U.S. Department of Agriculture reports.

Meanwhile, the Atkins diet craze is credited with spurring a demand for red meat.

And after mad cow, also called bovine spongiform encephalopathy, BSE, was found in a Canadian cow last May, the U.S. banned imports of Canadian beef, further restricting the beef supply.

"That's the big thing that drove the prices up, is when they closed off the Canadian market," said Clark Finch, owner of Heeb's East Main Grocery, where 86 percent lean ground chuck cost $1.99 Thursday. He agreed that a lack of supply is keeping prices up.

When BSE was found in the Washington state Holstein, more than 30 countries banned U.S. beef. Scientist believe humans can contract a brain-wasting illness, variant Creutzfeldt-Jakob disease, from eating infected meat.

But American craving for beef -- according to the Beef Council, beef is consumed 77.8 million times each day across America -- didn't change much.

"One of the things I do is try to educate my customers," Grant said.

He notes that BSE was found in a dairy cow, not a beef cow, for example.

And the disease has been found in brain and spinal tissue, not muscle cuts of meat.

"We do not buy pre-ground meat," Grant said. "We use chucks and rounds."

Because the prices he pays suppliers haven't come down, he's working harder to keep costs under control.

"I'm spending more time on the phone getting into those plants to find out what they might be long on," Grant said.

For example, a major grocery story chain might buy a huge quantity of a particular cut for a special promotion, he explained. But packers have to sell the whole animal so other cuts may be available at good prices.

That's one time when being a small, independent store pays off, he said.

Ron Tschida is at rtschida@dailychronicle.com

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