Another dry summer spells higher beef prices

Forest fires and fireworks bans aren’t the only effects of long-term drought being felt across much of the nation. As feed gets more expensive and arid land becomes harder to graze on, cattle ranchers around New Mexico and elsewhere in the U.S. are being forced to sell off their herds, which leads to a price spike as demand for beef remains high and supply gets lower and takes years to recharge.

The latest numbers from the U.S. Department of Agriculture for May show ground beef at $3.31 per pound on average, up 32 cents per pound from May 2012. And though the price of choice boneless sirloin steak is at $6.79 a pound for May — about 8 cents cheaper than in April — that’s still 37 cents more per pound than the same time last year.

The increased cost of meat is passed on to local restaurant owners and, ultimately, to their patrons, despite the best efforts of owners and chefs to manage high beef prices.

Boe Lopez, who sits on the U.S. Cattlemen’s Association’s board of directors and whose family owns Diamond Arrow, LLC and several ranches near Springer, attributes a lot of problems facing cattle ranchers — including high feed costs, poor grazing lands and ultimately selling off cattle — to the recent dryness in the state.

“The demand is remaining about the same and the cattle numbers are down due to the extended drought,” Lopez said. “And the other part of it is that all the inputs have gone up. With the drought, the price of hay has gone up — all the feed costs have really gone up. I think ultimately that’s what’s caused the price of beef to increase.”

As a result of the increased cost of feed, many cattle ranchers have to take drastic measures. Lopez said that last year Diamond Arrow took its cattle to graze in Nebraska, and others he knows about took their herds to Oklahoma and Wyoming. But there are costs associated with that, including the price of hauling the cattle out of state and the cost of leasing the land.

When grazing at home or in other states becomes financially untenable, ranchers are forced to sell off part or all of their herds.

“We’ve reduced our numbers by half and we’re still not out of it,” Lopez said. “We’re trying to hang on now and see what we’re going to have to do, but I don’t know if we’ll have cattle by the end of the year.”

For longtime ranchers, selling off herds means selling off years of work in breeding healthy cows with specific traits.

“What’s sad about it is these ranchers have spent generations putting together a select genetic of herd — and these are cattle that will walk to water or mama cows who are good birthers without assistance,” Dalene Hodnett, spokeswoman for the New Mexico Farm and Livestock Bureau, said. “They’ve been breeding them for these characteristics and for these traits for years, and now they’re having to sell them off.”

Once the herds are gone, Lopez said, it can be expensive to buy the herd back, and it can be hard to start from scratch. Additionally, before farmers can even begin to think about getting their numbers back up, they have to wait for grass to grow back on the range. That means more time with less supply for consumers, which translates into high prices.

At Rio Chama Steakhouse, 414 Old Santa Fe Trail, executive chef Russell Thornton is doing everything he can to save money, not only re-evaluating the meat the restaurant offers but also looking to cut costs elsewhere.

“What I’m having to do is engineer portion size, being super, super careful with the way we handle food so that we don’t have any waste,” Thornton said. “To some degree, we’ve already got some things in place that help us — for example, cutting a lot of our own steaks helps because we can buy in bulk.”

Manager Dave Readyhough said that another focus is on “portion control, cheaper cuts of meat, things we can braise to get more bang for our buck out of it.”

At the same time, Thornton said he’s “being more sensitive toward considering whether guests really need things,” like bread and butter. These are “other ways to offset cost so that we don’t have to pass it on 100 percent to the consumer.”

Eventually, though, prices are going to go up as profit margins diminish with increased costs for the restaurant. “We’re hoping not to for as long as we can, but eventually we’ll have to,” Readyhough said.

For Harry Georgeades, owner of The Bull Ring, 150 Washington Ave., it’s a matter of increasing the number of customers to keep prices where they are and keep consumers from bearing the brunt of increased costs.

“You can’t take it to the public — although people know the price of beef is rising, because they go to the store and they pay it in the store for good beef, there’s only so much they’ll pay for retail,” Georgeades said. “For right now we’re swallowing it and hoping the market will get back to level. That’s all we can do.”