Beef prices to rise higher in the coming years, experts say

Retail beef prices are near record highs. During 2013, the price consumers paid for ground beef climbed roughly 5%, according to government data beef price data released Thursday finds that consumers paid an average of nearly $3.50 per pound for 100% ground beef.

What’s more, experts say that climbing beef prices are here to stay. The USDA’s Economic Research Service projects that beef prices will rise faster than almost anything else this year. Don Close, a cattle economist with Rabo AgriFinance says he thinks prices this year could rise 7-8% and roughly the same amount in 2015. Kevin Good, a senior analyst at cattle research firm CattleFax, says that “higher prices will continue through 2015 or 2016.”

Good says that ground beef may see especially steep price hikes. He thinks that while steak retail prices could climb 5-10% in 2014, ground beef could climb 10 — 15%.

So what’s with the sky-high beef prices? The bigger beef bills have been partially due to the fact that the cattle herd in the U.S. — the largest beef producer in the world — fell to an estimated 63-year low, according to a Bloomberg survey. “Cow numbers were down…the lower supply meant higher prices,” says William Hahn, an agricultural economist with the U.S. Department of Agriculture. And the dry spell in Texas, the nation’s largest cattle producer, is exacerbating the issue of smaller herds. Plus, in 2012 and 2013, grain prices were particularly high, says Close.

That said, cattle herds are beginning to increase, says Good. But “it’s not like poultry…it takes a longer time for a cattle to be ready for slaughter.” Indeed, a calf born in the spring of 2013 would be bred in 2014, might have a calf by 2015 and that calf couldn’t come to market until 2016, he explains. That means that the herd growth won’t translate into a ton of new supply for a while.

And though, by some measures, U.S. consumer demand for beef has been declining — 39% of Americans say they eat less beef now than they did three years ago, compared with just 6% who say they eat more, according to the NPR-Truven Health Analytics Health Poll — some experts predict a small rise in demand or at least stable demand in the coming years as the economy improves. “While the price increases of beef are notable, this shouldn’t price consumers out of the market,” says Close.

Plus, says IBISWorld analyst Hester Jeon, global demand for beef is growing and exports are a solid portion of business for some cattle producers.

All of this means consumers will have to pay top dollar for beef for at least another year or two. The good news: There are a number of ways to save. Erin Chase, a consumer shopping expert for Savings.com , which makes the grocery savings app Favado, says that you should ask the meat counter clerk when certain items will likely go on sale and look for coupons. “Typically meat goes on sale for a week at a time,” she says — so stock up when the sale hits and freeze the extra meat. She adds that the warehouse clubs like Costco often have good deals on meat and that you should start keeping a list of never-pay-more-than prices; so for example, if you find a sale on hamburgers, put that price on your list and then wait to buy burgers in the future only when they are near that sale price.