The price of beef becomes hard to swallow

If your menu for the December holidays always features prime rib or filet mignon, this could be the year to cook your first goose instead. Even opting to serve seven courses of fish, à la the Italian Christmas Eve tradition, might be easier on the wallet than buying beef for a crowd.

Beef prices are soaring. At this time last year, live cattle traded at 64 cents per pound; now it's just over a dollar. And retail prices at some stores have shot up about 40 cents per pound.

But not all price tags reflect the increase. To protect consumers from sticker shock, some retailers are opting to absorb the extra cost, rather than raise prices. Or they might charge more for other items to make up the difference. Some restaurants are even steering customers toward other entrees. McDonald's and Wendy's, for example, are hyping salads and lean chicken pieces.

But they can't avoid raising beef prices for long, economists say.

"Grocery stores and restaurants are hoping this is a passing phenomenon," says Derrell Peel, professor of agricultural economics at Oklahoma State University. "They figure they'll give customers a break. But beef prices will be on a higher plane for a while, and they will have to face this and drastically increase prices."

How long is "a while"?

About two years, says Ron Gustafson, beef analyst with the USDA's Economic Research Service. It will take at least that long to increase the nation's cattle supply, he explains, especially since many heifers typically retained for breeding are being sold.

He attributes the bull market to several factors: First, supply has been dramatically reduced as a result of the past several years of drought, which eliminated important "forage" (grass and wheat) for cows. The Plains states, home to the majority of American cattle ranches, were hardest hit.

In 1996, says Mr. Gustafson, the US cattle count was 103.5 million head; now it's down to 96 million. And this year's calf crop is forecast at 38 million, the smallest since 1951.

Also impacting the market is the ban on Canadian beef exports into the US, which went into effect in May as a result of one incident of mad-cow disease in Alberta. Previously, about 8 percent of American beef came from Canada.

At the same time the beef supply has been reduced, diet gurus have boosted the appeal of red meat. Both the Atkins diet and the South Beach diet tout a high-protein, low-carbohydrate approach to weight loss. So people looking to shed a few pounds are ordering steak or a burger alongside their salad. And they're willing to pay top dollar.

"They figure this is the cost of entry to losing weight," says food trends expert Phil Lempert. "The big joke," he adds, "is that a low-carb diet allows you to lose weight fast, but eventually it gets tiresome and boring to eat half a cow every week. So people give up and then gain all the weight back."

Mr. Lempert, food editor for NBC's "Today Show," gives the diet-fueled beef craze six more months. "The low-carb trend will shift back to low-fat," he says, explaining that this will be partly a result of new promotional campaigns by pasta and bread companies.

Then, he thinks, beef prices will come down.

Of course, cattle ranchers hope that Gustafson's, not Lempert's, crystal ball is the right one.

"Producers keep asking me how long this market can last," says Matt Brockman, CEO of the Texas and Southwestern Cattle Raisers Association. "Many of them have never seen prices this high."

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