Beef and Grain

A letter from Down Under reports beef prices falling there--and gives a reason why:

I heard this on a rural affairs/farming program on the radio here in Victoria, Australia.

The program was on the current crash in prices that is affecting Australian beef farmers. They have just come out of four years of drought, and now they are faced with world-wide prices falling steeply. Many of them are on the verge of going out of business.

The reason for the falling prices is that American beef farmers are selling more beef in larger amounts than they ever have. Is this because of an unusually healthy and large "crop" of animals? No.

It's because of high grain prices. Most cattle in the U.S. live in feed lots and are grain fed. The price of wheat is at an all-time high. American beef farmers are selling off their herds because they can't afford to feed them.

That wouldn't be of any real concern if the current high price of wheat was because of normal fluctuations in harvest or climate. But it's not. It's due to the steadily increasing worldwide demand for wheat, in other words, it's population pressure, and therefore it's not going to go away.

Neither, therefore, are the problems that the beef industry is facing. I guess that what will happen is that over time, the price of beef will keep falling as the herd sell-off continues, and then sky-rocket as beef finds a new status as a "delicay" food of the rich, like caviar.

It sounds strange, that in a time of overpopulation and starvation that the prices of one the staple foods of the developed countries should be crashing. The current economic system is a strange thing.

P.S. I heard the above before the news of the virus that has just been found on American wheat. I suppose that will just force wheat prices up even higher.

Created: Sunday, June 09, 1996, 12:26:21 PM Last Updated: Sunday, June 09, 1996, 12:26:21 PM