Skip to content

Costing the Beef

Those who work the hardest, day in and day out, are often the least rewarded, financially? I say that, seeing images of a farmer out the corner of my eye.

Those who work the hardest, day in and day out, are often the least rewarded, financially?
I say that, seeing images of a farmer out the corner of my eye. And I could stray into other professions and businesses and name hardworking caregivers, teachers and the like, but I want to focus on what our farm community provides and what that costs.
Just this morning, Wednesday, July 8, I heard CBC Winnipeg morning show host interviewing consumers regarding how they felt about the cost of beef at the stores.
The recent price climb of cattle at auction marts around the country is being used as an excuse for a great rise in price over the counter.
Of course, summer is always the best time to slap a hunk of steak on the barbecue grill, so the price in the stores usually rises a little in June and July. And, that is nice, because for many beef producers, their ‘fats’ are hitting the market in early summer as well, so they will get $0.05 per pound more for their cattle, perhaps.
But I want to remind consumers that while the price you pay in the store will shadow the rising live cattle and rail carcass prices, there are a lot of middlemen between agricultural producers and consumers.
From a raw product state (the live steer) to the plastic wrapping in the grocery store cooler, every time a product is handled or in some cases virtually handled, a percentage of cost is added.
But the money a farmer receives has little to do with the cost in the store.
Take a loaf of bread for example: One bushel can produce about 100 loaves of bread. At $8 per bushel, (roughly) that means there is $0.08 worth of wheat in a loaf of bread which you may pay $2.50 for at the store.
According to Statistics Canada, stewing beef rose from $10.55 per kg in May of 2011, to $16.94 in May 2015. That is a 50 percent increase and that translates into a cost of $37.30 per pound this May.
But keep in mind that the live steer, as Auctioneer Brock Taylor pointed out at the 4-H calf sale, is selling for about $1.90 per pound this week - nowhere close to the per/pound rise in the stores.
Just looking at bread and beef, you can see that even if the farmer received double for his product, it shouldn’t rise doubly at the store.
I mean, with eight cents worth of wheat in a loaf of bread, if the wheat price doubled that would put bread up by 8¢.
The cost of the raw product is fairly unrelated, in my opinion, to the price on the grocery shelf. But as the price of these commodities rise, somehow, the trucking/investor/ packaging/retail industry takes it as a cue to hike the price of the fi nished product.
With the retail price of beef rising by three times over four years, or about $6.40 per kg in the stewing beef example, keep in mind the live weight price of beef only rose by $1 per pound, or $2.2 per kg.
Why the disparity? According to Stats Canada, hamburger took the smallest jump in the stores and sirloin steak rose about $8 per kg. However, do the math yourself, if you can recall what you paid for steak four years ago. Is sirloin steak selling for $24.22 per kg here in Virden? Don’t blame your agricultural community. Be glad for them as they receive a well deserved price lift. And realize that others on the production line received larger raises - across the board - for Canadian commodities.