Beef prices are at a record high, but some local ranchers are unable to take advantage of the opportunity one agricultural economist calls the 'chance of a lifetime.'
"This is just one of those situations where pretty much the stars are aligning," said Steve Koontz, an associate professor of agricultural and resource economics at Colorado State University. "This is the perfect storm for beef."
A number of factors have combined in the last year to push the price of beef to an all-time high.
In May, a cow in Canada tested positive for mad cow disease. Subsequently, a ban was placed on Canadian beef, and the United States lost about a one-month supply of fed cattle. U.S. ranchers then picked up Canada's lost export business, Koontz said.
At the same time, many ranchers here were in the middle of a seven-year drought. Hay was scarce and expensive. To save money, many ranchers in Southeast and West Colorado liquidated their herds, reducing the supply of beef.
But while supply decreased, demand increased, partially because of the nationwide popularity of high protein, low carbohydrate diets, such as the Atkin's Diet.
"The people who have cattle are doing well," Koontz said "People who sold cattle are missing a once in a lifetime opportunity."
Koontz estimated fed cattle are currently selling for $1 per pound. That's about 20 percent higher than the most recent record high. Usually, 80 cents per pound is an excellent price.
Feeder calves also sold well this fall. Range calves sold for about $1.05 per pound, and ranch calves sold for up to $1.40 per pound.
"This has never happened before and may never happen again," Koontz said.
Veterinarian Gary Visintainer regularly meets local ranchers while out caring for their animals. He said he hasn't seen ranchers selling many cattle this year.
Many ranchers had no choice but to sell their cattle because hay costs so much, Visintainer said.
"It's been more difficult to restock herds, especially when ranchers had to sell because of the drought and high price of hay," said Jay Whaley of the Routt County Colorado State University Cooperative Extension Office.
Now is not a wise time to restock, Koontz said, especially since the cost of feeder calves is so high. And since it takes 18 to 24 months to raise a calf to maturity, ranchers restocking now may be too late to cash in on the current boom.
"Most had to spend a lot of money just to hold on to what they had," Visintainer said. "Overall, they just want to hold where they're at."
Ramona Green said her family was able to hold onto their cows during the drought. But if there were another drought, they'd be in trouble.
In July, the Greens signed contracts to sell their cattle. Ramona said that was a little early, so they may not have received the best possible price. But they still made about 20 cents more per pound than usual.
Things evened out when they went to replace their cows and found the price of feeder calves was up also.
Koontz predicted all these rising prices will soon catch up to grocery stores and restaurants.
"I've talked to restaurateurs that don't know what they will do," he said. "They can't afford high quality beef."
There is a delay between the increase in wholesale prices and retail prices because billions of pounds of product are being moved around on lots of trucks, Koontz said.
Rob Gebhart can be reached at 824-7031 or by e-mail at email@example.com.