The global pandemic has impacted the food supply in numerous ways and that has led to fluctuations in the prices of some common items. Consider humble ground beef, the stuff of hamburgers, meatballs, chili and pasta sauce. The fattier it is, the lower the price. Usually.
“Normally it would be the case that leaner beef would be priced higher than less lean beef,” says Jayson Lusk, an agriculture economist at Purdue University. With a chuckle, he adds: “But of course different market factors and forces can sometimes alter those two relationships.”
This spring, the economic shutdown brought the price of the fattiest ground beef, 73 percent lean, up and then beyond the leanest, 93 percent, according to U.S. Department of Agriculture data.
Sources: price data, USDA; timeline, news reports. Graphics: Amy Mayer/Iowa Public Radio
Schools and restaurants tend to use fattier ground beef. After they closed and states issued stay at home orders, all ground beef prices inched up.
Lusk says that’s likely because ground beef is also popular with even reluctant home cooks. Health-conscious families might sometimes select a leaner, more expensive option, like 93 percent lean, but with almost all eating moved into homes, demand increased across all varieties of ground beef.
Then, a few weeks later, COVID-19 infections at meat-packing plants forced closures.
That’s when things got really interesting.
The wholesale price shot up then for all ground beef. Some fast-food chains stopped selling certain burgers.
Lawrence Silverman, a Miami attorney who specializes in competition law, says in times of crisis, retailers can’t jack up their prices—in most states, that would violate anti-price gouging laws. What they can do is limit how much they let their customers buy.
“The anti-gouging statutes are solely based on pricing, they don’t cover allocation in times of shortage and they don’t cover quantity limitations,” Silverman says.
The laws also don’t distinguish between real, anticipated or perceived shortages. Several grocery chains announced at the beginning of May that customers would only be able to buy a certain number of packages of meat, or a certain amount of ground beef.
The week of May 15, the 73 percent lean ground beef had a wholesale price 70 cents higher than the leaner 93 percent. Usually, the leaner meat is at least a dollar per pound pricier. And both were selling for more than $5.00 a pound, wholesale.
Silverman says during the pandemic, when most places had declared states of emergency, food would be considered a necessity. Retailers would be willing to pay more to keep meat on their shelves.
“For today, the resellers are doing whatever they can to try to get supply,” he says. “The question of whether or not they overpaid... nobody’s going to have time to think about that until this calms down.”
At some future date, he says there may be legal questions about whether wholesalers took advantage of the situation.
Meanwhile, the fluctuations had a different kind of impact for small-scale producers.
At Sky View Farms in north-central Iowa, the end of May is a time for cutting hay and putting it up for winter feed. This year, being out in the field also offered a bit of a break for co-owner Laura Cunningham, who’s had a very busy spring.
“When the pandemic hit I sold all of the inventory that we had pre-processed for summer sales in three days,” she says. Her phone continued to ring off the hook. “In a period of 11 days, I did the amount of business that I typically do in a year.”
She doesn’t take her cattle to a major packing plant. Instead, she books the animals into local meat lockers and sells directly to consumers. She scrambled to line up more locker dates as the schedules filled up for 2020 and even into 2021.
But despite the sudden flood of interest in her beef, she says she and her husband made a conscious decision not to raise their prices.
“We didn’t need to scale up,” she says. “Could I? Yes, there was definitely demand for it. But I don’t believe in that kind of a model to sustain a business that we want for the long term.”
She’s hopeful that some of her new customers will stick around, and she’s looking forward to Iowa’s new participation in the Cooperative Interstate Shipment Program which allows farmers like her to sell their products out of state and online even if they have been processed at a state inspected slaughterhouse. Other Midwest states already in the program include Missouri, North Dakota and Wisconsin.
While some shoppers switched to buy from farmers like Cunningham, others replaced ground beef with ground pork or skipped meat altogether.
Heading into summer, ground beef prices are coming down and the order between fatty and lean has been restored: the leaner stuff is again more expensive.
But things aren’t all back to normal. Processing plants can’t move as much meat through with new COVID-19 worker safety measures, employees may still be getting sick and some stores may still have limits or somewhat higher prices than before the disruptions.
So as with all things pandemic: Don't take off your seat belt just yet. This roller coaster ride of meat prices probably isn’t over.
Follow Amy on Twitter:@AgAmyinAmes
