Why drought on the Prairies is making your steak more expensive

Ask John Wildenborg if he thinks Canadians will be paying more for steak during future barbecue seasons, and the owner of Calgary specialty butcher shop Master Meats doesn’t hesitate.

“Prices are definitely going to go higher, no ifs, ands or buts about it,” he said.

“It keeps me up at night, actually, thinking about coming into the summer and where prices are going to be. It’s not a good situation.”

Beef — whether in the form of a juicy burger or a classic tenderloin steak — is a mainstay of many Canadians’ diets. Its popularity is the reason why consumer demand for beef has historically remained strong, even through periods of economic downturn when Canadians have less money in their wallets.

But the business of beef is changing, in large part due to consecutive years of severe drought across North America’s main cattle-producing regions.

From parched southern Alberta to water-scarce east Texas, ranchers have been downsizing their herds due to a lack of grass for grazing. The resulting shortfall in cattle supply is reducing overall beef production and helping to push retail beef prices higher.

“A 10-ounce New Yorker right now … would cost around $20. Three years ago that was maybe a $15 steak,” Wildenborg said.

“And this is usually the slow time of year for beef, but wholesale prices haven’t dropped off at all since Christmas. I’m paying 40 per cent higher than I was last year at this time.”

Food in general, as consumers know, has increased in price over the last three years due to the COVID-19 pandemic and an overall rising cost of living. But while inflation is starting to moderate in a number of food categories, the drought factor means beef prices are not.

“When you talk to producers, whether it’s in the Canadian provinces or key cattle-producing regions of the United States, many producers will tell you they’ve had to experience two ‘hundred-year droughts’ back-to-back over the course of 10 years,” said Lance Zimmerman, a Kansas-based senior beef analyst with Rabobank.

“Add to that a global pandemic and all the challenges that go along with that, and we’ve had a 10- to 15-year period that’s been particularly challenging for a lot of cattle producers. It has led to a lot of liquidation.”

Liquidation is when a rancher makes the decision to sell off a greater proportion of heifers and cows for slaughter rather than retaining them to grow his or her herd. Ranchers may decide to do this because of a variety of factors, including high input costs, limited labour availability and high interest rates, as well as the challenges associated with long-term drought.

In Canada, the size of the national cattle herd has been declining for years, a trend that continued last year amid a punishing drought in Western Canada. This country’s beef cow inventory fell in 2023 by 1.5 per cent to 3.66 million animals — the lowest level since 1989.

South of the border, U.S. Department of Agriculture figures show an even more dramatic story. There, the national cattle…

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