Getting the lowdown on high costs and other beef issues

December 31, 2003|By ROB KASPER

LIKE MANY carnivores, I enjoyed a hunk of beef for a holiday dinner. It was delicious, pricey and, all of a sudden, newsworthy.

Like an investor who jumped in the stock market just as it topped out, I invested in a $15-a-pound tenderloin just before news hit that the first case of mad cow disease had been found in the United States.

The mad cow news and top dollar did not stop me from buying my holiday hunk of beef. I figured chances were very small that the meat from a dairy cow in Washington state would make it into a 5-pound tenderloin sold in Baltimore.

Officials from the United States Department of Agriculture hurried to assure beef eaters that the food supply was safe.

Officials also said that whole cuts, which most Americans eat especially during the holidays, are generally safe to eat because mad cow disease is not known to affect muscle meat. The nervous system of cattle is what carries the infectious agent of diseases, which lays waste to the brains of cattle. People can be infected and die by eating meat that contains the diseased tissue.

It seemed obvious to me that beef, which had been enjoying record prices and increased popularity, was in for in some rough times after the holidays. Even if the mad cow incident doesn't cool Americans' appetite for beef, it has already cut demand for exported beef and that could lower beef prices in the coming months.

Last week in the wake of the mad cow news, a number of foreign nations that traditionally have taste for top-dollar cuts, including South Korea and Japan, halted imports of American beef. This flurry of bad news comes at the end of a year that, until last week, had looked as if it had been a good one for the beef industry.

Beef prices had reached historic highs in November. Henry Reisinger, the butcher who runs Fenwick's Choice Meats in South Baltimore's Cross Street Market, best described the situation before the mad-cow news hit.

"Prices," he told me, "were higher than the moon." But lately, he said, they have been dropping.

I had relayed that assessment to Ron Gustafson, a senior beef analyst with the Economic Research Service of the United States Department of Agriculture, and the Washington expert agreed with the Baltimore butcher.

Beef prices reached their peak, or full-moon status, this fall, he said, and were on the wane. But after months of swallowing much of the wholesale-price increase, this fall grocers and restaurateurs began passing some of it along to the consumer, he said.

The USDA has about as many statistics on beef prices as there are dinner forks at a black-tie dinner party. But the one I focused on tracked the retail value of 1 pound of beef.

The USDA statisticians get this figure by averaging the prices of all cuts of beef from all over the steer. In November 2002 that price was $3.34 a pound. Last month it had jumped almost $1 a pound to $4.31 a pound. For prime cuts of meat this has translated into an increase of at least $4 a pound over last year, with tenderloins going for as much as $15 a pound.

Usually discussing economics is about as exciting for me as reading the manual that comes with a new toaster. But when Gustafson explained why my holiday beef dinner was costing more this year, I was all ears.

Basically, he said it was a matter of supply and demand. Thanks to a couple of bad-weather years - too dry one year, too wet the next - the supply of beef cattle in the United States was already tight. Then last May, a ban on Canadian beef went into effect and made the supply even tighter, and beef prices started climbing.

The ban was imposed after one cow in Western Canada was discovered to be infected with mad cow disease, he said. Canadian imports account for about 10 percent of the American market. The ban was eased in August, allowing boneless beef from cattle younger than 30 months to come in the United States, he said.

Last week, in the wake of mad cow news, the equation shifted. Folks in the beef industry told me that a drop in domestic demand for beef, coupled with foreign markets' shying away from American meat, could mean that the high pre-Christmas prices soon will be a memory.

Reisinger said he had enjoyed brisk business at his Cross Street butcher shop during the holiday season. The lack of foreign markets competing for American meat could mean Baltimore beefeaters will "be seeing some real decent prices in the next few weeks," he said.

Harold Graul, whose family operates a number of high-end grocery stores in the Baltimore area, said predicting beef prices is tricky. He said that many Maryland cooks traditionally serve beef at Christmas but some switch to pork or seafood at New Year's.

George Janouris, manager of Graul's Market in Ruxton, said that this Christmas season, standing rib roasts, tenderloins and other high-end pieces were in such demand that the meat department of two Graul's stores sold the prime cuts or "middle meats" of some 600 steers.

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