Beef Prices 2022
So today's blog is going to be about the cost of beef and, at least for KD Farms, what we can expect for 2022 in terms of beef prices. So it's been an interesting couple years for the beef industry. When Covid-19 hit, the meat packing plants shut down, the beef prices at the grocery store went up, and availability went down. Thankfully, packing plants being shut down has not been happening much lately, so the initial problem has mostly been navigated by the big players. We still see an occasional brief shutdown once in a while, but the large meat packing plants have mostly adjusted their procedures and throughput for social distancing, more people are getting vaccinated, and as a result, fewer are getting sick which has helped maintain supplies and prices as well. Beef, as a whole, has gone up 20% since this same time last year due to supply issues, the cost of materials and labor increasing, and, notably, inflation. So, for the country, expect to pay 20% more for beef.
Locally, we have some of our own issues. The Flathead Valley only has two state inspected butchers that we can use to process our beef. We have a couple other options, but they are all at least an hour away. The two local butchers are booked out until June 2022, one until 2023. So, they have no availability for beef unless you already have appointments. Thankfully, we do have appointments for most of our animals already, albeit at a butcher that charges quite a bit extra for any beef processed for retail sales. I’ll address that later.
Unfortunately, those butchers are having to pay their people more to keep them on board, they’re also having to pay more for their packaging supplies, which is a very large part of butchering expenses. Higher labor costs, higher packaging costs, and high demand for their services means one thing: our butchering rates also went up. How much did they go up? The kill (or slaughter) charges went from $85 per head to $125-$150 depending on the size of the animal. The cut and wrap charges went from $0.72-$0.75/lb hanging weight up to $0.85/lb hanging weight for both butchers. That’s a 47% increase in kill charge and an 18% increase in cut and wrap. For us, that means our quarters, halves, and wholes cost us an additional $36, $72, and $144 just in butchering for an 800 lb hanging weight animal. Our total bill for butchering is going up a minimum of $1728 for 2022.
Another part of the equation is the cost of producing the animals, which has also gone up due to fertilizer, cost of feed, and overall cost of living (aka inflation) that the we have to deal with. Farmers have to pay more for all those things, so our expenses are higher too. For 2022, we know that fertilizer is going to be up about 45% compared to 2021, and fuel is looking to be at LEAST 50% higher than 2021. A cow doesn’t exactly drink diesel, but running a tractor to mow, rake, and bale hay for the cows sure uses quite a bit. Feeding cows in winter also takes quite a bit of diesel fuel. And, if you’re doing due diligence and figuring your actual costs, you better darn sure account for fuel costs when you set your prices.
For 2021, our bills for pasture fertilizer were $37 per acre, and we fertilized twice. That same program for 2022 will cost us $54 per acre. “Don’t fertilize” is what some folks will say, but those folks don’t know that means we’ll be significantly compromising both our feed quality and quantity, which will both hurt growth and also exacerbate feed costs for winter of 2022. Despite our intensive grazing program, our soil is not ready to go sans fertilizer yet, so we don’t have a choice. For the near future, fertilizer is largely a fixed cost for us in order to manage our pasture responsibly. Fertilizer alone is going to cost us $2500 more on our pastures, and that will mostly account for the increase in summer pasture. Winter feeding will go up 20%, but is accounted separately as fuel, equipment cost, and fence maintenance come into account. Winter feed costs will be around an additional $2000 in additional costs. So feed costs will go up a total of $4500 for both summer and winter feed for 2022.
Inflation, and I’ll probably get laughed at a bit here, on our profit margin is $504.
Lets turn those values into terms of our gross sales. The feed cost increase is going to be about 10% of our gross sales, the butchering will add about 3.8%, and inflation is tacking on an extra 1.1% to our costs. So, for us to take home the same amount per animal as last year, we should technically raise our prices 15% to cover just what things are going to cost for 2022.
These were our early 2021 prices:
Half/whole: $3.95/lb hanging weight (roughly $6-$6.10/lb cut and wrapped weight)
Quarter: $.6.25/lb cut and wrapped weight (not the same as hanging, see my other blog here for the explanation.)
Eighth: $6.35/lb cut and wrapped weight
Burger: $4.50-$4.75/lb
KD Farms pays all butchering, so these were folks’ final costs. The early 2021 numbers have already changed a little bit, but not fully to where they should be. If I apply a straight 15% increase to all these numbers, that brings us to the following:
Half/whole: $4.54/lb hanging weight (roughly $7/lb cut and wrapped)
Quarter: $7.18/lb cut and wrapped weight
Eighth: $7.30/lb cut and wrapped weight
Burger: $5.18-$5.46/lb
These prices are somewhat appalling to me. I really do my best to try to keep my prices down and make our product somewhat affordable for the average family, though perhaps a bit of a stretch for most. Is this where we’re headed for 2022 prices? I hope to stop somewhat short of this by doing my best to find more ways to save costs, but, unfortunately, economics is king. If we can’t make money, we can’t keep raising beef. If you go to your job and they can’t afford to pay you, you can’t afford to keep working for them, can you?
Beef prices are up 20% across the board, so I guess 15% isn’t horrible, is it?
I guess we’ll see what 2022 actually brings, but right now, things aren’t looking to be starting out real great.
Be blessed, and ask for a raise,
Kenny