Drought Drives Up Beef Prices - KTVN Channel 2 - Reno Tahoe News Weather, Video -

Drought Drives Up Beef Prices

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At the Feedstore BBQ in Texas, they go through 3,000 pounds of beef per week.

But higher prices are biting into Mike LaFaver's bottom line. "Once it was a cheap cut of beef, but now increasingly it's an expensive cut of beef and getting more expensive."

Beef prices are now at record levels - $5.04 a pound on average, up 6% from last year and 11% since 2012. "My margins get cut a little bit and then we have to start watching about cutting people's times and watching our other expenditures."

The cause of the sky-rocketing costs is the extreme drought which has impacted feed supplies and limited the number of cattles. While consumer appetites for red meat remain steady, beef production is down 8.6% so far this year. "We're not looking at something we can change overnight; this is going to be a two or three year deal once things get back on their feet and we've got those aquifers filled back up and we start to get more rain," says commodities trader Scott Shellady.

With prices expected to increase through this year, customers will pay more for their barbeque. "Instead of eating a steak once a week and so forth, maybe we're doing it once every two or three weeks, same thing with hamburger meat," says Chris Heibel.

LaFavers adds, "I think it's pretty much gonna be here to stay for awhile, they're just not producing cattle fast enough, takes too long to breed and grow to get to market."

Little consolation to consumers who may find themselves saying beef is no longer what's for dinner.

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