Moorhead, MN — It's sales day at the West Fargo Stockyards. Cattle in holding pens, wait for their turn in the auction barn.
The cattle are poked and prodded as they head into the sales ring. A handful of people sit in the arena. Some wear cowboy hats, others sport weather-beaten ball caps. All watch closely as the auctioneer calls for bids. Most folks raising cattle are smiling these days. Edward Olson farms and raises cattle near Argusville, North Dakota.
"This is probably as strong a market as we've had for, oh 25, 30 years," says Olson.
Cattle prices are up. Meat packers are paying more than 90 cents a pound for beef. Thats up 30 cents from a year ago. On a 1,200 pound steer, that's an extra $300 dollars for the rancher.
"There's going to be some profitably in the business, if people are going to just be raising them to break even, you know they're not very happy," says Olson. "So to keep young people and keep the enthusiasm good and keep people going we need some years with profitably and I would say that it's very good for the whole economy of the area."
People who raise calves are making more money too. When ranchers replace their herds it costs more. The strong market is expected to continue. Cattle buyer Larry Christiansen says if you're not already in the business, it will be tough to cash in.
"One thing about cattle, it takes a while to have a calf and raise it up and get it fat," says Christiansen. "So it isn't like a chicken or a pig where, boom! If the market gets good, everybody and his brother is into it and six or eight months later the market is flooded."
The situation is also affecting the price consumers pay at the grocery store. Brian Musolf manages the meat counter at a Moorhead grocery store.
"Our prices go way up," says Musolf. "This is the highest they've been since I've been cutting meat and that's been 15 years."
Musolf says retail prices for beef have increased steadily over the summer. Musolf says the biggest jump has come in the last two weeks. He says retail beef prices have gone up 40 to 60 cents a pound.
"There's no beef out there. Our wholesalers are saying there's no beef to be had," says Musolf. "They're short on ground beef, everything is just short."
It's basic supply and demand economics. Supply is short and demand is high. Economists, ranchers and retailers say their are a number of reasons for this situation. Ranchers have sold off animals because of the drought. The popularity of low-carb diets is a factor.
Some say supply is down because of a ban on Canadian cattle imports. That's because of an outbreak last spring, of bovine spongiform encephalopathy. Tim Petry is a livestock marketing specialist at North Dakota State university in Fargo. He says that's not the case.
"We are now allowing as much beef to come in from Canada as they can slaughter. They have to take all the bones out. But we are allowing all that in," says Petry. "In fact we have had the highest prices of the year since we opened the border. The border opened for Canadian beef on September 1st, and our highest prices have actually occurred since September 1st."
Petry expects the cattle market will remain strong in 2004. He says many ranchers are not just breaking even, they're making money. Retailer Brian Musolf says there has been no decline in consumer demand. He says some customers gripe about rising prices, but are still buying beef. But he says, if beef prices continue to rise, he expects consumers will buy less beef and switch to a cheaper alternative, like pork or chicken.