Drought, STECs and the Price of Ground Beef

At least two factors will be driving up the cost of ground beef:

  • The abnormal weather that is impacting corn production.
  • The implementation of the new testing regulations for STECs.

I am not a weather expert or fully versed on raising cattle. Having said that, this year’s record high temperatures and drought conditions are certain to drive up the cost of beef. Also impacting the retail price of ground beef will be the new regulations on testing for E. coli O157 and other STECs, which went into effect on June 4, 2012. Everything indicates that the level of positive results will increase significantly under these new regulations.

What we knew before the STEC regulations went into effect:

  • The positive test rate for O157 was in the 0.1% – 0.2% range.
  • The population of non-O157 STECs was far greater than O157.
  • A few studies estimated STEC positive rates around 2.0% or higher.
  • There are seasonal variations in the positivity rate, but summer results are usually much higher.
  • The demand for cooked ground beef was fully satisfied and additional supply wasn’t required.
  • The concerns that the new test methods would yield false positives given the difficulty to truly identify a virulent STEC.

Preliminary results were just released, and positive rates are high at about 3.5%. Read the results from the results from the Food Safety and Inspection Service routine and follow up sampling programs here. Much more testing is ongoing, and certainly a more robust and “true” pattern will emerge. However, these levels appear to be in line with expectations. Given this, ten times the number of positives can be expected from ground beef now than before June 4, 2012. Wow, what is going to happen to all of that product?

10X the number of positives can be expected from ground beef now than before June 4, 2012. What is going to happen to all of that ground beef?

Clearly this new regulation will result in more ground beef testing positive. Combine that with the current weather conditions and their effect on corn production. The result: Much higher ground beef prices.

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