In 2014, beef could take a bite out of your budget

America's love affair with the hamburger is likely to get more expensive next year, analysts say.

The same is true for other cuts of beef as well, said Lance Zimmerman, a market analyst at CattleFax, a research company near Denver, Colo.

Overall, beef prices are expected to rise 3 percent to 6 percent next year, said Lee Schulz, an agriculture economist at Iowa State University. Since 2010, prices for steaks, roast beef, ground beef and other cuts have climbed nearly 30 percent, he said.

"This has been a fairly long-term trend. We have seen prices climb higher and higher at retail" as beef supplies have dwindled, he said.

Beef producers reduced herds to record lows as corn prices spiked and pushed livestock operations into the red. For the first time since the recession hit, cattle producers could return to profitability in 2014, Schulz said.

"In years past, producers were mostly in survival mode, and now producers are talking expansion in the industry," he said. "There's interest in building new facilities and growing the herd."

Until producers can ramp up herds, consumers will feel pinched.

After climbing 18 percent over a year ago, Zimmerman expects ground beef prices to rise as much as 10 percent next year.

At the same time, U.S. incomes are expected to climb only 1 percent while inflation pushes 3 percent higher. "Incomes aren't keeping up," he said.

"We've pushed a large price increase onto consumers in what is their largest purchasing category," Zimmerman said, adding that price increases over the past year or two have trimmed demand, and that should help temper next year's bump.

Schulz said retailers work to buffer the impact on consumers, who are reluctant for families to reduce how much they buy.

"We really try to hold the line," said Kenan Judge, assistant vice president of Hy-Vee meat operations. "We're slow to move up. And we're probably slow to move down as well."

Judge said beef price spikes have consumers pulling chic! ken, pork and other proteins more frequently into the lunch and dinner lineup. "We give customers what they want to buy," he said.

“I just love beef, and I think most people are that way. I think if people even have to pay a little more per pound they will and cut back on other things.”

— Kent Wiese, owner of Amend Packing Co.

Poultry prices are the most likely to drop in the year ahead as producers ramp up production, Zimmerman said. Pork prices also could decline if producers are able to increase supplies to offset a 1 to 2 percent increase in demand, he said.

Kent Wiese, who owns Amend Packing Co. in Des Moines with his wife, Amy Amend Wiese, sees beef prices staying high in 2014, "especially if we see another snowstorm that kills off several thousand animals."

A blizzard in October killed an estimated 30,000 cattle in South Dakota.

Wiese said the higher prices make it tough for families with children.

"Moms are probably giving their kids peanut butter sandwiches more often at lunch," he said.

But, he said, the company's custom processing business continues to grow from consumers looking for specialty beef, especially products that come directly from Iowa producers.

He sees consumers buying more ground beef as well.

It's not unusual for a family buying a half of steer to use all but the choice steaks for hamburger, Wiese said. That's about 400 pounds of hamburger over a year.

Despite consuming less beef, Americans are spending more per person, Zimmerman said. Consumers have spent nearly 20 percent more per person on beef since 2008, when the recession gripped the nation.

More consumers see ground beef as a weekly staple, both because of the ease of preparing and the diversity of foods that can be prepared from it, from tacos to sloppy Joes to chili to lasagna, Zimmerman said.

"We have become a ground beef nation," he said. "Sixty percent of the beef consumed, per person, is ground beef," whether it's served up at ho! me or Red! Robin, Smashburger or McDonald's.

"It can satisfy a wide variety of health and income price points. Someone who is health conscious can pay a little more for that lean to extra lean, where someone else who is value-focused can buy a 73-27 lean point at an affordable price point. ... Or a middle-of-the road option," he said.

"Every year ground beef gains a little ground on chicken breast or a pork chop," he said, despite having a higher price point on average.

Wiese worries that consumers could begin to see beef as a luxury. "I just love beef, and I think most people are that way. People have to have it," he said. "I think if people even have to pay a little more per pound they will and cut back on other things.

"Instead of going out to a restaurant and buying a 12- or 16-ounce steak that will cost 30 or 40 bucks, they'll go to the grocery store and buy the same steak for 10 bucks or 12 bucks and cook it themselves," Wiese said.