Meat Price Mania

The Canadian retail prices for meat have entered a mania phase.  How will Canadians react when more and more of us are forced to become vegetarians by unaffordable meat prices?

Figure 1:  Canadian Retail Prices of Meat, Sept. 2014.  Prime Rib roast of beef
is 277% higher than chicken.  How do they justify these pricing
differential?

Figure 1 shows data from Statistics Canada on the retail price of meat in Sept. 2014.  Click on the graph for a bigger version.  As expected, prime rib of beef is the most expensive.  I am pleased to see chicken is still the cheapest on a $/kg basis.

Note that prime rib is 277% more expensive than chicken.

CAFO (Concentrated Animal Feed Operation) has the biggest market share for beef, is usually the cheapest method of producing beef, and has an FCR (Feed Conversion Ratio) of around 5, while Ontario chicken has an FCR of around 1.72.  If all other factors are similar, the cost of feed is the biggest factor in determining the price of meat.  Therefore beef should  be 290% higher priced than chicken, but is actually just 277% higher.  Does this mean that beef is 4.7% too expensive, or chicken is 4.7% cheaper than it should be, or a combination of the two?

I think it's safe to assume that the prices are reasonably close to the correct ratio; but both beef and chicken need to be deflating in price, not inflating.

Figure 2:  Trends in Canadian meat prices for 2010 to 2014.  Stewing beef wins the race towards
unaffordability with a 9.9%/yr increase, doubling and re-doubling every 7 years, with a total increase of 52.3%
in price from 2010 to 2014.  Chicken is up 3.79% per year, doubling every 18 years, with a total increase of
16.1% from 2010 to 2014.

Figure 2 above shows the trends in Canadian meat prices for 2010 to 2014.  Stewing beef wins the race towards unaffordability with a 9.9%/yr increase, doubling and re-doubling every 7 years, with a total increase of 52.3% in price from 2010 to 2014.  Chicken prices are up 3.79% per year, doubling every 18 years, with a total increase of 16.1% from 2010 to 2014.

I wish to congratulate the Canadian chicken industry for resisting the natural urge to jack up prices like the other meat industries did in 2013-2014.

See, I can offer the #ChickenMafia a heart-felt complement when they deserve it.

It is interesting that, except for chicken, the cheapest meat cuts have the highest rate of price inflation.  As meat prices go up, more and more people will naturally gravitate towards the cheaper cuts of meat.  As stewing beef flies off the store shelves, the available supply of stewing beef  drops.  Stewing beef is usually the trims cut off the higher priced cuts of beef during the butchering process.  When that is all gone, butchers can start cutting up prime cuts of meat to make stewing beef (highly unlikely), or sell out and have a bare meat counter with no stewing beef for sale, or they can raise the price of stewing beef to balance supply & demand. 

Beef and pork were both suffering severe struggles on the farm in 2013-2014 due to the PED virus for pork, and the severe US drought in Texas and California.  Are these being used as excuses (or are just and reasonable reasons) for these extreme price increases?  Even weiners, mostly made from pork and chicken, jumped on the price inflation bandwagon in 2014.

However, chicken resisted the price inflation trend set by everybody else.

Did this Blog and its whiny voice have any influence in the #ChickenMafia's decision?  I doubt that.

It appears that the #ChickenMafia has determined that flying below the radar is in their long term best interest.  Large price swings tend to incur the attention and anger of the public, and that is when Supply Management might add the straw that breaks the back of SM's camel.

Instead, #ChickenMafia continues their policy of a "steady as she goes" inflation of 3.79% year over year, like clockwork.  Let the sleeping public stay asleep.  It appears the #ChickenMafia's strategy is working pretty well for them.

Hopefully, Supply Management can be changed so that the #ChickenMafia have a "steady as she goes" price reduction each and every year, requiring them to work very hard each year to find more and more methods to improve their efficiency and productivity, thereby lowering prices like clockwork.

In that way, the #ChickenMafia become excellent stewards for the public, using their government created monopoly to serve both stakeholders (ie. themselves, as well as the greater good of the public).