By Robert Pore
robert.pore@theindependent.com

And those rising costs could cut into consumer beef demand, which has been increasing since the late 1990s, said Darrell Mark, agricultural economist at the University of Nebraska-Lincoln.

"I'm getting more and more concerned every day about beef demand when you watch what energy prices are doing," Mark said. "All you have to do is fill up your pickup, SUV or car and realize what it does to your disposable income."

Rising beef prices and the higher fuel prices people are having to ante up each time they fill their vehicle could translate to consumers finding another, cheaper protein source for supper.

"Rising energy costs don't leave a lot of discretionary income in a lot of people's pockets," Mark said.

He said that loss of consumer disposable income also affects food consumption away from home, with people eating out a lot less or maybe not spending as much when they are eating out.

"It also affects you at the grocery store," Mark said. "Rather than buying that expensive piece of beef, maybe you shift to chicken."

Mark said a lot of people like to link higher food costs to higher commodity prices farmers are receiving.

"Granted, prices in the grain sector are higher, but the proportion of what you are buying in the grocery store is not 100 percent derived from the price at the farm retail. So much of it is from things like marketing costs, labor costs and transportation."

On Tuesday, diesel gas prices in Grand Island were at a record high and the highest in Nebraska at $4 per gallon, according to Nebraska AAA Fuel Gauge.

Much of the food that comes to Grand Island grocery stores travels thousands of miles by truck from the farm to the wholesaler and then to the retailer.

"Higher transportation costs are having a big impact on food costs," Mark said.

For Nebraska beef producers, this will all have a negative effect on the bottom line.

"But one of the saving graces is the export market," Mark said.

He said beef exports are increasing but are still at 60 percent of what they were prior to the December 2003 mad cow incident in Washington state. That incident caused more than 100 countries to ban American beef imports.

"Our exports continue to grow, and that helps make up some of that loss on the domestic side," Mark said.

The annual average retail beef price for 2007 was $4.16 per pound, said David Anderson, an Extension livestock marketing economist at Texas A&M University. That was 5 percent higher than 2006 and exceeded the previous record from 2005 of $4.09 per pound.

"There are higher costs of getting it to the store," Anderson said. "When we talk about $100-per-barrel oil, it ripples through the economy. Everything you get at a restaurant or grocery store, we have to get it from somewhere else."

Another reason is a leveling of beef production across the United States, Anderson said.

"With fewer cows and calves in national inventory, and increased export demand for U.S. beef, that's keeping pressure on beef prices," he said.