As a drought continues to plague the United States Midwest, an increase in the price of steaks and prime beef will be felt throughout restaurants and grocery stores nationwide.
"They are slaughtering the cattle before they achieve the size and the marbling," said Amy Rubenstein, an owner of the Brooklyn-based restaurant Peter Luger steakhouse, famous for aging prime sides of beef.
The worst Midwest drought since 1956 has charred crops and sent the price of corn, the main ingredient in livestock feed, up 62.8 percent since mid-June. Ranchers are culling herds to avoid feed costs, flooding the market with cheap supplies of beef.
In order for an animal to produce the highest quality of meets, the animal must undergo months of extra feeding.
"Today's issues are next year's price increases," said Lee Hanson, co-chef and an owner of the Minetta Tavern, one of only two Michelin-starred steakhouses in New York along with Peter Luger.
To make the highest quality and best tasting steaks prairie-fed steer are fattened for an additional two to three months on a high-calorie corn diet and penned in so their muscle turns to marbled flab before they're slaughtered. The best cuts are then dry-aged in a humidity-free cooler for six to eight weeks before they're served.
Corn prices reached a record $8.49 a bushel this month, and fewer ranchers can afford to fatten cows to prime, thus pressuring them to produce lower quality meats.
The drought prompted President Barack Obama to help farmers with $170 million in government meat purchases.
The government is also considering cuts to ethanol mandates after livestock producers complained that too much grain is being diverted to make fuel.
Prices for prime steak are already at a premium to USDA choice grade beef. A 1.5-pound bone-in New York sirloin sells for $45.95 at Peter Luger, and the 2.5-pound Porterhouse for $93.90.
The prospect has Peter Luger's Rubenstein concerned. The cost of a New York strip steak is up 11 percent this year, and 45 percent since 2010, she says. "We think the price rise is yet to come, and we're afraid that perhaps the quantity of meat that will be offered will be diminished."With an increase in prime steak prices the job market may see a negative effect resulting from the price hike. More than likely restaurants that sell the expensive meats may have to downsize in order to increase or keep profits at a steady level as the number of customers may decrease due to their inability to pay for the meats new prices.
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