Beefs About Beef

The average American this year will eat 170 Ibs. of red meat, and the typical family will spend at least 5% of its income to buy it. These superlatives--no nation eats or spends more--somehow do not make housewives and wage earners as happy as they should, and for good reason: the average price of a pound of choice beef, which seems to be what most Americans buy, is 810 v. 680 ten years ago.

Prices in general have gone up since then, of course, but meat presents a special paradox. While its price has. stayed high, the amount the rancher gets for beef cattle has been falling, is now the lowest since 1956. Last week no less a cattleman--and consumer--than Lyndon Johnson asked Congress to unravel the paradox by appointing a 15-member national commission on food to investigate food prices, particularly those of beef.

What bothers Johnson and many another beefeater is that meat prices remain high even though distribution techniques have radically improved. Once, all cattle were trucked to feed lots for fattening, sold at stockyards, slaughtered, wholesaled and finally retailed--and each middleman sent the price a bit higher. Today, 110 supermarket chains sell almost 50% of all the meat eaten in the U.S. Some operate their own feed lots and slaughterhouses; the rest buy in bulk at favorable prices. By all the laws of economics and common sense, beef prices should be falling.

Market Barons. While the cattlemen's share of the average price per pound of beef has dipped to a six-year low of 45.30, the retailers' share has steadily increased to a record high of 24.90. Cattlemen blame this disparity on what they angrily call "supermarket barons." In fact, supermarkets buy in such large volume that they are practically able to name their own price for beef on the hoof. Says John Fryer, research director of the 75,000-member meat packers' union: "If the A. & P. comes to Swift and says, 'We want a million pounds of wieners at 100 a pound' and Swift says 'No,' then A. & P. takes its order elsewhere." Such critics insist that the large chains ought to be able to pass such savings on to the customer.

The chains, on the other hand, maintain that they enjoy no substantial savings. For one thing, their share of the retail price of beef must pay for rising labor costs ($3.57 an hour for male cutters, $2.91 for women wrappers) and for the increased cost of handling, cutting and wrapping, which amounts to 90 a Ib. Moreover, many housewives no longer will buy cheap cuts of meat, preferring to buy steaks that they can throw on the broiler rather than a 590-per-lb. portion of stew meat that needs to be cooked most of the day. Since there are fewer prime cuts, the demand tends to drive up the price, and keep it high.

Traditional Step. The Johnson Administration can do little to lower retail prices, but it will try to close part of the gap between them and livestock prices, as a starter has ordered more beef served in school lunch programs and more distributed to needy families. Cattlemen meanwhile are taking a traditional step toward the same end: an estimated 2,000,000 head are being held back from market. But a paradox lies here too. Bad weather or economic pinches could force cattlemen to dump the held-back cattle, thus tumbling prices even lower than they are.

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