Yes, We Have No Beefsteaks

Question: What would draw a crowd of 4,500 people--almost all housewives-- to the opening of a Thom McAn men's shoe store in Davenport, Iowa?

Answer: Steak.

All 4,500 turned out on the promise that just one of them would win a supply of four beef filets weekly for a year. Similar scenes occurred at Thom McAn openings in Dallas, Roanoke, Va., and South Bend, Ind. In St. Louis, three banks were attracting lines of new depositors by promising each of them a poke of rib eye. Juicy bovine slabs were joining Waring Blenders and Miami Beach vacations on America's list of treasured giveaways.

The beef industry--farmers, ranchers, packers and especially cattle feed-lot operators--could not have hoped for better testimony to the point that it was trying to make. The Nixon Administration's price freeze on beef, which is not scheduled to end until Sept. 12, was shutting off the supply to the public. The price of live animals was not frozen, and packers could not afford to buy at uncontrolled prices and sell at controlled prices. The number of cattle slaughtered at packing plants dropped 10% two weeks ago and plunged an estimated 23% last week. At least 40 plants shut down throughout the Middle West. There were reports of cattle rustling in Utah and a hijacked meat truck in Stamford, Conn. Canadian operators were buying cattle in the U.S., dressing it in Canada and selling it back to the U.S. at prices above freeze levels because there is no freeze on imports.

Black Markets. For the U.S. consumer, who has an almost emotional attachment to beef, the meat situation was similar to that of World War II--but without the patriotic fervor. Black markets developed as some packers sold sides of beef for whatever price they could get; the usual subterfuge was to sell lower-grade cuts at high-grade prices. Supermarkets adopted a form of rationing, occasionally limiting shoppers to a roast or two each. All across the country, shoppers discovered empty or nearly empty meat trays; in Cleveland, a fight broke out between two women over the last roast in the store. Sales of home freezers heated up to records as many shoppers hoarded, risking disaster if the electricity went out.

In Washington the purveyor to the White House staff, Bernard Goldstein, protested the price freeze by refusing to supply President Nixon with his usual choice cuts, and directors of the Cattlemen's Hall of Fame in New Braunfels, Texas, promptly elected Goldstein Man of the Month. Jails, hospitals and college cafeterias will have to cut down on servings of meat and stretch their meals with macaroni and plentiful, reasonably priced seasonal produce, including potatoes, snap beans, corn, squash, cucumbers, bananas, peaches, cantaloupes and nectarines. At least two U.S. institutions, however, vowed to pay any price or bear any burden in order to get great portions of red meat for their highly prized charges. One was the Cleveland Browns football team; the other was Chicago's Brookfield Zoo.

Appealing for the Government to end the freeze before Sept. 12, a delegation of big cattlemen and packers called on Agriculture Secretary Earl Butz, the farmers' friend. He told them: "If I had my druthers, I'd very seriously consider ending it sometime before Sept. 12." The Senate voted 84-5 to put an immediate stop to the freeze. The measure was then sent to the House, which adjourned until after Labor Day without acting on the bill, thereby killing any chance that the freeze could be legislated out of existence. Thus only President Nixon could call an early end to it.

No Scarcity. With much evidence, the White House holds that though the beef shortage is real enough in the stores and packing houses, it is merely a form of impromptu theatrics staged by the cattlemen to get the freeze lifted. Though meat is in tight supply in many parts of the world, there is no genuine scarcity of beef on the hoof in this nation. The U.S. now has 2% more cattle on feed and 6% more breeding cows than at this time last year. Ranchers and feed-lot operators can collect alltime high prices for their animals but are holding them off the market, betting that they will be worth as much as 20% more when the freeze is off. The average price per hundredweight of cattle jumped from $29 in 1971 to $33.50 last year; now it is well above $45, with bidding often as high as $56 (at that rate, ordinary ground beef would retail for $1.50 or more a lb.). In the past four weeks, the price of cattle destined for feed lots has shown the sharpest rise ever recorded.

The increase in livestock prices is a major reason why the net income of America's farmers leaped from $16.9 billion in 1969 to $20.3 billion last year and will reach an expected $23 billion this year. Indeed, there has been a historic shift in the nation's income. As consumers have paid more and more for food, they have shifted increasing sums of money out of their pockets and into the pockets of farmers and ranchers. In 1958, the average American ate 80.5 lbs. of beef. Last year he ate 115.9 lbs. Helped by this enormous demand, farmers are doing relatively better than other Americans. In 1960, Americans who lived on farms earned only $1,100 per capita, or 55% as much as non-farm people. By last year, the farm residents took in $3,179 per capita, or 83% as much as non-farmers. Though the farmer still earns less than other people, the average value of his major investment--land--is soaring.

Burned Sellers? Confronted by the politically potent cattlemen--and by the cries of beef-hungry consumers--the Administration may yet be forced to cave in and call off the freeze prematurely. The pressures on the White House will grow because the shortage is likely to become much worse in the next two weeks. The nation's price controllers doubtless made a bad mistake last month in continuing the beef freeze and simultaneously announcing the date on which it would end, thus tempting cattlemen to hold their animals off the market until then. But lifting the ceiling before Sept. 12 would further damage the Administration's credibility, and encourage producers, retailers and labor unions in other sectors of the economy to press harder to escape all price and wage controls.

The original logic behind the price freeze was that it would delay and spread out price increases. Economically, that would ease the pain for the consumer; politically, that would soften the blow to President Nixon. During the rest of this year, food prices are likely to rise 3% or 4%--an annual rate of 6% or 8%. In fact, so much beef is being held back now that the cattlemen may get burned. If the Administration hangs tough and the sellers' strike continues, great herds of cattle will hit the markets after Sept. 12--and beef prices could go down.

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