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Your steak is more expensive, but Ontario beef farmers aren't getting the biggest cut

A new study suggests Ontario beef farmers aren't necessarily cashing in on high beef prices caused by the pandemic and a surge in consumer demand.

Between 2016-2021 the wholesale price of beef rose at 10 times the rate of the price of cattle

During the pandemic the average price of beef rose from as little as six per cent for a kilogram of ground beef, to 24 per cent for some cuts of steak, such as prime rib, according data from Statistics Canada. (J. Scott Applewhite/The Associated Press)

A new study commissioned by the Beef Farmers of Ontario suggests cattle farmers aren't necessarily cashing in on high beef prices at the butcher counter. 

Since the pandemic began in March of 2020, the price of beef has risen significantly, from as little as six per cent for a kilogram of ground beef, to as much as 24 per cent for some premium cuts of steak, such as prime rib, according to data from Statistics Canada.

While customers are getting sticker shock at the grocery store or restaurant, the share of the price increase for farmers like Belinda Bowman, the owner of BB Cattle Co., based outside of Lucan, Ont., are getting lost somewhere between field and plate. 

"If you look at that, I wouldn't say that we have gained 25 per cent in terms of animals we're butchering for wholesale," she said, noting the cost of a bushel of corn, a key ingredient for feeding cattle has risen 40 per cent over the last year. 

"Like everything right now, our costs have also gone up." 

Growing gap between field and plate

According to the study, there's a growing gap between the price abattoirs pay for cattle from farmers like Bowman and the price retailers, like grocery stores or butcher shops pay for wholesale beef.

As the price of beef rises, restaurants, grocers and butchers are losing their share of the profits, according to the study. (Mary Altaffer/The Associated Press)

Between 2016 and 2021, the study suggests, the price of cattle stayed relatively flat, increasing by only 2.8 per cent, while over the same period, the price of wholesale beef rose 27 per cent, or, a rate nearly 10 times as high. 

Kevin Grier is the author of the study. The Guelph Ont.-based economist has been analyzing the relationship between livestock and meat prices for decades. 

"Historically beef prices and cattle prices have gone hand-in-hand, as one goes, so goes the other, but in the last couple of years that relationship has been broken." 

The breakdown means farmers are getting a decreasing share of the profit margins in Ontario's $2.7 billion beef industry while demand for beef is at a 30-year high.

Farmers and grocers losing profit share to meat packers

According to the study, the farmer's share fell from 41 per cent in 2016 to 39 per cent in 2021. At the same time, the meat packer's share rose, from 51 per cent to 59 per cent.

The price of cattle stayed relatively flat, increasing by only 2.8 per cent between 2016 and 2021, the study suggests. Over the same period, the price of wholesale beef rose 27 per cent, or, a rate nearly 10 times as high. (Aleksandra Afanasyeva)

Grocers and butcher shops fared worst of all, according to the study, earning an eight per cent share of the profit margin in 2016, to just over two per cent in 2021. 

"The grocer's share of the beef dollar actually declined," Grier said. "Believe it or not, grocers don't like to raise prices because it pisses people off." 

"My estimation of packer [profit] margins are phenomenal." 

CBC News reached out to the Canadian Meat Council, the industry association for meat packers across the country. The organization did not respond by publication time. 

ABOUT THE AUTHOR

Colin Butler

Video Journalist

Colin Butler is a veteran CBC reporter who's worked in Moncton, Saint John, Fredericton, Toronto, Kitchener-Waterloo, Hamilton and London, Ont. Email: colin.butler@cbc.ca

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