Farmer share of retail value of red meat is declining
The spreads between farm prices for hogs and cattle and retail prices for pork and beef have widened over the past 18 months, leading to a decline in the farmer share of retail red meat prices. Growing cattle inventories and increased pork production are pushing cattle and hog prices lower. For the fourth quarter of 2015, hog prices (51-52% lean) averaged about $45 per hundredweight, down about 33 percent from a year earlier and nearly 50 percent below the prices received in the second quarter of 2014. Similarly, cattle prices (5-market steer price) averaged $128 per hundredweight in the last quarter of 2015, down nearly 23 percent from the fourth quarter 2014. Retail prices for both beef and pork are down as well, but by a smaller magnitude as they tend to adjust more slowly to changes in the farm price due to the wide variety of other costs—including labor, packaging, storage, and transportation—that also contribute to retail prices. This chart is based on the ERS Meat Price Spreads data product.