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Beef prices are down right now. But that may not last

LEILA FADEL, HOST:

Supermarket shoppers are seeing something unusual these days, discounts in the meat department. Steak prices have actually fallen in each of the last three months. But as NPR's Scott Horsley reports, bargain beef may not last.

SCOTT HORSLEY, BYLINE: My neighborhood Safeway is advertising top sirloin this week for 4.99 a pound. Steak prices have come down from a year ago, even as the cost of chicken, pork and most other groceries has gone up. Those falling beef prices are a welcome development for shoppers, but there's a painful story behind them, severe drought that's affecting about 60% of the nation's cattle. Drought-stricken ranchers are being forced to slaughter some of their livestock early, which means more steak in the supermarket and a temporary drop in prices. Brady Blackett raises Angus beef at the foot of the Wasatch Mountains in south central Utah, where, thanks in part to a changing climate, the winter snowpack has been way down. The grazing land where Blackett's animals spend the summer is bone dry.

BRADY BLACKETT: The cattle have to travel miles and miles each day in, you know, 100-degree weather to get back out to where there's adequate enough forage. So it's tough. Over the last couple of summers, we've actually had to haul water to the cattle because the springs just aren't producing enough water to keep up.

HORSLEY: Ordinarily Blackett relies on runoff from the mountains to irrigate the alfalfa he feeds his cattle in the wintertime. This year, he's having to use groundwater for irrigation. And he knows that's not sustainable.

BLACKETT: It's not looking good for the future unless we're able to get some moisture and pull ourselves out of this drought.

HORSLEY: John O'Dea runs a ranch in southwest Nebraska. He didn't even bother planting hay on some of his land this year because he knew it was too dry to grow.

JOHN O'DEA: At our ranch, we've gotten two decent rains in the last 14 months.

HORSLEY: With grain prices also high, ranchers are opting to send some of their cattle to slaughter early rather than bear the cost of keeping them fed all winter.

O'DEA: We've liquidated part of our cows. And a lot of neighbors have liquidated anywhere from 20 to 60% of their cattle herds to try and get as much to go through the drought as possible.

HORSLEY: That's produced a temporary glut of beef and lower prices at the supermarket. But the savings for consumers may be short-lived. In a sign of ranchers' desperation, many of the slaughtered animals are breeding females, cows and heifers. So Wesley Tucker, who's a field specialist at the University of Missouri Extension, warns the next generation of cattle will be smaller.

WESLEY TUCKER: Life has very few guarantees. But a cow or heifer that is slaughtered this year is guaranteed not to calf next year. So that means there's lower animals coming down the line and less beef production in the future.

HORSLEY: Ranchers have lived through this cycle before. A severe drought a decade ago led to a similar downsizing of herds and, ultimately, higher prices. That's an incentive for ranchers to try to hang on to at least some of their cattle. But Tucker worries even if beef prices rebound, it may not be enough to offset the rising cost of things like diesel fuel and fertilizer.

TUCKER: I don't think the price of a tractor is going to go back down next year just because our weather improves.

HORSLEY: John O'Dea keeps checking the weather forecast at his Nebraska ranch. So far, there's no sign of improvement on the horizon.

O'DEA: Basically, what we're doing now is trying to figure out how we're going to manage for next season because we know this season's a bust. I would bet that our first moisture will be blizzards this winter, the way it's looking right now. It's definitely a struggle (laughter). And we're dang sure not getting rich out here.

HORSLEY: Something to think about when you put that sale-price steak in your shopping cart.

Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.