The price of brisket is more than basic supply and demand
Among barbecue connoisseurs, the high price of brisket is like the weather: Everyone complains, but nobody does anything about it.
Of course, the process by which beef, and specifically brisket, is priced is unfathomably complex. On a microeconomic level, the forces of supply and demand are appropriately referenced to explain the ups and downs of brisket prices.
For example, every year around Memorial Day, brisket prices start to rise. This is a demanddriven price increase; specifically, more consumers are buying and cooking brisket during the summer at backyard parties and cookouts. As demand rises, price rises.
In the mid-2010s, there was also a supply factor involved in the seasonal increase. Drought in beefproducing regions reduced the ability of ranchers to economically produce cattle, resulting in smaller herds. As supply decreased, prices rose even more.
More recently, brisket prices have settled into a more or less predictable cycle of fluctuations, though the increasing popularity of Texas barbecue continues to drive demand and relatively higher prices.
But there are storm clouds on the horizon, and I’m not referring to the real ones that have alleviated the drought over the past few years. This storm is of a macroeconomic variety, and involves political, legal and technological developments that have appeared in just the past few months and may affect the price of beef in the long term.
Technologically, the availability of “plantbased meat” has significantly increased. Using complex engineering techniques, companies such as Impossible Foods and Beyond Meat have created meat substitutes that taste surprisingly like the real thing.
In fact, Beyond Meat recently had a hugely successful initial public offering of stock, and its products are now available at H-E-B supermarkets. Impossible Foods burger patties are currently being rolled out to Burger King restaurants nationwide.
If the faux-meat products catch on, watch for lower demand for real beef and a possible decrease in prices. Sound unlikely? On the contrary; cattlemen’s associations in various states are concerned enough to bring lawsuits and lobby against the use of the word “meat” to describe these plant-based products.
Politically, just this past month, the U.S. and the European Union came to a new trade agreement to allow more U.S.-produced, hormone-free beef to be imported tariff-free into the E.U.
American beef is popular in Europe, and if political barriers to tarifffree imports continue to fall, an increasing volume of high-end U.S beef will be sent across the Atlantic. This new source of demand could result in an increasing price of beef in the U.S.
And legally, a federal lawsuit was filed in April in which a consortium of cattlemen’s associations and feedlot owners accuse the largest meat packing companies of cattle-price fixing and anti-competitive behavior.
Very generally, beef production in the U.S. involves cattlemen breeding and raising cattle, which are then sold to feed lots where they are fattened, which are in turn sold to meatpacking companies that slaughter the cattle and market the beef.
The meat-packing industry in the U.S. is concentrated among four big companies. The lawsuit alleges that the meat packers artificially suppressed the supply of beef by intentionally closing slaughterhouses, thus reducing the amount of cattle sold and beef produced.
From the plaintiff ’s point of view, closed slaughterhouses meant cattlemen had fewer places to sell their cattle; thus, they had to sell at a lower price. That is the basis of their lawsuit, among other allegations.
From the consumer point of view, this alleged artificial reduction in supply may have propped up the price of beef sold at the wholesale and retail level. A class-action lawsuit on behalf of consumers alleging pricefixing has also been filed against the meat packers.
If it is determined that the meat packers colluded to manipulate the production and marketing of beef, this may result in a general decrease in price if any anti-competitive behavior is proved and halted.
That’s a lot to think about the next time you buy brisket at your favorite supermarket. For now, though, consumers don’t seem to mind paying higher prices for the cut of beef that is the cornerstone of Texas barbecue.