An interesting confluence of events could affect your pocketbook the next time you go shopping. Because of strong international demand for dairy products, butter prices are near record levels with the retail price of butter nearly 50 percent higher than last year at this time.
A similar situation holds for beef. Prices are near record levels, with rib eye prices nearly 10 percent higher than last year and hamburger prices almost 50 percent higher. And, as the beef industry attempts to re-build the national herd from its smallest size in 60 years, beef prices are expected to continue moving up. Further, a new twist has recently been added which turns a lot of our thinking about eating red meat and dairy products on its head, potentially increasing demand just as prices are near record levels.
Since the 1960s, saturated fat was seen to be an important cause of heart disease. The advice from the health and nutrition community was animal fats should be avoided as much as possible. As a result, red meat and dairy products – butter and cheese – were excluded, or at least minimized, from diets of health conscious people. A new book was recently published that disputes that advice. The book, “The Big Fat Surprise,” written by Nina Teicholz and widely reviewed in a number of publications, turns the traditional anti-red meat and dairy product diet on its head. The book indicates low fat diets may not be as beneficial as once believed nor are red meat and dairy products as bad as once believed.
I am not a medical specialist, nutrition expert or dietitian. So, I won’t comment on or evaluate the basic premise of the book; he medical advice provided to us about the danger of eating red meat and dairy products is both overstated and incorrect. This issue is one that will be debated by professionals. But the impact could be seen at the grocery store and felt in the pocketbook long before professionals have finished their discussions.
So, while not quite a perfect retail price storm, high butter prices and high beef prices have been met with a possible new source of increased demand, potentially pushing prices even higher. Will consumers, or at least a significant number of them, embrace the book’s hypothesis that eating red meat and dairy products is OK? Is there much pent-up consumer demand the book might unleash? There have been reports that retails sales of butter have increased almost 20 percent since the book was first published and featured in an extensive article in the Wall Street Journal.
Or will consumers be skeptical of the book’s claims and, when faced with expensive red meat and dairy products at the grocery store, cut back on their demand for those items?
I am not sure how consumers will react to these events. But it does seem like a good news – bad news situation. The good news is it may be OK to eat things which, just a month ago, you were actively discouraged from eating. The bad news is, since prices are so high, you can’t afford them.
Professor William Bailey formerly was the chief economist for the U.S. Senate Committee on Agriculture, Food and Nutrition. He also has served as Deputy-Under Secretary of Agriculture. He is now affiliated with the Western Illinois University's School of Agriculture.