Why did the price for retail beef remain stable?
Unlike cattle pricing, retail beef pricing has remained stable for a number of reasons. First, Canadian demand at the retail level has remained strong for all beef products. Second, the U.S. border opened in September 2003 to boneless beef exports from cattle under 30 months of age, thereby reestablishing a North American market and price for these beef products. Canadian beef packers responded by increasing slaughter levels and selling into the U.S., where Canadian beef prices are determined. In addition, lower cattle prices do not necessarily lead to lower consumer prices for beef. Beef prices are less volatile than cattle prices, which are generally set in auction markets, changing continuously. The final retail price of beef includes a number of fixed costs such as transportation and labour, in addition to the price of cattle. The time series analysis conducted by Dr. Bessler shows that a shock to one input, namely a reduction in cattle prices, will not impact the final retail pric
