Beef Stakes

The Texas economy is churning out record job numbers, but the $7.5 billion cattle industry isn’t doing too hot — or rather, it’s too hot. After a year and a half of drought, Texas cowherds have shrunk drastically. And lean, texturized beef — now commonly known by the epithet “pink slime” spread by The Naked Chef, Jaime Oliver and the national press — has become a hot-button issue with consumers, prompting many big name supermarkets to remove the product from their shelves. 

Mix the two together and you’ve got a recipe for sky-high beef prices.

Last summer, ranchers sold off more cattle than usual and at unusually low prices, because crisp fields had left little grass for herds to eat. Cowherds are now the smallest size since 1955, according to the Texas Beef Council. And as those in the industry know, beef production has been steadily shrinking for decades. There’s a myriad of factors contributing to the production decline, but in essence, ranchers are not making enough profit annually to increase production the next year.

Cattle raisers are making efforts to turn slowing beef production around in the long term, like increasing education to attract the next generation of ranchers, raise healthier heifers to birth calves and enhance cattle nutrition with food supplements. But the “pink slime” debacle is having a huge effect on rising prices in the short term.

Typically, an extra 10 to 12 pounds of meat can be salvaged from a carcass that’s already had its prime cuts sliced and turned into lean, texturized beef. For years, the FDA-approved beef byproduct has been used as filler in ground beef to keep prices cheap, despite lowered beef production. 

The beef industry says the ammonia-treated beef scraps are “beef,” plain and simple, but consumers weren’t happy when national media brought to their attention how it was made and how much of it was in their food.

The sudden loss of demand for the product has now tightened the already limited beef supply — and it's now affecting Texas jobs. Beef Products Inc., which originally crafted the beef byproduct, closed production plants in Amarillo and two other states. And AFA Foods, which also has a facility in Texas, filed for bankruptcy after some of its largest customers, including Walmart, severely scaled back their orders.

And if you missed the headlines, even Gov. Rick Perry chimed into the national debate over the beef byproduct, saying it is healthy, not horrifying. He estimates it could take an additional 1.5 million cattle to replace the lean, texturized beef in the market.

Otherwise, economists say most of Texas’ non-farm industries are still on track to recession recovery. The Texas unemployment rate is still a little high at 7.2 percent, but the number of jobs in Texas has surpassed pre-recession levels.