E (2:09)

Support for NPR and the following message come from Edward Jones. A rich life isn't always a straight line. Unexpected turns can bring new possibilities. With a hundred years of experience navigating ups and downs, Edward Jones can help guide you. Let's find your rich together. Edward Jones, Member, SIPC this message comes from Capital One. With the Capital One Saver card, earn unlimited 3% cash back on dining and entertainment. Capital One, what's in your wallet? Terms apply. Details@Capital1.com I always like to remind people.

C (2:45)

How this award show works. There are 12 regional banks in the Federal Reserve System. Each one studies their local economy and brings back stories of what they See, they publish them in the document known as the Beige Book. We read it and we give awards to the best stories.

B (2:59)

Let's start with a runner up. This short sentence appeared in the Beige book entry for the New York Fed.

C (3:06)

Quote, alcohol sales were slow during the summer.

B (3:11)

Ernest Hemingway writing these for the Fed.

C (3:12)

Now, I know. And Hemingway loved his alcohol, right? So I pulled this as a runner up because New York City is all about cocktails in the summer. And we've seen other issues of the Beige book mention this new long term trend. People are drinking less. A recent entry from the San Francisco Fed said that wine sales were down and some winemakers were removing their vines.

B (3:37)

Oh, what vintage goes with that weird frittata we made?

C (3:41)

Red. It's always red, whatever it is.

B (3:43)

Yeah.

C (3:44)

All right, let's do the big award.

B (3:46)

Okay. Envelope, please. And the Beije award goes to the Dallas Fed.

C (3:57)

Coming to the stage is senior business economist for the Dallas Fed, Leila Ehsani. Congratulations, Layla.

F (4:04)

Thank you. On behalf of the Dallas Fed team, we're honored and thrilled to receive the Beiji Award.

C (4:09)

You're winning beige Book entries about cattle and high beef prices, which we mentioned at the beginning of the show. Do you eat beef or are you one of those notable Texas vegetarians?

F (4:19)

Well, I enjoy both. You can call me an equal opportunity eater. So I'll take a plate with Texas brisket on one side and grilled veggies on the other.

C (4:28)

Well, we're just coming out of Texas brisket season, the summer. All those barbecues. Is anyone out there talking about beef prices? I hear they've been going up, or so the Beige book tells me.

F (4:39)

Yes, they certainly have been quite high. And for Texas, the barbecue season runs all 12 months. So whether it's corn on the cobs or ribs, something is always sizzling on the grill in Texas.

B (4:50)

Like, she works with the Texas Tourism Board. I love it, though. I love it.

C (4:54)

Everyone in Texas sounds that way.

B (4:57)

The winning entry says, there's some trouble in beef land. Here, I'm going to read it. Cattle prices remained historically high amid solid demand and a decline in beef production. One factor limiting production was the suspension of cattle imports from Mexico and implemented last fall to protect US Livestock from the new world. Screwworm. A parasitic fly.

C (5:20)

I know. Sounds scary. So let's break this down. People are still eating a lot of beef, so demand is high.

B (5:27)

Is this the age of, you know, Instagram and TikTok influencers telling us all to eat beef tallow fries?

C (5:33)

Yeah, Right. But the supply of beef is down for a bunch of reasons. There are long term reasons and new challenges.

B (5:40)

So.

C (5:40)

So, Layla, I know that the number of cows and bulls grazing out there in America has been gradually going down.

F (5:47)

So cattle inventory in the US has been declining since the mid-1970s. But that trend has become a bit more pronounced over the past few years due to persistent droughts, higher feed costs and other economic pressures leading ranchers to liquidate their beef herds.

C (6:05)

In other words, kill the cattle and send them to market. But there is still not enough beef in the United States for American appetites. So we fill the gap by importing quite a bit of meat from places like Canada and Mexico. But Leila, you mentioned in the beige book, this infestation, the New World Screwworm, has kept out the Mexican beef imports.

F (6:26)

And that means fewer cattle are coming into the United States, which results in tighter supply and higher beef prices.

B (6:33)

That's bad news for consumers, but not a bad situation for the people who raise cattle. We know this is a nationwide issue, so we called up a rancher out on the a little north of Texas.

C (6:44)

Wyoming, to be precise, to a guy with a honest to goodness cowboy hat and a beefy name.

A (6:51)

My name's Jack Berger. I'm a rancher from Saratoga, Wyoming. And I understand we're going to be talking about cattle prices today.

C (6:59)

We are. You know, someone once told me it's rude to ask someone how many heads of cattle they have. So what should I ask instead? What's a more polite question?

A (7:09)

Well, there's no sense just beating around the bush. We run about 1300 cows, so it's enough to keep us busy.

B (7:17)

Anyway, Jack explained to us that yes, the drought and the screwworm parasite have reduced cattle supply and sent up cattle prices. But there is another factor, something he calls the cattle cycle.

A (7:29)

Well, I mean, a few years ago that cattle prices weren't very good. It wasn't very profitable. And that causes some people to kind of leave the business. And those that of us that stay in the business, there's fewer of us and fewer cattle out there on the market. And so that drives prices up.

C (7:47)

The cattle cycle happens because cows don't respond immediately to supply and demand. Jack says it would take five years to increase his herd. You have to have the baby calves born after all, and they have to grow up and become meaty, I guess. And who knows what the cattle prices will be in five years. The high prices today might mean, we don't know, there might be a glut of cows by 20, 30.

B (8:11)

Of course, high prices now means that Jack is bringing in more money this year. But even then, there is a catch.

A (8:17)

Well, you know, there's more profit, but this is our chance to upgrade equipment and make some capital improvements that in the short years, you're not able to do some of that stuff. So, yeah, we got more income. But our costs, our fuel, our tires, our fertilizer have gone up the last few years, and that affects us, too.

C (8:37)

Naturally, we had to ask about tariffs. High tariffs might mean even more pressure on prices. But Jack sees the beneficial side of the tariff war. Australia, for instance, used to restrict the import of US Beef. Under pressure from President Trump, Australia has relented.

A (8:54)

Yeah, I mean, now Australia's finally taking some beef. I hear they just didn't want ours because it's so much higher quality. They didn't want their people to know how good beef could be and stuff. But they are taking some of our beef now, which is only fair.

C (9:11)

That's probably just a story told by cattle ranchers in the U.S. well, maybe you got to admit, well, I don't.

A (9:16)

Think there's any country that can claim the quality that we have in the United States.

C (9:20)

Always be selling. Always be selling the beef.

B (9:22)

He's going for that set of steak knives, right, Robert?

C (9:25)

Exactly.

B (9:27)

Thanks again to the Dallas Fed for alerting us to this change in supply and demand. And Leila Sani, congratulations for winning the Beiji.

F (9:35)

Thank you for having me, Layla.

C (9:37)

I feel like every time the Dallas Fed wins, it's for an entry about oil or cattle. I hope we're not stereotyping Texas too much.

F (9:44)

I hope so. Not. I think we'll try to find some better anecdotes to include in other sections.

B (9:52)

This episode was produced by Cooper Katz McKim and engineer by Kwesi Lee. It was fact checked by Sierra Juarez and edited by Paddy Hirsch. Caking Cannon is our show's editor and the Integration a production of npr.

D (10:06)

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