U.S. cattle group fights recession with $5 steaks

CHICAGO (Reuters) - As the recession discourages people from dining out, the U.S. beef industry is stepping up efforts to sell steaks through supermarkets to compensate for a slowdown in restaurant business, NCBA economist Gregg Doud said on Monday.

"On the steak side, you are seeing a lot of features for rib-eyes and T-bones at below $5 a pound. That is some of the best featuring we have seen in many many years," said Doud.

The NCBA is the nation's largest cattle industry trade group, and Doud said the feedyard segment of the industry, which fattens cattle on grain, has lost about $4 billion in equity over the last 15 months.

The losses are due in part to high grain costs and a slowdown in beef sales in restaurants and export markets, which have prevented cattle producers from getting the prices they need to cover costs.

In years past, about half of the U.S. beef has been consumed at restaurants and fast-food chains. But business is down in that segment as cost-conscious consumers eat at home.

"We are really focusing right now on one aspect of our industry -- the retail side," said Doud. "You are seeing some of the best value in grocery stores for steaks than what you have seen in an awfully long time."

The approaching of spring, when people begin grilling steaks and hamburgers outdoors, has also encouraged the NCBA to promote steaks and other beef products in supermarkets at lower than normal prices.

This focus on retail sales is also being pushed because of a mild slowdown in beef exports, said Doud. A strong dollar relative to other currencies has made beef more expensive to foreign buyers, which hurts sales.

While the low beef prices are designed to spark sales, they may be hurting cattle producers, who have been losing millions of dollars a week as cattle are selling at well below production costs.

Current beef prices are "not profitable" for the long term but are necessary to sell beef, said Doud.

The losses on cattle have led to producers raising fewer cattle, which could be mean less beef in 2010 and beyond.

While a smaller beef supply could mean higher prices then, Doud was reluctant to forecast beef prices that far out because many factors can affect prices, such as feed and fuel costs, weather conditions, and supplies of competing meats.

USDA estimates 2009 U.S. beef production at 26.477 billion lbs, down about 1 percent from 2008.

(Editing by Matthew Lewis)