Beef prices hit an all-time high

You're not imagining things: The price of beef, whether in your local grocery or at your favorite restaurant, has taken a big jump lately.

A combination of factors have pushed beef prices nationally to an all-time high, currently around $5.06 a pound.

Drought conditions in some parts of the U.S. are now in their second year and have dramatically reduced the amount of cattle feed and forage available, which in turn has forced ranchers to reduce their herds to sizes not seen since the 1950s. A growing global demand for beef has also pushed prices higher.

The U.S. Department of Agriculture reports beef and veal prices rose four percent in February and are up 5.4 percent compared to the same time last year -- the largest monthly increase since late 2003.

The dramatic jump is also affecting retailers and, in turn, consumers.

In Los Angeles, Erika Nakamura, co-owner of Lindey & Grundy, a neighborhood butcher shop that works with California farmers, says beef prices have shot up in just the past few weeks, according to a report by KCAL's Serene Branson. Nakamura's store normally purchases two to three steers a week to supply beef to local restaurants and hotels, but her producers can't accommodate her now.

"That's where the major struggle is," Nakamura notes, "our farmers just don't have large enough and healthy enough animals."

"You only get whole animals,"says Nakamura tells, "so it doesn't apply in the same way as boxed beef and commodity beef does. That does become about 25, 35 percent" -- which can add up to thousands of dollars in additional costs.

And at Canter's Deli, an L.A. culinary landmark in business since the 1930s, the worry is about what rising beef prices will mean for the bottom line.

"Corned beef and pastrami, they're synonymous with deli," says Greg Dovell, who has worked at Canter's for decades. "We serve 1,000 different things, but this is what keeps the doors open and the lights on. Prices probably will have to increase a little bit with the next printing of the menu, but we're holding the line for now."

Large corporate restaurants, like fast-food giant McDonald's (MCD), which purchases 1 billion pounds of beef annually for its U.S. outlets alone, get access to much of the less expensive and available meat. But for operations like Canter's, lower-quality beef isn't an option.

"We're either going to have to cut down the portions," laments Dovell, "or the prices are definitely gonna have to follow suit."