Supply and Demand in the Beef Industry NEWSCASTER: Millions of Americans are celebrating the 4th of July tonight around the barbecue. But the cost of the burger or steak they're throwing on the grill has spiked since last year's party. Beef prices have gone from $4.88 a pound, last year, to $5.45, this year. So we asked Dean Reynolds to find out why. DEAN REYNOLDS: If you have a beef with the rising price of meat, a trip to the LJ Ranch in Logan, Kansas may be instructive. LLOYD SCHNEIDER: We have the lowest amount of cow numbers since 1952. And so our cow numbers are down drastically. DEAN REYNOLDS: Down drastically, says rancher Lloyd Schneider, because of a combination of factors, beginning with the grass. LLOYD SCHNEIDER: When the drought hits us, our grass does not grow to the extent that we're accustomed to. DEAN REYNOLDS: Calves don't mature as fast on drought-stricken pasture land, and the prolonged winter slowed the growth of grain to fatten them up. But there's another reason for the lack of domestic beef. LLOYD SCHNEIDER: We are also exporting more to other countries. And so the demand for beef is stronger. DEAN REYNOLDS: The USDA is projecting retail prices for beef will rise as high as 6.5% this year, compared to just 2% last year. The Northwest Meat Company in Chicago is on the supply end of the equation, providing meat to local hotels, restaurants, and country clubs. But finding meat from producers isn't as easy as it once was. ANDREW NEVA: 10-ounce burgers. DEAN REYNOLDS: Andrew Neva is a third generation packer. ANDREW NEVA: Like today, I ordered 12 boxes of whole beef tenderloins. I got six because they don't have the supply. DEAN REYNOLDS: So he pays more to get what he needs-- on average, 10% to 15% more. And some of that has to be passed along to his customers-- who then pass it along to theirs, and on and on until the steak hits your table. And that is something to chew on. Dean Reynolds-- CBS News, Chicago.