Consumers have been experiencing sticker shock at the supermarket these days as prices of seemingly everything has gone through the roof.
That’s particularly true when it comes to beef, and anyone hoping that the soaring cost of various cuts of meat will be coming down anytime soon could be in for a rude awakening.
Not Enough Cattle
A new report from the Wall Street Journal details the economic headwinds that are forcing unprecedented change within America’s $100-billion beef industry — and why the high prices consumers are experiencing are not temporary.
The main reason behind this cost increase: not enough cattle.
“After years of economic turmoil and droughts, the U.S. cattle herd has shrunk to its smallest level in 75 years,” reports the Journal. “The supply shock is driving up steak and hamburger prices at grocery stores and restaurants to record highs — conditions that could last well into the next decade, given how long it takes to replenish a herd.”
According to the Journal, it can take up to 22 months for a cow to grow to market weight, significantly longer than it takes for chickens (approximately six weeks) and hogs (six months).
This shortage has led to issues with the supply chain and closures of meat-packing plants throughout the U.S., which have been losing billions of dollars.
No Easy Fix
While the answer would appear obvious — simply breed more cattle — it’s actually not that simple.
“The common public probably thinks you can turn it around in four months,” industry expert Brad Peek told the Journal. “We’ll be lucky to start gaining cattle in four years.”
Another solution is to import less-expensive beef from other countries. However, that leaves a market in which this imported beef undercuts prices of U.S. product, while leaving fewer processing plants in operation when cattle stocks do eventually replenish.
However, fewer processing plants will bring about a reduction in competition that has led to a reduction in the value of rancher’s cattle. As a result, those ranchers are holding onto that cattle, waiting in the hopes that their value will rise — a situation that adds additional costs while reducing revenue. Meanwhile, the industry is still recovering from a 2022 drought that saw pastures dry up from Oklahoma to Montana. Add rampant inflation to the mix, which has increased costs of everything from fuel to feed to equipment, and ranchers are left with a perfect-storm scenario.
Ultimately, consumers won’t be seeing any immediate relief in beef prices.
“We still have a long way to go before we have any increase in numbers and we’re going to get tighter before we get better,” Derrell Peel, a professor of agricultural economics at Oklahoma State University, told the Journal. “The high prices are ahead of us yet.”
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