President Trump summons advisers to combat rising beef prices and inflation
President Donald Trump has convened a team of economic and industrial advisors to address rising beef prices and broader inflation concerns. The group will focus on strategies to lower the price of ground meat and provide relief to American families facing rising grocery costs.
Fox – 5 Atlanta
- High beef prices are primarily driven by a shrinking U.S. cattle herd and steady consumer demand.
- Drought has forced ranchers to reduce their herds, a process that will take years to reverse.
- Despite rising prices, demand for beef in the United States remains strong due to dietary trends and improving quality.
As beef prices rise to record highs, many sticker-shocked consumers across the country are wondering aloud why a ribeye steak costs nearly $22 a pound. Economists say the reasons behind this have been largely shaped by drought-induced herd declines and strong demand over the years, as well as general inflation.
The average retail price of beef hit a record high of $9.64 per pound in April, up about 13% from a year earlier, according to data from the USDA Economic Research Service. Agricultural economists Brenda Bortel and Jeffrey Swenson say that while inflation plays a role, today’s beef prices are primarily driven by a historic shortage of cattle to meet stable consumer demand.
“The most important factor is the decline in the U.S. cattle herd,” said Bortell, a professor of agricultural economics at the University of Wisconsin-River Falls. “As of January 1, the national cattle population was about 86.2 million head, the lowest since 1951 and nearly 9% below the peak in 2019. Fewer cows means less beef, and when demand is strong but supply is tight, prices will rise.”
Drought casts a long shadow on the beef industry
The roots of today’s supply crunch go back many years. Bortel said prolonged drought in major cattle-producing states has forced ranchers to sell breeding cows and other animals needed to rebuild their herds sooner than planned. When pastures dry up and hay becomes scarce or expensive, producers often have little choice but to reduce herd numbers, a process known as herd consolidation.
“This liquidation will have a long-term impact on beef supplies,” Botel said. Unlike crops, which can be replanted seasonally, cattle production follows a biological timeline. Even if prices encourage expansion, it can take years to rebuild a herd.
“If a producer currently has heifers, it could take two to three years before those calves enter the beef supply,” Botel explained. “There is no quick fix for a shortage like this.”
Why hasn’t demand for beef cooled down?
Despite rising prices, Americans are not moving away from beef. Swenson points to strong retail sales and changing food trends as key factors in keeping demand high.
“There’s an increased focus on protein in the diet,” said Swenson, a meat and livestock specialist with the Wisconsin Department of Trade and Consumer Protection. “People look at protein intake the same way they look at calories.”
Swenson says beef farmers are doing a great job of focusing on protein and improving the quality and taste of beef.
“Part of that is due to genetics, but cows are also spending more days on forage, which is resulting in higher marbling,” Swenson said. “People want beef because it has improved quality and consistency, so even with higher prices, demand is strong.”
Will ground meat become unaffordable?
Ironically, high-quality beef poses challenges for one of the most affordable cuts of meat. The higher the grade of beef, the less lean trim there is, which is an essential ingredient in making processed products like ground beef and snack sticks.
“Beef production so far this year is about 7% lower than last year, and cattle harvest is about 9% lower, although increased cow weight has offset some of the reduced supply,” Swenson said.
The scarcity of lean cuts is driving up the price of ground meat, even though cost-conscious shoppers are always looking for it as a lower-priced alternative. To fill that gap, beef imports are increasing, especially from countries like Brazil, Australia and Canada, Swenson said. Still, imported beef still accounts for a small portion of consumption, and is not enough to completely compensate for the domestic beef shortage.
Importing helps but doesn’t solve the problem
U.S. imports of cattle from Mexico, primarily feedstock cattle, remain largely suspended.
“Historically, Mexico supplied more than 1.8 million head of cattle to the United States annually,” Botel said. “With domestic calf supplies already tight due to herd consolidation, disruptions to feed cattle imports from Mexico will further tighten feedlot inventories and further reduce beef production. This will put upward pressure on wholesale and retail beef prices.”
Beef imports from countries such as Brazil, Australia, Canada, New Zealand and Mexico account for nearly 20% of U.S. consumption, increasing from 10% to 15% in recent years. Much of it is used to make hamburgers. Still, the money available to Americans this year is expected to be about 1 pound less per person than last year, Votel said.
“Imports are helping to supplement supply, but they are not large enough to completely cover the shortage,” Botel said.
What will happen to beef prices in the future?
The future of beef prices will be influenced by supply and demand. Simply put, either the demand for cattle goes down or the supply of cattle goes up, Swenson said.
“In the short term, beef demand is typically high through June, with some cuts, such as ribeye and other steaks, declining around the Fourth of July, when grillers turn to burgers, brats and hot dogs,” he said. “This could cause an overall decline in beef prices, but note that ground beef prices will rise in July and August. Long-term demand could be affected by price increases as customers seek pork and chicken instead of beef. We haven’t seen that happen yet.”
In the longer term, the outlook depends on whether supply catches up, which remains uncertain.
“Range conditions in many parts of the country are affected by ongoing drought, and feed supplies are tight. Many farmers and ranchers would like to increase their cattle herds, but conditions are not as favorable as they would like,” Swenson said.
High land, labor and interest rates continue to hinder expansion, as do aging owners.
“While many producers are reaching retirement age, younger generations are often reluctant to enter the business due to high start-up costs and financial risks,” Botel said. “Urban development has also reduced grazing land in some areas, limiting opportunities for herd growth.”
After all, high beef prices reflect a historic shortage that cannot be quickly resolved. Many analysts now believe it could take several years for the cow cycle to fully turn.
“Beef prices are likely to remain high until we see meaningful herd expansion,” Bortel said. “This is a supply problem that’s been years in the making, and it’s going to take years to fix.”
Swenson said many predict the pendulum will swing in the other direction in 2030.
“If that’s true, beef prices could remain high for another four years, but that depends on Americans’ appetite for beef,” Swenson said.
