In the United States beef prices have soared in recent months. This unprecedented growth has led to calls for some type of intervention in order to reduce the stress on consumers’ wallets. The last week of September, the average price for a pound of ground chuck reached $6.33, according to USDA data. That’s an increase from $5.58 only one year before. Both consumers and industry insiders are concerned about the spiraling costs. Between September 2021 and September 2022, retail prices for ground beef went up 12.9% and beef steak prices jumped 16.6%.
We know prices are increasing at an alarming rate. This spike comes at a historical cattle inventory low by nearly 75 years. Per capita consumption of beef has been declining since 1980, and the number of U.S. beef cattle farmers and ranchers has consistently been on the wane. Since 2017, we’ve lost more than 150,000 cattle ranches, a 17% decrease in ranching operations. The market for beef is quickly becoming an oligopoly. Today, four companies control more than 80% of the slaughtering and packing business.
Faced with that challenge, former President Donald Trump made an audacious pledge. He called for increased U.S. beef imports from Argentina where U.S. purchases could increase four-fold. A lot of industry experts aren’t convinced that this strategy would actually lead to lower prices for American consumers.
“It’s important to understand that unless we have a market, you’re a fool to get into the cattle business,” stated Austin Frerick, an industry analyst. He described the prejudices ranchers experience for being squeezed in a consolidated market that gives them no leverage to negotiate.
This is in addition to a new U.S. Department of Agriculture package recently unveiled to strengthen domestic beef production. Other aspects of this initiative involve opening more public land to cattle grazing and funding small meat processors. Proponents – including cattle producers and industry experts – are calling for these measures as critical steps to revitalize the beleaguered cattle sector.
Derrell Peel, a professor of agricultural economics, expects prices to remain elevated. He’s confident this trend will continue through at least the end of this decade. He attributed this trend at least in part to years of reduced cattle herds. Drought and other compounding conditions have taken a harsh toll on ranchers across this country.
07 Ranchers like Christian Lovell have seen the impact of climate change on their operations. “Parts of my farm that were lush and grassy when I was a child have now dried up,” Lovell remarked, highlighting the limitations on grazing areas for his cattle. This sentiment illustrates an increasingly common feeling among ranchers that environmental kickbacks are impacting ranching as a way of life.
Mike Callicrate, a veteran cattle rancher and food activist. He shuttered his 300-cow operation in South Dakota way back in 1985 and to his credit, he focuses on the long game here. “We’re not going to rebuild this cow herd – not until we address market concentration,” he asserted, underscoring the critical need for reform in the beef industry.
So, the prices just continue to go up, making ranchers’ margins tighter and tighter. At the same time, they are hit with skyrocketing costs for their essential inputs, including fertilizer and equipment. Brenda Boetel, an agricultural economist, explained that “the cattle herd has been getting smaller for the last several years, yet people are still wanting that American beef – hence the high prices.” This double whammy makes for an inhospitable environment for producers and consumers alike.
Our ranchers are legitimately concerned about both supply issues and price gouging. They further argue that the present excessive consolidation in industry is detrimental to fair competition. Justin Tupper commented on the potential impact of Trump’s import plans: “I don’t see that lowering prices here at all,” indicating a belief that imported beef may not provide a viable solution to rising costs.
Bill Bullard, an industry advocate, added that Trump’s focus on imports fails to address underlying issues within the market structure. “He’s focused on the symptoms and not the problems,” Bullard stated, suggesting that solutions must tackle deeper systemic issues affecting ranchers’ ability to thrive.
This convergence of factors has lead to what many in the industry are calling a “broken market”. Christian Lovell encapsulated this sentiment by saying, “You put all these together and you have a recipe for a really broken market.”