Beef prices are skyrocketing as U.S. herd shrinks

The supply of cattle has fallen in recent years to the smallest level since early 1950s.

- By Enpa CURRAN AND ILENA PENG

KACIE SCHERLER and husband Zach Abney run a cow-and-calf enterprise.

(NICK OXFORD Bloomberg)

While inflation has cooled from its pandemic-era peak, prices at grocery store meat counters are skyrocketing with no relief in sight.

Beef costs have risen faster than most other items in the consumer price index, with the broad beef and veal category up 15% over the past year as of January. Uncooked ground beef reached a fresh record after soaring by the most since June 2020 in government data released Friday. The gains are a standout from the rest of the consumer grocery basket, where things have broadly improved. Chicken prices rose only by 11% in the past 12 months, while milk was little changed.

The blame game for what's behind the beef price surge has pressured the White House to respond. President Trump has vowed to increase competition in beef processing and boosted Argentinian beef import quotas to ease supply.

But it’s not that simple: The U.S. cattle herd has shrunk in recent years to the smallest since the early 1950s because droughts and higher production costs, including elevated interest rates, have made raising the animals more expensive.

Although the cattle industry is cyclical, the current contraction has lasted longer than expected because there’s a lot more money to be made selling animals for slaughter while very young rather than keeping them to expand herds.

At current levels, any expansion in the U.S. herd would at the earliest make it to the retail counter in 2028, keeping beef prices elevated for longer, said Don Close, a senior animal protein analyst at Terrain Ag.