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US beef prices hit records as cattle shortages squeeze farmer profits
Record calf auction bids around $2,500 for 600 lb animals are offset by higher costs, after drought left the US with fewer cattle than any time since 1951.
US beef prices have surged to record highs, but farmers say they are not earning more profit as meat costs rise faster than general inflation. BBC Business, via its Follow the Money series, traced the US beef supply chain to examine how the price jump is affecting producers.
The outlet reports that the driver is a shortage of cattle, with drought and disease pressure leaving the US with fewer cattle than at any point since 1951. In South Dakota, rancher Eric Gropper, who keeps about 350 breeding cows across roughly 8,000 acres of grassland, says drought has dried up the water sources on his land, forcing him to rely on a water tanker.
While Gropper and other beef farmers are seeing the highest auction bids he has ever seen, about $2,500 for a 600 lb calf, he says costs have climbed just as sharply. BBC Business says input prices have jumped since the Covid pandemic, including a pick-up truck price rising from about $40,000 to $100,000, fence posts increasing from about $6 to as much as $19, and a quarter-mile roll of barbed wire doubling from $60 to $130.
Because more than 60% of US cattle are grazing on drought-hit land, farms like Gropper's also have to buy hay, silage, and other fodder, adding to the squeeze on margins even when cattle prices are strong, according to BBC Business. The report concludes that the cash flow implied by higher beef prices is being overwhelmed by the higher cost of getting cattle raised and ready for sale.