U.S. Cattle Herds at Record Low

American ranchers are currently dealing with the smallest cattle herds seen in 70 years. A combination of years of drought, escalating costs, and an aging workforce has severely impacted cattle numbers nationwide. Ranchers and agricultural economists seem to agree that rebuilding these herds will take quite a while, and the price of beef isn’t expected to drop anytime soon.

“The most significant factor is definitely the drought,” remarked Eric Velasco, who heads the agricultural economics department at Montana State University. Years of dry conditions have devastated grasslands in the West and Plains, leaving ranchers struggling to find sufficient forage and water for their cattle. Many are even selling off cows that are key for future breeding, making recovery even harder.

“This is not going to be a quick fix,” Velasco stated. “It’s not something that will resolve overnight.”

He emphasized that the lingering effects of prolonged drought mean consumers will continue to feel the financial strain until ranchers can start rebuilding their herds. “The primary reason for high prices is the lack of inventory rebuilding,” he pointed out, suggesting that prices likely won’t decline until there’s a recovery.

Derrell Peele, an agricultural economics professor at Oklahoma State University, echoed these thoughts, pointing out the hurdles the livestock industry faces in rebuilding. “Honestly, there’s not much anyone can do to change this situation quickly,” he said. “We’re in a tight supply, and it took years to create this scenario, so it’s going to take a considerable amount of time to unwind.”

Peele, who is knowledgeable about livestock marketing, noted that easing pressure on beef prices isn’t simple, as it takes about two years to get cattle to market and several more years to repopulate herds.

As ranchers await recovery, ongoing dry conditions are still wreaking havoc, converting pastures into dust bowls and causing feed prices to soar. A study from the Kansas City Federal Reserve indicated that each severe drought typically leads to a 12% reduction in hay production in cattle-raising areas, causes a 5% increase in hay prices, shrinks herd sizes by about 1%, and reduces farm income by roughly 4%.

Consequently, many ranchers are downsizing their herds. A recent Farm Bureau study revealed that around two-thirds of ranchers have sold off livestock, leading to herds that are approximately one-third smaller than they were previously.

Cole Bolton, who runs K&C Cattle Company in Texas, reinforces the struggles faced by ranchers. “It’s going to take a while to fix this cattle shortage crisis. My advice to consumers is simple: be patient. We need time to rebuild,” he shared. Bolton noted that his region had not experienced rain for nearly three months until recently, highlighting the ongoing hardships the livestock industry has faced over the past five years, including market instability and extreme weather conditions.

The pressure is palpable not just on ranches but also in grocery stores. Retail beef prices climbed from about $8.51 per pound in August 2024 to $9.85 per pound the following year, reflecting a substantial increase of approximately 16%, according to USDA data.

The “5 market steer price” indicates how much ranchers can expect to earn for a live cow before it gets processed, while the “farm-to-retail” spread covers all post-processing costs and profits associated with selling beef in stores.

Notably, the bulk of the profits from beef processing is concentrated among the four major meatpackers: Tyson Foods, JBS, Cargill, and National Beef. This suggests that while ranchers may see slight increases in earnings for their cattle, the significant price hikes occur much later in the supply chain.

Despite the soaring prices, the demand for beef remains strong, and Americans continue to purchase more than ever before. Beef sales accounted for $44.3 billion over the past year—surpassing chicken, pork, and turkey—with a 12% increase, as cited by Beef Research.

Glynn Tonsor, a professor of agricultural economics at Kansas State University, mentioned that robust consumer demand is likely to persist. “Nothing is compelling consumers to pay more for beef at the grocery store; people are choosing to do so,” he explained. “The appetite for beef is strong, driving prices higher, regardless of the supply situation.”