Over the past couple of years, you may have noticed higher prices and less availability for beef at your local grocery store. There’s a good reason for that – the United States is currently experiencing a beef shortage. This article will explain what’s causing the shortage, how it’s impacting consumers and farmers and what the future could hold for beef prices and availability.
What’s Causing the Beef Shortage?
There are a few key factors contributing to today’s beef shortage
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Smaller cattle herds – The total number of cattle in the U.S. is the lowest it’s been since 1951. After years of droughts and high feed costs many farmers reduced the size of their herds. There are simply fewer cows to harvest beef from.
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Increased exports – While domestic beef production has declined, global demand for American beef is surging. In 2021, the U.S. exported a record 1.44 million metric tons of beef, leaving less available for American consumers.
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Supply chain issues – Like many industries, the meat supply chain has been disrupted by COVID-19, labor shortages, and transportation challenges. This has slowed down beef processing and distribution.
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Changes in land usage – Previously grazed grasslands are increasingly being used for urban development and crop production instead of cattle ranching. This further limits beef production capacity.
How is the Shortage Impacting Consumers?
The most obvious effect of the beef shortage for consumers is higher prices at the grocery store. The average retail price for fresh beef is up 16% from last year. Some specific cuts like ribeye steak cost 25-30% more than their 2021 price.
Besides paying more, consumers are also seeing less selection when they shop for beef. Many stores don’t have their full inventory of steaks, roasts, and other beef products. Some restaurants have had to remove beef menu items entirely due to lack of supply.
There’s also been a noticeable drop in quality as retailers accept whatever beef they can get their hands on. Steaks are being cut thinner to stretch supplies further. Lower grades of beef are making it into ground beef packages.
The Outlook for Beef Prices and Availability
Experts don’t see the beef shortage resolving anytime soon. The USDA predicts commercial beef production to drop another 3-4% in 2023. Making matters worse, demand remains strong both domestically and for export. This mismatch of low supply and high demand will continue driving prices up.
It likely will take years to rebuild cattle herds to pre-shortage levels. The beef industry is constrained by the 2-3 year lifespan of cattle. Even if farmers start increasing herd sizes today, it takes time for those cattle numbers to rise.
The good news is consumers do have some options to mitigate the price and availability challenges:
- Purchasing alternative proteins like chicken, pork, fish, and plant-based meat
- Only buying beef for special occasions or recipe needs
- Checking prices across multiple stores and buying from the lowest-priced retailer
- Buying larger, less expensive cuts and portioning the meat at home
While the beef shortage is frustrating for consumers, it’s even tougher on cattle ranchers and farmers. After covering the high costs of feed and land, they’re actually seeing very small profits from today’s high beef prices. Many are struggling to break even or are operating at a loss. The industry needs structural changes to become sustainably profitable over the long-term.
Climate Impact on Beef Supply
Droughts have been affecting the West and Great Plains regions for the last couple of years. Droughts occur when an area or region has experienced below-normal levels of precipitation, which leads to reduced soil moisture and crop damage. One of the main reasons for the decline in cattle herds is the diminishing quality of pastureland across the Midwest due to the ongoing drought. Beef cattle herds have been declining since 1975 and have reached a 61-year low, according to the U.S. Department of Agriculture.7
In addition, when climate conditions are not favorable, crops like corn and soy suffer which can increase the cost of feed, therefore, increasing the cost to raise cattle. Some of the cattle liquidation has been a result of increased feed costs compared to other animals. Fortunately, feed costs are coming down which could help cattle farmers feel some relief.
Beef Supply Chain Constraints
Despite increasing beef prices, the demand for beef has remained strong as consumers claim they will continue to purchase beef. Unfortunately for beef manufacturers supply is declining and is expected to be 56 pounds per capita in 2024, 1.9% lower than 2023.2 This is due to the contraction of beef heards, ongoing drought, higher producer input costs, supply chain issues, and more. Which means beef manufacturers will be faced with narrowing margins in 2024.
In the face of historically high cattle prices, margins are going to suffer. The biggest question for manufacturers is when the domestic herd is going to recover from years of liquidation. Previously, opinions were split down the middle. Some outlooks were saying the herd would be replenished by 2025, and others were saying short supply and high cattle prices will continue well into 2025.3,4 However, new predictions show we can expect to see continued struggles in 2025 and beyond. According to RaboResearch, analysts predict that per capita beef supplies in 2025 will be 58.8 pounds, a dip from an estimated 59.6 pounds in 2024.5
As beef supply tightens, consumer shopping decisions will determine the outcome of cattle prices. If consumers continue to buy beef at higher prices, then cattle and calf prices will continue to rise. However, if consumers stop purchasing as much beef, cattle prices may see more resistance. These concerns will continue to trouble the beef cattle industry if supply does not start to bounce back.
Fortunately, consumers in the United States are willing to pay around $9/lb for steak, which is within current pricing, however, prices are expected to reach record highs in the upcoming months–approaching nearly $10/lb. This will likely result in a consumer shift to less expensive cuts rather than a complete avoidance of beef, but will still have an impact.6
Why There’s a Meat Shortage in America’s Grocery Stores
FAQ
Why is there a shortage of beef right now?
The supply issue is due to current high stocker prices and drought. Drought means the big cattle producers can’t increase herd size. This means the rest of the country is weighing the value of a 700lb heifer today for beef sale or keeping her and selling a calf in two years.
What caused the beef shortage?
Unlike with eggs, this latest supply shortage isn’t caused by an illness. Rather, cattle ranchers blame the high costs of supplies for keeping herds fed and transporting cattle from the west to east coast. Cattle ranchers across the nation have been facing a supply and demand struggle, driving beef prices up.
Why is there a beef stock shortage?
Agricultural economists blame it on an ongoing drought, along with high feed costs and inflation.Feb 15, 2024
Where do the US get most of their beef?
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Texas and Southwestern Cattle Raisers Associationhttps://tscra.org‘We have 94 million cows. Why do we import beef?’ (And answers to other …Jul 6, 2020 — Specifically, a lot of the beef the United States imports is frozen 90% lean trim from Australia and New Zealand, which is blended into 80/20 grinds …
Is there a beef shortfall?
There is now a national beef shortfall. Thankfully, imports have saved the day. As recently as 2022 America was a net exporter of beef. That has now reversed. Last year imports totalled 2m head of live cattle and 4.6bn pounds (2.1bn kg) of beef—a record high. This has contained price rises.
Does JBS beef have a beef shortage?
JBS Beef North America, in contrast, posted a healthy profit in its 2023 third quarter. But for its US beef division, a shortage of cattle for slaughtering will remain a challenge in the fourth quarter and in 2024, director Wesley Batista Filho told analysts.
Will a beef shortage be a challenge in 2024?
But for its US beef division, a shortage of cattle for slaughtering will remain a challenge in the fourth quarter and in 2024, director Wesley Batista Filho told analysts. The unit’s adjusted EBITDA in the quarter was $103 million, with an adjusted EBITDA margin of 1.7%. EBITDA in the 2022 third quarter was $481.1 million for an 8.7% margin.
What causes a decline in cowherds & beef production?
Contributing Factors With the decline in U.S. cowherds and beef production, Barkley says the main contributors to this issue include climate change, drought and consumer consumption patterns. In addition, higher feed prices, input costs and interest rates, paired with strong demand, has resulted in lower U.S. production.
Why are beef prices so high?
Despite the increase in cow carcass weights, the U.S. beef industry is experiencing a considerable decline in production, contributing to inflated consumer prices. Many factors come into play, including environmental challenges and changing consumer consumption patterns.
Why are cattle prices so high?
As many producers exit the industry, the reduction in supply exacerbates the situation. For cattle producers, these high prices are welcome, but for consumers, the story is quite different. Beef has been a significant contributor to food inflation in recent months, outpacing general inflation.