High beef prices are 'the new normal' for Americans

After years without profits, U.S. cattle ranchers resist
growing their herds. (Photo by K. Sikkema, Unsplash)

Even as U.S. consumers keep complaining about high beef prices and government officials, including President Donald Trump, have pressured cattle ranchers to lower their prices, American livestock owners have a message for both groups: Get used to paying more for red meat. Patrick Thomas of The Wall Street Journal reports, "High prices are the new normal in the U.S. beef market."

Roughly five years ago, livestock owners were barely scraping by as they contended with high input prices, drought, wildfires and paltry payments from meatpacking companies. To cut costs, they reduced their herd sizes.

Now that beef prices have consistently risen, and consumer demand has remained robust, "ranchers are reluctant to erode their strongest profits in decades by increasing the size of their herds," Thomas explains. "As a result, the U.S. cattle herd is at its lowest level in 75 years."

In January, "ground-beef prices were up 17% from a year earlier, compared with a 2.1% rise for all other groceries over that time," Thomas writes. Beef remains a protein favorite for many Americans who continue to purchase it despite price hikes.

Cattle ranchers, who are finally seeing some profits, have opted to channel money into long-stalled repairs and paying down debts. Other ranchers are investing in breeding plans "that could yield juicier steaks — and possibly land them bigger paydays," Thomas explains. But most don't plan to increase their herd sizes.

All told, U.S. consumers can expect to pay more for beef in the foreseeable future. Thomas adds, "Meatpacking companies have signaled that a smaller beef supply is here to stay."