Why Are Beef Prices Soaring?

Rows of fresh cut beef in the coolers of the retail section at the Wight's Meat Packing facility in Fombell, Pa., on June 16, 2022. (Keith Srakocic/File/AP Photo)

First, it was eggs, and now it’s beef. Just in time for grilling season, beef prices continue to rise. And although the overall economy is contributing to the increase, other factors are at work.

With budgets already stretched, the thought of additional costs to your meal is frustrating. But how high are beef prices expected to go? And why do they continue to increase?

Americans Like Beef

Americans like their beef. From hamburgers at McDonald’s to grilled steaks, Americans have enjoyed beef for decades. And in the past, the producers could fill the beef order.

For example, the average American had 56.2 pounds of beef available to them in 2021, according to the U.S Department of Agriculture (USDA), and they consumed 54.5 pounds per person.

Beef Price Forecast

But those hamburgers and steak are increasing in price. Beef and veal prices rose 1.3 percent in April 2023. That’s the largest monthly increase since October 2021, according to the USDA. The USDA predicts an additional increase of 0.7 percent in 2023. The USDA predicted an increased interval of -4.1 to 5.9 percent.

This contradicts a report by the global investment firm BTIG that anticipates a 15 percent increase in beef prices. It expects prices to remain high until 2025.

Why Beef Price Increase

The main culprit for the high prices is cattle inventories. They are at the lowest level in more than 60 years, according to the USDA.

A drought in the West hit in 2020. Cattle producers had to use groundwater for their herds instead of relying on rain. It also affected forage. Nearly 93 percent of beef cows were in states with poor pastures.

Because the drought-affected forage, producers were forced to purchase alfalfa. The producers had to deal with record-high alfalfa prices.

It became more cost-efficient for beef producers to liquidate their herds in 2022, leaving shortages in 2023.

This isn’t the first time that drought has affected beef supply. The current cycle started in 2014. Before that year, there was a significant drought. Following that drought, America had five years of beef expansion. But with the new drought starting in 2020, diminished herds began again.

The National Weather Service (NWS) expects drought to continue from Kansas to Texas. The NWS is optimistic for the Dakotas, Nebraska, eastern Montana, and Wyoming.

In April 2023, several cattle states had high percentages of poor to very poor pasture conditions. Oklahoma and Texas, two large cattle producers, had 58 and 57 percent, respectively, poor or very poor crop conditions. Texas is the number-one beef producer in the United States, with Oklahoma coming in second.

Economy Factors Into Beef Prices

To make matters worse for livestock producers, the economy created challenges. In 2022, diesel and fertilizer doubled in price. In some areas, these costs tripled. These costs put additional pressure on feeding and shipping cattle. The cost of a ton of alfalfa increased 14 percent from 2021 to 2022, according to a New Mexico alfalfa variety test report.

Combining the economy with the weather conditions, it was a perfect storm for cattle producers.

Do Beef Producers See Higher Profits

Cattle ranchers aren’t making a killing on the high beef prices. The South Carolina Cattlemen’s Association noted that input costs are at a record high. It just costs more to produce beef. And farmers aren’t seeing any greater return at auctions.

Beef Producers Selling Direct

When possible, consumers try to buy directly from beef producers. Many cattle producers are recognizing the demand and selling their livestock locally. Restaurants and individuals can save and receive fresh meat.

The producer takes the cattle to the processor and consumers pick their meat up there. It cuts down on costs for everyone.

High Beef Price Alternatives

Chicken will be a likely alternative in 2023. Previously, chicken prices were inflated due to inflation and pathogenic avian influenza that struck down flocks. But the industry has recovered, and a substantial deflation of prices is anticipated. Poultry prices are predicted to drop 9 percent in the upcoming year.

If you really must have beef, the cut you purchase could save you money. Some butchers recommend opting for flank steaks and sirloin instead of pricier cuts. Talk to your butcher about different cuts. You can satisfy your beef need and help your wallet.

Meat Prices Moving Up Rapidly

Although not as severe as the 70 percent increase in eggs in 2023, meat prices are expected to increase. The anticipated 15 percent increase on beef tops increases on fish, at 4.2 percent, and even peanut butter, at 3.6 percent.

And although some of the increases result from drought, the economy, with its supply-chain problems, high fuel prices, and labor shortages, have influenced current and future beef prices.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.