Small US cattle herd is one reason beef prices are so high

U.S. beef prices have soared to record highs as the nation’s cattle herd has shrunk to its smallest size in more than 75 years, creating a supply-demand imbalance that shows little sign of easing in the immediate future.

The average price of uncooked ground beef reached $6.86 per pound in March, just 3 cents below the all-time high set in February, according to federal data. This represents nearly a 48% increase from March 2021, putting significant pressure on consumers’ grocery budgets.

“They’re good times, and they’re bad times,” says Stephanie Hatzenbuhler, who runs the Diamond J Angus ranch near Mandan, North Dakota, where about 700 calves will be born this spring. Her 2,000-acre operation exemplifies the dilemma facing U.S. ranchers: whether to expand herds to capitalize on high prices or maintain current numbers due to persistent challenges.

The U.S. cattle inventory has declined dramatically from its peak of 132 million head in 1975 to just 86 million today. Despite this reduction, technological advances in genetics and feeding techniques have allowed ranchers to produce more meat per animal. In 2022, U.S. beef production reached a record 28.4 billion pounds, with production expected to remain strong at about 26 billion pounds in 2026.

Persistent drought conditions represent perhaps the greatest obstacle to herd expansion. Approximately 63% of the U.S. cattle herd is located in drought-affected regions, according to USDA data. This scarcity of water and grazing land has forced many ranchers to reduce their herds rather than expand them.

“You’ve got to have rain. You’ve got to have grass to keep cows on because they’re out on pastures for over half the year, and so that’s been the dilemma,” explains Tim Petry, a livestock marketing specialist at North Dakota State University.

Feed costs represent the largest expense for cattle operations. In drought-stricken regions like Texas and Oklahoma, ranchers must import hay and water from distant locations, significantly increasing production costs and making herd expansion financially risky.

“When these pasture conditions deteriorate, and water becomes an issue, some of these states have to go as far as to haul hay, haul water from other regions of the country that have grass and easy access to water, and that adds a significant cost to operations,” says Bernt Nelson, an economist with the American Farm Bureau Federation.

Even if ranchers decided to increase their herds today, the biological reality of cattle production means consumers wouldn’t see price relief anytime soon. It takes 15 to 24 months for a calf to mature to slaughter weight, creating a significant lag between production decisions and market impacts.

Industry concentration has also been cited as a factor in high beef prices. Four major companies dominate meat processing in the United States, leading some ranchers to blame this market concentration for the price discrepancies between what consumers pay and what producers receive.

The Meat Institute, a trade group representing processors, disputes this characterization. In a statement, the organization noted that retailers and food service companies—not processors—set consumer prices, and argued that the concentration ratio in the industry “hasn’t changed appreciably over the past 30 years.”

John Robinson, a spokesman for the National Cattlemen’s Beef Association, acknowledges the complexity of the situation. “It’s far more complicated than most people will give it credit for,” he says.

Another significant factor affecting beef prices is the closure of the U.S.-Mexico border to livestock imports due to an outbreak of New World screwworm, a flesh-eating parasite. This closure has prevented approximately one million cattle from entering the U.S. market since late 2024, particularly impacting feedlots and ranchers in the southern plains.

While President Donald Trump has called for increased beef imports from Argentina to help address supply shortages, experts note that the expanded quota would represent only a small fraction of U.S. beef production.

For established ranchers who own their land and equipment outright, the current market provides solid financial returns. Hatzenbuhler notes that it’s “a good time to raise cattle” for those already established in the business. However, high costs for equipment, fertilizer, and labor make it exceptionally difficult for newcomers to enter the industry.

California rancher Mike Williams agrees that current prices are finally providing fair compensation for producers. “I think people are starting to realize the value of beef, and they’re finding that they’re willing to pay maybe a little more than they have in the past for the quality of the product that they’re getting,” he says.

Until weather conditions improve across cattle country and ranchers can confidently expand their herds, the fundamental supply-demand imbalance is likely to keep beef prices elevated for American consumers in the foreseeable future.