In most years you don’t think a lot about beef prices, and especially not about how the beef in the grocery case even gets there. Today’s record prices, though — the national average for sirloin is $14.11 per pound — are attracting a lot of attention from consumers, and politicians. So much so that President Trump recently relaxed tariffs on 300,000 metric tons (about 661 million pounds) of imported beef to bring down costs.
But high beef prices didn’t just happen overnight. They’re not going away anytime soon, either. Because getting a steak or a burger to your plate is a long, complicated process. And both the price and the process of beef have been greatly disrupted by a multiyear drought as well as high feed costs and herd liquidation that have undone more than a century of stability within the industry. For consumers, the only near-term solution is to eat something else.
To understand beef prices, you have to understand how the cattle and beef industry works. The price you pay for beef covers an enormous set of production, processing and marketing activities. Also, land, animals, feed, shipping, labor, meatpacking plants, packaging. And then more shipping — all the way to the workers stocking the meat cases at your local grocery store and the servers in restaurants bringing food to your table.
This is not, by any means, fast food, even if that’s how you consume it. The fresh beef you get today was slaughtered within the past two to three weeks, but the animal it came from was probably born more than two years ago. Breeding cows produce one calf per year, and each calf is typically weaned at about seven to eight months old, then grown for several months before being fattened in feedlots for five to seven months more.
When cattle are ready for the butcher, they are roughly 15 to 20 months old. So the total production time is about 24 to 30 months.
Who gets the money from your roast beef purchase? On average, according to my research, ranchers might take about 33.3 percent of the price you pay at the grocery store; the stockers, 6.4 percent; feedlots, 18.3 percent; the packing sector, 10.3 percent; and retailers, 31.7 percent.
The profit margins each sector gets are always skewed. The better ranchers do, the worse meatpackers do. Today, the cattle rancher share is 37 percent higher than average, according to my calculation, which helps explain why companies such as Tyson Foods are closing plants — and laying off hundreds of workers — even with record high beef prices.
Since the late 1800s, the beef industry has gone through more or less regular inventory and price cycles. These self-correct under normal circumstances, just like any other commodity. But these are not normal circumstances. The years of widespread drought forced ranchers to cull their herds from 2021 into 2026. The beef cow herd totaled 27.6 million head as of January, the smallest inventory since 1961 — and there are about 160 million more American mouths to feed.
A smaller herd, of course, means bigger prices. Fewer cows yield fewer calves, which in turn lowers beef production.
That cycle is hard to break. Ground beef makes up about 48 percent of the total beef consumption. Our supersize hamburger habit helps explain Mr. Trump’s decision to increase imports — a decision that is highly unpopular with cattle ranchers because the news of it threatened to knock down the price they were getting for their animals.
But it won’t change the fundamental problem. Beef exports and imports can only offset each other — we export products Americans don’t want and import the ones they do.
Consumers may have a bigger role to play than government, by switching to cheaper sources of protein. We’re already seeing it.
The McDonald’s chief executive, Chris Kempczinski, has acknowledged that higher beef prices are a drag on sales. Wendy’s has shut more than 285 locations. Steakhouses such as Outback and Quaker Steak & Lube have closed some restaurants, too. The increasing popularity of GLP-1s is probably playing a part, too. Eventually, softened demand will help ease price pressures.
The federal government, desperate to lower prices now, has taken steps intended to help ranchers and lead to increased beef supplies. They include expanding public grazing land access, making it easier for small ranchers to grow their own cattle herds and combating wildlife predators such as wolves. None will have any appreciable immediate impact on prices.
The administration has resorted to placing blame on the big meatpackers and retailers. Those accusations and investigations, too, will likely come up empty. Multiple academic research and government investigations of the beef industry over the last 50 years have consistently failed to uncover significant anti-competitive behavior. Foreign ownership of domestic beef packing is a particular focus, which is ironic because the biggest potential beneficiary of increased beef imports is Brazil, whose major beef companies own or invest in American beef packing companies.
The government’s grandstanding has only fomented uncertainty and volatility, increasing risk for U.S. cattle producers and delaying the industry’s recovery. There is no single culprit here — not cattle producers, or packers, or retailers. Or presidents past and present. The high prices result largely from adverse weather conditions — climate change may be a contributor — with consequences that are rippling through an incredibly complex set of cattle and beef markets.
We can’t grow cows any faster. We can’t make the weather better. And we are only just starting the process of rebuilding the herd, which requires holding some heifers back for breeding — a process that will make tight supplies even tighter. For the rest of the decade, then, expect inventories to remain constrained and prices to remain high.
Beef, it’s the new oil.
Derrell S. Peel is regents professor of agribusiness at Oklahoma State University. He has served as the O.S.U. Extension livestock marketing specialist since 1989.
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