Beef prices are at a record high. How a ‘perfect storm’ led to the increase

The week starts for Aaron Rees on Sunday afternoons. That is when customers drop off beef at his packaging facility in Fillmore, Utah. He doesn’t refer to the cows that are delivered as “cows,” for the most part, or “cattle” much either.

As someone who has been in the business his whole life, Rees calls cows what they are to the public. They’re beef.

Rees and the small team of folks he and his wife, Dana, employ — it’s a family affair, with a few part-timers and a lone full-time person — spend all day Monday slaughtering what came in over the weekend. This past week it was nine beef.

Tuesday to Friday is for cutting, or what he calls butchering, the eight to 15 cattle that he takes in weekly. Rees cut nine last week, too.

Once they’re finished with the cattle, he then heads over to a separate game cooler and butchers whatever hunters dropped off.

“It’s not for weenies, that’s hard work,” Rees said. “By the end of the day, if you’ve killed beef all day, you know you’ve done something.”

He and his wife own and operate Provident Meat Company, a slaughterhouse and packaging plant that also has a small retail operation out front. It’s 145 miles south of Salt Lake City, just a six-minute drive west off I-15, so folks who know can pass through and pick up steaks on their travels.

The shop’s open six days a week from 9 a.m. to 5 p.m., with a slight reprieve on Saturday when it closes at noon. A day later, everything starts all over again.

Though it’s more than a full-time job for the Rees family and small packers like them, the operation is done on a scale that hardly registers within the supply chain of the greater American beef industry, which is almost too massive to fathom.

Provident’s facility is 4,400 square feet — about double the size of the average American home — and processes less than 20 head a week. There are some facilities capable of processing 5,000 head a day. Those plants are well over half-a-million square feet with values running upwards of a billion dollars.

Of course, that doesn’t mean that Rees and his family are insulated from the larger, prevailing pressures of the industry. Nor are they without exposure to steep fluctuations in consumer beef pricing.

As of June, all uncooked beef prices are the highest they’ve been since the data was first tracked, beginning in the 1980s. They are nearly double what they were 10 years ago.

According to the Bureau of Labor Statistics’s most recent Consumer Price Index, ground beef’s price has gone up about a dollar per pound since last year, now costing over $6. That’s a nearly 12% increase year over year. For all other cuts, the price went up 8% to $11.49 per pound.

As all food items have only gone up a collective 2.7% in the last year, according to the report, beef prices stand out. Some headlines referred to beef as “the new eggs.”

(President Donald Trump has questioned information from the Bureau of Labor Statistics, and last week fired its commissioner after the most recent jobs report was published, claiming without evidence that she manipulated the data.)

“Our ribeyes went from $17 to $20 a pound, so that was a one week price change on that,” Rees said. “So when somebody walks in and all of a sudden that ribeye, instead of $35, is whatever the number is, they’re like, ‘well, maybe I’ll buy hamburger or something cheaper.’”

For small businesses like the Rees’ who juggle massive expenses and tight margins, that cumulative loss of revenue has an impact.

But for those familiar with the business and its dizzyingly large range of implicating factors, the increase is just another in a much longer story. One that is more akin to a saga, due to the scale of the forces — man-made and natural — that constantly force alterations and adjustments to the beef cattle industry.

“Obviously in the last CPI report, we saw that spike in beef prices,” said David Anderson, a livestock economist at Texas A&M University. “But we’ve been setting new records in beef prices using the CPI data for several years now.”

What these numbers reflect today, Anderson said, are part of a trend that goes back a long time. Trade plays a part, so Trump’s tariffs do affect prices. But mostly it’s a wide variety of things that include lower supplies due to smaller herds, sustained increases in overall demand, long term and significant drought and, still, some shocks from the pandemic.

“I think God’s got a plan and we’re fitting in it or not,” Rees said. “There’s just a lot of factors affecting ranches and farms right now.”

Supply and demand

A USDA spokesperson wrote in a statement to the Deseret News that the current prices are “the perfect storm” resulting from a combination of sustained demand and prolonged decrease in cattle supply.

Anderson takes that assessment and zooms in to explain the most recent CPI data.

The results are an indication of beef prices at the end of the spring, specifically. The timing coincides with the period when stores prepare for Memorial Day and the high demands of the summer.

“Everybody likes a hamburger and a steak and we’ve got grilling season kicking off,” Anderson said. “So we have this confluence of tighter supplies with good seasonal demand and that drives prices higher.”

The demand is not really seasonal, however. Rees referenced the wide variety of social media accounts or YouTube channels available to teach people how to make a brisket.

“In five minutes, you can find 20 different videos,” Rees said. Some with millions of followers.

“Think of all the trends in terms of hamburgers and all the big chains that have opened and expanded,” Anderson said. In addition, consumers want higher USDA quality grades, or “branded beef,” like Angus or Wagyu that have gained in popularity over the last several years.

But coupled with the demand is a much larger implicating factor. The one mentioned by the USDA spokesperson that’s not affected by the summer season: the overall supply.

Right now, “we have the smallest beef cow herd since (1965),” Anderson said. “We’ve got the smallest total cattle herd since the 1950s.”

According to the American Farm Bureau, the current American herd is 86.7 million head large. That’s the smallest it has been since 1951.

When you look at it in those terms, Anderson said it’s really quite simple to understand why prices are so high. “We’ve got less beef,” he said, “and people love the product.”

The pandemic effect

Rees grew up in southern Utah’s Wayne County in a family that ranched and farmed the area for generations. His family ran cows near Capitol Reef National Park and trailed them through the park every year.

Rees expected to ranch just like his forefathers had done for the rest of his life, but that dream was cut short in his 20s when his family sold its land and permits.

He and Dana left the area and found work on ranches and feed lots in Wyoming, Nebraska and Colorado. Eventually, they settled with their five kids back in Utah in 2018.

After managing other people’s ranches for them, the family bought into a herd of their own. Just in time for COVID.

In the lockdowns, the big corporate packing plants — 80% of all American beef is processed by four conglomerates — had to social distance, forcing worker days to be cut. With fewer people slaughtering and butchering the beef, the supply of available cattle increased dramatically.

At the same time, people stopped eating at restaurants, and did more shopping at grocery stores, which further lowered the overall demand.

“It was a perfect storm. Cows were not getting killed. ... So, the prices went through the roof on the actual beef. But the cow prices dropped through the floor because they weren’t killing enough,” Rees said.

In the tumult, Rees’ small herd became “mostly worthless.”

“We were selling them before (COVID), making 400 bucks a head roughly. By the time we sold the last of them, we were losing 400 bucks a head on them.”

Processing had become the bottleneck, and packers — those that slaughter, butcher and process for sale — were making a killing in the pandemic marketplace. Rees had done some butchering for hunters and decided to get into the business full time.

“The bottom line why I started this, because I’m not going to starve. I’m going to feed me and my family, and hopefully 500 or 1,000 families around us,” Rees said. “We’re not going to change the world, but we’re not going to starve either.”

Between 2020 and today, however, the price per cow shot back up and another act of nature influenced the change. Cows that were nearly worthless to Rees during the pandemic are now hitting record highs.

The smallest herd in decades

Cows eat grass, hay and other vegetation. The whole industry is dependent on plants, which require water in order to grow. And for the last 20 years, large parts of the cattle producing parts of the country have been experiencing severe and intermittent drought. Ones that climate change make longer, more severe and wider ranging, according to the U.S. Geological Survey.

With less water, there is less grass or other foods for cows to eat, which makes it hard for herds to replenish. Not only that, the price of feed goes up when there is less of it growing.

The USDA spokesperson wrote that the prolonged decrease in the supply of live cattle is “exacerbated by the drought conditions in cattle country in 2022 and 2023 which are contributing to fewer market cattle today.”

The drought in 2022 was especially devastating to the Great Plains states, including Texas. The conditions forced a lot of ranchers to sell off their herds to slaughter rather than try and cover the costs of feeding them.

In the Intermountain West, particularly the Southwest, drought has been a persistent problem, too, but for far longer than the last two or three years.

Droughts are now a true limiting factor in how quickly a rancher — or the whole industry — can expand the overall supply of cattle.

As a result, it isn’t just the cost of the feed that went up in the last decade, but the price of individual cows. With fewer on the market, the value of each has gone up considerably.

Single cows can now sell for thousands of dollars. They are often priced by a “live cwt” rate, which is the price per 100 pounds of the cow’s live weight. That number is around $230 right now. In 2020, it was lower than $100.

That new price tag also influences how many cows are in the herd. That’s because the cost of each cow is a major deciding factor in how ranchers manage their finances. Namely, whether they decide to sell their cattle for slaughter or keep them for breeding.

Bernt Nelson, an economist at the American Farm Bureau, wrote in a blog post about the state of the cattle industry, that “high cattle prices combined with the unpredictability of future prices and profitability could compel farmers to continue marketing a higher percentage of females for beef rather than breeding.”

“I’ve got a heifer that’s been born. Am I going to keep her and add to my herd, get her calves over her life and that return?,” Anderson explained. “Is that future return better than the check I could get for her today if I sold her?”

Trade and tariff impacts

The U.S. imports more than 4 billion pounds of beef every year. That’s 13% of its beef production, according to Anderson, and it exports around 9%. Historically, we exported more than we imported, but with high beef prices and an increased demand for inexpensive burger meat, those ratios have flipped in recent years.

“We export that to other countries that will pay a premium. We’re sending out a lot of good beef; we’re importing a lot of crappy beef,” Rees said.

A large amount of that beef trading is done with Brazil, Mexico and Canada. Three countries that are the recipients of Trump’s tariff-based attempts to address the U.S. trade deficits.

Brazil — which is home to the largest beef company in the world, JBS — is the recipient of a 50% tariff. Canada now has a 35% tariff, and Mexico has been granted a 90-day extension for trade talks to continue.

Trump’s work to secure lasting markets for beef producers abroad, the USDA spokesperson wrote, sends a strong message to American cattle producers to raise more beef and rebuild the herd.

Yet, those increases create uncertainty for ranchers, packers and the industry as a whole in the short term, even if there is hope that they might build more manufacturing and larger herds sometime in the future. Those cow herds are not going to grow overnight, and the impacts of the tariffs — that is, if they stay in place and Trump does not change them — are yet to be seen.

In the meantime, Anderson said that prices will continue to go up due to the lower supply and high demand — even before tariffs or continued drought are factored in.

“We may come down from that peak, but prices are going to still stay higher than they were a year ago,” Anderson said.

“Building back the herd will take time,” wrote the USDA spokesperson. “Decisions by cattle men and women have significant biological lags before beef makes its way to the store, but (Agriculture) Secretary (Brooke) Rollins is committed to reduce risk for cattle producers, deliver robust disaster relief to cattle country, and support new and beginning ranchers across the country.”

Struggle for survival

For Rees, he’s got his hands full in the here and now though — and he is busy. He and his family are working tirelessly as they try to make all these intermittent economic factors make sense.

“You tie up all that money, those beef hanging there and you’re sitting waiting on it,” Rees said. “You’re cutting constantly and killing constantly, just trying to keep the cash flow going through there to pay your bills, pay your help, pay your lights, all your stuff.”

Even in a version of America where folks like to eat and buy local, Rees acknowledged the scale of what he’s up against and the size of some of his competitors.

“Little plants like me, if all of them went away, it wouldn’t matter,” he said.

At the same time, Rees said that people — especially folks who’ve ranched and farmed like his family has done down in Wayne County — have always run up against big forces in their attempts to make a living.

“It’s been a struggle since pioneers got here trying to get water and it hasn’t changed,” Rees said. “It’s just different struggles.”