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Americans are paying a lot more for their favorite beef items.
According to the U.S. government's most recent Consumer Price Index report, beef and veal prices were up 4.2% in August 2024 compared to the same time last year.
“Ground beef and steak products would be 20% to 30% higher than they were three years ago,” said Kansas State University’s Ag Economics professor, Glynn Tonsor. “The U.S. beef cattle herd is fairly small by historic standards, so the amount of beef we’re producing is less than it was five years ago, and that has the effect of higher beef prices.”
It always comes back to supply and demand.
Ranchers across the country are downsizing their herds to survive the aftermath of drought, inflation and high interest rates.
“Everything we do has gone up in price, whether it be, you know, parts for machines or input for fertilizer or feed,” said Randall Debler, a Kansas rancher. “Our leverage is pretty high and interests rates make a big impact on us and our ability to move capital and to expand or try a new venture, you know, any of that.”
Debler hates to do it, but this usually means charging his buyers a little more for the same beef items. That explains why customers pay more at grocery stores.
The good news is Tonsor thinks farmers will start to expand their herds again next summer.
However, the situation will get worse before it gets better.
“Cause we take some females out of the production system to expand the herd, but then fast forward after that, we’ll actually have more beef being produced,” said Tonsor. “That will lead to cheaper beef prices eventually, because we’ll have more supply available. But please notice I said eventually, that’s a multi-year story.”
It is a multi-year story that is contingent upon what events effect both domestic and foreign markets. For example, the war in Ukraine and low water levels in the Mississippi River are both impacting exports of grain.
While the road to stability feels long and uncertain, Debler hopes consumers will come along for the ride.
"As they go up, they'll come back down again," Debler said. "But just hang in there with us 'till we get to that point.”