Record Beef Prices Squeeze Herd Expansion
Record-high beef prices are giving some ranchers a profitable exit, but high costs and tight supplies are making it tougher for the next generation to get started in the cattle business.
Record-high beef prices are being driven by a historically small U.S. cattle herd, and analysts say supplies may stay tight for several years. USDA puts the national inventory at just 94.2 million head as of July 1, one of the lowest in decades. Drought, high costs and strong demand have all played a role in slowing herd recovery, even though conditions have improved in parts of California.
A California Farm Bureau Ag Alert explains that many ranchers are choosing to sell while prices are strong instead of holding calves back for breeding. Because it takes nearly two years before today’s heifers can start producing calves, economists don’t expect to see real signs of herd expansion until at least 2027.
Looking at the bigger picture, Bernt Nelson, an economist with the American Farm Bureau Federation, says ranchers nearing retirement often see selling as more attractive than borrowing money at high interest rates. At the same time, high prices and borrowing costs make it harder for newcomers to get established.
