California Ag Network

Tag: Beef Production

  • Experts Discuss Factors Driving Up Beef Prices

    Americans love beef. Reportedly, a typical American eats three hamburgers a week. Yet Americans shopping for ground beef, New York strips, or sirloin in 2025 are paying for that love through extreme sticker shock as prices continue to skyrocket.

    “We are in the middle of a classic cattle cycle downturn,” said agribusiness expert Mario Ortez Amador. “U.S. beef production is declining because the national herd has shrunk to its lowest levels in decades.”

    Economic expert David Bieri concurs. “Tariffs are playing a secondary but important role in beef pricing that consumers are seeing right now, with the impact becoming more pronounced in recent months,” Bieri said.

    What is driving the reduction in beef production in the U.S.?

    “Incentivized by high cattle prices and high input costs, many ranchers reduced their breeding herds — both by culling older cows and by selling heifers that otherwise could have been kept for breeding. The result is fewer calves coming through the pipeline,” Ortez said. “Because it takes about 18-24 months for a calf to reach slaughter weight, production is relatively unresponsive to price signals in the short run. Even though beef prices are high, it takes time for producers to rebuild the herd and bring more beef into the market. This is a classic feature of food production, crops take time to grow, livestock does too.”

    “Incentives also matter,” Ortez said. “With cattle prices at record highs, ranchers often prefer to capitalize on today’s market rather than wait years for future returns. In economics we say a dollar today is worth more than a dollar tomorrow — and that mindset reinforces the short-term liquidation of cattle rather than long-term herd expansion.”

    To what degree are tariffs playing a role in pricing consumers see right now?

    “The primary factor driving record-high beef prices is a severe supply shortage — by some metrics, the U.S. cattle herd is at its smallest level since 1951 — because of multiyear droughts that increased feed costs, so ranchers are selling cattle rather than breed them,” Bieri said. “Tariffs are adding to this supply pressure, above all the 50 percent tariff on Brazilian imports since Aug. 1, affecting Brazil’s roughly one quarter share of all U.S. beef imports.”

    What would it take to see beef prices return to more affordable levels?

    “On the demand side, beef demand has been remarkably resilient,” Ortez said. “Despite higher retail prices, consumers continue to value beef strongly in their diets. When you put constrained supply together with steady demand, you get the record beef prices we’re seeing today.

    “Prices will only ease once the national herd begins to rebuild. That process starts when producers stop liquidating cows and begin retaining more heifers for breeding. But those heifers won’t calve for two years, and the resulting calf will take another 18 months to reach market weight. That means it could be several years before supplies increase enough to meaningfully pressure prices downward,” he said.

    About Ortez
    Mario Ortez Amador is a collegiate assistant professor of agribusiness and entrepreneurship in the Department of Agricultural and Applied Economics. He was recently named the James A. and Renae C. Pearson Collegiate Faculty Fellow by the Virginia Tech Board of Visitors. Read his full bio here.

    About Bieri
    David Bieri is an associate professor in the School of Public and International Affairs and an associate professor of economics. He also holds an appointment in the Global Forum on Urban and Regional Resilience. View Bieri’s full bio.

  • UC Helps Cattle Ranchers Estimate Costs and Returns of Beef Production

    Sacramento, Calif., (July 18, 2017) – The cattle industry in California has undergone dramatic changes over the last few decades. International competition and opportunities, new regulatory requirements, fluctuating feed costs, changing consumer demand, economies of scale and competing land uses all affect the bottomline in cattle ranching. Ranchers have experienced increasing production costs while revenue has not kept pace with costs.

    To help ranchers make business decisions, new cost studies for beef cattle production have been released by UC ANR Agricultural Issues Center and UC Cooperative Extension.

    Sample costs and returns for beef cattle production in the northern Sacramento Valley are presented in these studies. The studies are titled “Sample Costs for Beef Cattle, Cow–Calf Production,” “Sample Costs for Beef Cattle, Yearling/Stocker Production” and “Sample Costs for Beef Cattle, Finished on Grass.”

    “These studies are useful to new and experienced ranchers, lenders and other agribusiness companies, as well as government officials, researcher and students who want to know basics of ranch practices and the costs and returns that can be expected for a well-managed operation,” said Daniel Sumner, director of the UC Agricultural Issues Center. “The studies show ranges of net returns under alternative price scenarios to help indicate sensitivity of returns to cattle market conditions.”

    The analyses are based on a hypothetical well-managed ranching operation using practices common to the northern Sacramento Valley. The three studies are based on a herd of 300 cows and bred heifers, 60 yearling heifers and 15 bulls. An 11 percent cull rate is applied to the herd. An 89 percent calf crop with three percent mortality before weaning is assumed.

    All rangeland and pasture is rented per animal unit month. Ranging analysis tables show net revenue over a range of prices. The costs, materials and operations shown in this study will not apply to all ranches. Ranchers, UC Cooperative Extension farm advisors, and other agricultural associates provided input and reviewed the methods and findings of the study.

    Free copies of these studies and other sample cost of production studies for additional commodities are also available. To download the cost studies, visit the UC Davis Department of Agricultural and Resource Economics website at https://coststudies.ucdavis.edu.

    The cost studies program is funded by the UC Agricultural Issues Center and UC Cooperative Extension, both of which are part of the UC Division of Agriculture and Natural Resources, and the UC Davis Department of Agricultural and Resource Economics.

    For more information or an explanation of the calculations used in the studies, contact Donald Stewart at the Agricultural Issues Center at (530) 752-4651 or destewart@ucdavis.edu; Larry Forero, UC Cooperative Extension farm advisor for  Shasta and Trinity counties, at lcforero@ucanr.edu, or Jeff Stackhouse, UC Cooperative Extension farm advisor for Humboldt and Del Norte counties, at jwstackhouse@ucanr.edu.