Beef prices are hitting record highs—ground beef at $6.88 a pound, steaks north of $13—and in this eye-opening conversation, Texas A&M agricultural economist David Anderson, PhD breaks down exactly what’s driving the surge and what it means for your grocery bill. From the recent tariff pause and its flood of imported beef, to the crushing squeeze ranchers face from relentless drought, soaring corn costs, and collapsing calf prices, we unpack the hidden forces behind America’s beef crisis.
Jeffrey Snyder, Broadcast Retirement Network
Well, Dr. Anderson, it’s always a pleasure to see you. Thanks for joining us on the program this morning.
David Anderson, PhD., Texas A&M University
Hey, it’s great to be with you.
Jeffrey Snyder, Broadcast Retirement Network
And I want to get into this farm beef tariff pause in a minute, but I want to get your reaction. I know we’re waiting on some new price information based on what I found on a beef tracking site. The current ground beef per pound is $6.88. That’s up 6 cents. All beef steaks are up $13.06 a pound. That’s up 19 cents. So I want to get your sense for the beef marketplace before we dive into tariff pauses.
David Anderson, PhD., Texas A&M University
Well, I think those rising prices and the continued rising prices really reflect where we are with overall tighter supplies. We’re producing less than we did a year ago. And so, you know, with less supplies and what appears to be continued pretty good demand for beef by consumers, you know, the result is continued pressure on prices, you know, going higher.
And so I think that reflects kind of this ongoing situation that we’re in both on the ground beef side and on the muscle cuts, the steaks and things like that.
Jeffrey Snyder, Broadcast Retirement Network
So what does this mean for our cattle men and women, the cattle ranchers, not only where you are in Texas, but maybe they’re in other parts of the country, Montana maybe and others. What does it mean for them?
David Anderson, PhD., Texas A&M University
Well, you know, high beef prices for us consumers, you know, has also, we’ve had record high cattle prices to ranchers. And I think that reflects that tighter supplies and, you know, prices are the market signal to do something. And when we have very high prices or in this case, profitable prices, that’s the market signal to ranchers to, and cattle producers all over the country to expand their herds.
But there are some constraints there. It’s not just that, hey, we’re making some money after some years of losing money. You know, we have drought conditions that coincide with major cattle producing areas.
And when you’re in a severe drought, there’s no grass for the cows to eat. You really can’t expand your herd, even though, boy, the market signal tells me to, if there’s no grass for them to eat, I just can’t expand. And so that’s, I think that’s a really important, really constraining factor.
I think we have some other interesting things happening in the cattle market, particularly is over the last six weeks, we have had a pretty sharp correction downward in prices. For example, we look at auction prices around in the, say Southern Plains of the U.S., Texas, Oklahoma. You know, calf prices, a five to 600 pound calf price, those prices are down from, they’re down a hundred dollars per hundred weight.
We price cattle in dollars per hundred weight. And so we’ve had sharply lower prices. The futures market for both cattle going from feedlots to packing plants and the, what we call feeder cattle, lightweight animals going to a feedlot to be fed, those are down dramatically also in just the last six weeks.
There’s several factors going on. And one is that corn prices are up dramatically. They’ve gone from about $4.50 per bushel in the Southern Plains cash prices to over $5.50 per bushel. And that’s related to drought and hot weather in the corn belt and fears about yields. And so, you know, when corn prices go up, calf prices go down. And so we’ve got a lot happening in the cattle market that’s pulling those prices down.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, so it’s not just make more cattle or birth more cattle. And there’s a lot of inputs there. Let me ask you about the impact of farm beef tariffs.
So there is, the federal government decided to pause farm beef tariffs. How impactful is that to the price of beef? I guess the impact, I guess the thought here is that by removing that, what is effectively a tax on top of everything else is gonna help reduce the price.
But is that necessarily the case?
David Anderson, PhD., Texas A&M University
Well, there’s, you know, like usual, the devil’s in the details, but the announcement was we’re gonna expand this tariff rate quota by 300,000 metric tons. Well, my first reaction was, well, I’m an American. I don’t know what a metric ton is.
I thought we weren’t doing metrics, but the conversion is 2,204 pounds per metric ton. So you multiply that, that is 661 million pounds. That sounds like a lot of beef.
In fact, that’s two pounds per person per capita consumption.
Jeffrey Snyder, Broadcast Retirement Network
And I guess, well, I guess the cattle ranchers, I’m sorry to interrupt you. I was gonna say, I guess the cattle ranchers like that, but is that realistic?
David Anderson, PhD., Texas A&M University
Boy, cattle ranchers were pretty angry about this because by cutting the tariff, it means we’re gonna import more beef and importing more beef leads us to lower prices. Just when cattle producers need these higher prices to expand their herds, that’s the incentive. And so it takes away the incentive or reduces the incentive for U.S. producers to expand their herds and increase domestic beef production. You know, the fear is it makes us more reliant on imports, but the details are it’s a bunch, about 90 days worth. The executive order said this applied only to countries that do not have a specific quota assigned to them, which your basic assumption is that for the most part, Brazil is the only country that could fill a majority of that. And so there’s been questions about where it might come from.
That is, I think, a logical assumption, although nothing’s been announced or said. But, you know, we’re importing record amounts of beef this year already. Most of what we import are lean beef trimmings to go into ground beef.
So, you know, when you go to the grocery store, you see the lean to fat mixture, right? 80-20, 96-4. You know, we don’t have enough real lean beef.
We have plenty of beef that has more fat. And so we need more lean to mix to make whatever your target specification is that you like. And so, you know, the presumption is all of this, whatever comes in under this order, for the most part, is going to be lean beef trimmings for ground beef to boost our ground beef supplies because we got high prices.
Jeffrey Snyder, Broadcast Retirement Network
Okay, so this is clearly a reaction. You know, I can’t get in people’s heads, but I would say it’s a reaction to consumer prices. As I said at the beginning, this is what they were on the date we’re recording this, which is about a week before it’s gonna air.
Presumably will change. It does change probably day to day. So, you know, what is, so, and it’s a 90-day order, right?
So it’s gonna take us up through, what is that? September, October, November. It’ll take us up through November.
Is that, so that should provide some relief at the expense of the cattle farmers.
David Anderson, PhD., Texas A&M University
Yeah.
Jeffrey Snyder, Broadcast Retirement Network
Is what we’re saying.
David Anderson, PhD., Texas A&M University
That’s right. And, you know, a lot of our lean beef for hamburgers, for ground beef, comes from old cows. You know, when the cow is not able to have a calf anymore, it’s really past its productive life.
It goes to a meat packer. You know, those aren’t the animals we’re cutting your best ribeye or filet mignon from, right? A lot of that beef is gonna go to hamburger.
And so these imports come in and would compete most directly with that lean beef that comes from our old cows. Now, the other unfortunate part of the timing of this from a cattle producer standpoint is most cows are culled from the herd or sent to a meat packer. The biggest, the majority of them come in the fall.
That’s when, you know, most calves are born in the spring. The calves are weaned and sold in the fall. Ranchers make decisions about which cows they’re going to keep.
And so the ones they’re not going to keep go to market then. And so it has the potential to really pressure prices lower for ranchers just when they were about to sell their year’s production because they’re selling all their production here at one time of the year. And so there’s certainly some worries out here about, you know, that the timing of this is sort of unfortunate as well.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, like I said, you know, having not your expertise, it comes, the lower prices comes at the expense of the cattle ranchers here in the United States.
David Anderson, PhD., Texas A&M University
And those lean beef trimmings, the prices for older cows are also at their lowest price anyway in the fall. And so this potentially adds a bunch of supplies just when prices are already lower. And so again, that timing from a producer standpoint is pretty unfortunate.
I think something else is important in this 300,000 metric tons is, you know, we’re already importing record amounts of beef. We were going to import beef over the next 90 days anyway. So now we’re going to let in beef without the tariff.
So it’s going to essentially be a zero tariff instead of what it was. You know, does that mean we get another 300,000 tons on top of what we were already going to import or does it just displace? It lets that stuff come in at zero tariff when it was going to come in at a higher tariff.
And so some of this is, I think, displacing what we were already going to bring in.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, I think this is kind of the inside baseball that clearly you bring to the table because as a consumer, most of us only see the price on the menu or the price at the supermarket. So we don’t see the inside baseball of all the machinations that happen. Dr. Anderson, I want to transition, if I could talk about maybe some supply shortages. Can you talk a little bit about what you’re seeing in the marketplace? Not necessarily to beef, although we did talk about importing beef because we don’t have the ability because of the other inputs to create more beef or to raise more beef.
David Anderson, PhD., Texas A&M University
But- I think that’s a good point. We always import beef. The amounts change because we have really tight supplies in the U.S. and high prices. So we import more. A few years ago, we were importing less. We also export beef right now.
We’re not exporting as much because with high prices, we’re just playing less competitive. But I think you bring up an interesting point. I’ve seen a couple of articles lately about, are we headed for some kind of food shortage, higher fertilizer prices because of the war with Iran, the Straits of Hormuz, a lot of fertilizer comes through there.
And really, I think the short answer is, I don’t think we need to worry about food shortages in the U.S. It turns out that, you know, as Americans, we pay less for food out of our income than any other country in the world. Typically, when supplies are tighter, for whatever that reason is, prices go up. It’s prices that really are the signal to producers, to consumers to buy less, but also for producers to produce more.
And so it’s part of market prices moving around, but we certainly have abundant supplies. And food, while food is more expensive, we as Americans do spend less of our income on food than anybody else in the world.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, so it’s unlikely we’ll see bread lines, a la Ukraine and the, you know, the, I think back to in my history, right? I mean, that was a big, that was a big deal.
David Anderson, PhD., Texas A&M University
Yeah, you think back to the, you know, the Great Depression, there’s pictures of, you know, mass unemployment and folks in soup lines. And, you know, we certainly do have, you know, some of our fellow Americans who do struggle income-wise, you know, our food pantries and places like that are as busy as ever. And so, you know, we do have neighbors that struggle.
And, you know, so that part is with us anyway, but when it comes to, you know, mass food shortages, that really isn’t, that isn’t a problem we really ought to worry too much about, I don’t think.
Jeffrey Snyder, Broadcast Retirement Network
And what would lead to more shortage? Would it be setting a maximum price? You know, I remember this 1970s where they had gas lines and we actually had gas shortages and it was a different economic environment.
We didn’t produce as much, we refined as much gasoline as we do today. But some of that was setting a maximum price. Would that create shortages in your eyes, you know, as an economist, if we were to just say, hey, you know, the price of eggs is gonna be X and the government sets the price over here and there.
David Anderson, PhD., Texas A&M University
Yeah, you’re right. Way back in the early 70s, we did, our government did wage and price controls, which was a real surprise, a real shock. That, and so that’s the problem with it.
I’m sorry, I’m having allergy problems. No, it’s okay.
Jeffrey Snyder, Broadcast Retirement Network
Maybe you’re just allergic to a wage and price controls.
David Anderson, PhD., Texas A&M University
Yeah, I think that’s it. Well, I was trying not to sneeze here, but yeah, that’s it. What happens is, you know, government comes in and sets the price.
Well, they set it low because people want low prices, but that tells everybody producing that I can’t produce it profitably at this. And so we don’t produce. That’s right.
And so it becomes a, you know, self-defeating or self-fulfilling kind of thing that it just doesn’t work nearly as good as the market does at doing this. And part of a market working is we have prices going up and down. That’s how a market works.
And, but, you know, coming in and trying to do wage and price controls to solve one problem creates a lot more problems that we don’t really want.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, yeah. Well, you bring it up. I remember my parents telling me stories.
I was probably a baby around that time period and my dad waiting in long gas lines in Baltimore.
David Anderson, PhD., Texas A&M University
I remember we went to visit my uncle who lived in California and it’s the first time I ever saw gas at a dollar. And I was obviously a young child, but.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, it’s, well, hopefully we can avoid that.
David Anderson, PhD., Texas A&M University
But there were these long lines and that was really the first kind of OPEC thing too with them actually getting together, forming OPEC, really constraining production to drive up prices, really using their market power. And it resulted in gas lines because we had a shortage in high prices and people were just trying to fill up the tank.
Jeffrey Snyder, Broadcast Retirement Network
Well, and it’s, we seem to have a laid or dissipated that threat because we produced more here, hopefully over time, we’ll be able to produce more cattle to meet the demand, help drive prices down, keep the cattle ranchers doing the jobs that they wanna do, making money and being profitable. Dr. Anderson, thanks for the beef in economics lesson. I always enjoy talking to you.
It’s like talking to Milton Friedman.
David Anderson, PhD., Texas A&M University
Oh my gosh, you know.
Jeffrey Snyder, Broadcast Retirement Network
Word, word. Undeserved praise. Yeah, well, maybe I’ll put you in for the Nobel Prize.
David Anderson, PhD., Texas A&M University
Thanks.
Jeffrey Snyder, Broadcast Retirement Network
Dr. Anderson, we’ll leave it there. Great to see you as always. Thanks for joining us.
And we look forward to having you back very soon, sir.
David Anderson, PhD., Texas A&M University
Thanks a lot. I always enjoy it too.
