A Few Thoughts by John Nalivka: The Key to Record Beef Prices

The USDA released their plan today to “fortify the American beef industry.” Their plan is based on: “strengthening ranches, rebuilding capacity, and lowering costs for consumers.” Wow! Where do I begin in my assessment? I do know that any response does not require 25 pages of text. If I boiled it down to my initial reaction, the first statement I will make is the beef industry and specifically, the ranching sector does not need a government plan to make the market work. The market is working. That is why we have record-high prices and the most profitable year on record (at least for the cow-calf operating margin that I calculate goes back to 1972).

Throughout 2026, I have discussed (with emphasis) that beef demand is the driving force pushing beef prices to a record high and furthermore, maintaining prices at or near those record highs. This year’s strong demand for beef is driven by quality – consistent quality. I would submit that without this significant and positive shift in demand, record-high prices across the supply chain likely would not be sustained – even with cattle numbers at a 75-year low.

In a release today, Certified Angus Beef echoed my statement. The 47-year-old brand reported annual sales of 1.235 billion pounds worldwide. This is one of its strongest years and reflects consumers’ continued taste for premium beef.

Consequently, any statement about lowering beef prices so beef would be more affordable for “every” consumer must begin with reducing demand. What?! Obviously, reducing demand to lower beef prices to any business in the beef supply chain would be a bad strategy. Furthermore, it would be negative to herd expansion. The impetus to herd building is 1) profitability for cow-calf ranchers, 2) grazing conditions, and 3) the outlook for continued profits and grazing. I will once again point out that the industry in 2025 will produce about 700 pounds of beef per brood cow with 37.2 million total cows (both beef and dairy). This is the lowest total cow herd since 1941 and that year, the industry produced 213 pounds of beef per brood cow. Part of the increase can be accounted for by the number of dairy-beef cross calves that are now being produced.

There was also a statement regarding imported beef. The U.S. imports beef to supplement our production of lean grinding beef, a key component for ground beef. This is particularly important this year when our cow slaughter is down sharply following significant herd liquidation from 2021 – 2022. Cows are the primary source of lean grind. In 2025, U.S. beef imports are projected to be up 13% (Sterling) against last year’s 24% increase. U.S. beef exports will be down 10% in response to tariffs.

Once ranchers begin retaining heifers to expand herds, it takes 2 years before a larger cattle herd is realized and then into a third year for the production from that larger inventory to hit the market. The significantly increased production efficiency noted above will play a role increased beef production. That will have an impact on the market. BOOM! USDA’s mission accomplished – prices fall and so does the rancher’s and cattle feeder’s margin. This is part of the impetus to maintain herd numbers – producer profits. With today’s production efficiency, herd expansion will likely have a greater impact on the market. Good for consumers who want beef at a much lower price – bad for producers enjoying solid operating margins.

Enhancing cattle production begins with supporting an industry driven by the market forces of supply and demand unhindered by regulations.