You might think record high prices would mean American ranchers are swimming in profits. It’s not that simple. The reality on the ground paints a far more complicated picture, one where soaring beef costs at the supermarket haven’t exactly translated into financial security for those raising cattle. Let’s dig into what’s really happening on American ranches and why this isn’t the straightforward success story it appears to be.
The Smallest Cattle Herd in Seven Decades
At 86.7 million head, U.S. cattle supplies were at their lowest in 74 years on January 1, 2025. Think about that for a second. We haven’t seen numbers this low since the early 1950s, when the country had a substantially smaller population. The number of beef cattle in 2025, 27.8 million, is the lowest it’s been since the 1960s despite the growing U.S. population. This dramatic shrinkage of America’s herd is the foundation of everything happening right now. In July, the agency estimated the 2025 calf crop at 33.1 million, the smallest on record. Ranchers aren’t choosing to keep herds small because they feel like it. There’s a story behind these numbers, and honestly, it’s not a happy one.
Drought Devastation Across Cattle Country
Over the last decade, the decline in cattle supplies has mainly been driven by drought conditions around the U.S., which reduced the available feedstock. Most recently, a severe drought started in 2021 and continued through last year, sweeping through the western half of the country. Picture trying to raise cattle when your pastures are brown and brittle. A tough drought a few years ago swept through many cattle states. Ranchers had to buy pricey feed when their own alfalfa fields couldn’t get enough irrigation, and had to pay for someone to haul water for their cattle to drink when springs ran dry in the grazing pastures.
This isn’t just some abstract environmental challenge. Selling off breeding cattle wasn’t just an economic decision, it was an emotional one, representing years or even generations of herd development lost in a single season. Drought has forced families to part with genetics they had spent decades refining. I think that detail really hits home. These aren’t corporate assets on a spreadsheet. They’re family legacies.
The Financial Squeeze Nobody Talks About
Here’s where things get frustrating for ranchers. Input costs for ranchers are up more than 50% over the past five years, according to the American Farm Bureau Federation. That’s a staggering increase. Feed, fertilizer, fuel, labor, equipment – everything costs more now. Record input and supply costs mean cattle farmers and ranchers are walking a thin line between making and losing money.
So even though beef prices at the grocery store are sky-high, ranchers are barely seeing profits. Cattle farmers and ranchers are operating in the black for the first time in a long time, but margins are vulnerable and could be wiped out should prices begin to fall. It’s hard to plan for the future when you’re living on the edge like that. Ranchers just happen to have a product with a high enough price that they’re able to maintain a margin, but margins really aren’t much different for cattle producers right now than what they’ve been in the past.
The Painful Summer of 2022
As it got harder to feed and otherwise maintain their herds, producers in the summer of 2022 slaughtered more beef cows than ever in the USDA recordkeeping. Let that sink in. Record slaughter numbers. They were already reeling from losses during the pandemic, which disrupted meatpacking plants, plus rising inflation and interest rates. That was a brutal period where ranchers had few options left.
Beef prices tumbling from too much available meat further discouraged ranchers from replenishing their herds. It created a vicious cycle. Sell cattle because you can’t afford to keep them, flood the market with beef, prices drop, and now you definitely can’t afford to rebuild your herd. This wasn’t just bad economics. It was devastating.
Why Rebuilding the Herd Is Painfully Slow
You’d think high beef prices would motivate ranchers to quickly rebuild their herds, right? Wrong. Facing ever-higher operations costs, ranchers are leery of investing in an expansion. It’s risky. There was a similar beef bubble about a decade ago and record high prices led to a collapse. Ranchers are hesitant to expand because of all the risks.
Here’s another complication. The record values that cattle can fetch mean that it’s often more profitable to sell young females (called heifers) for meat than to keep them for breeding. When prices for beef are this high, the temptation to cash in now rather than wait years for future profits is overwhelming. If a farmer decides today to keep a heifer instead of placing it on feed for market, it will take 30 months before that heifer produces a calf, putting us in 2028 before cattle supplies reflect that decision. That’s a long time to wait for a payoff.
Consumer Prices at the Breaking Point
Beef prices have increased over 50% since 2020, causing restaurants and stores to raise their prices. That’s an enormous jump. Ground beef is up nearly 15% and beef roasts are up a whopping 21% as many Americans head into a week of holiday cooking. At a certain point, even loyal beef lovers start reconsidering.
Research firm Circana is tracking a notable shift at the grocery store. For the first time, spending on ground beef – historically one of the fastest-growing categories – has hit a plateau. In recent weeks, shoppers only bought 0.2% more ground beef than a year ago. That’s a big deal. Americans love their burgers and steaks. If they’re backing away, we might finally be hitting the tipping point. One restaurant owner is paying nearly double the price for hamburger meat than he did a few months ago, and higher prices have started to drive away some diners, with visits down about 5% across his six locations.
Import Troubles and Tariff Chaos
Imports were curtailed earlier this year by an outbreak of parasitic screwworm flies in Mexico. President Trump imposed a 40 percent tariff on Brazilian food products, including beef, in July before lifting it last month. These supply disruptions have added more volatility to an already unstable market. Brazilian beef faces a 76% tariff. Fears about the screwworm parasite have led the USDA to block livestock from crossing from Mexico to the U.S.
Imported beef isn’t going to help bring prices down because of tariffs. The volatility and lack of predictability in that has sort of been off the charts in 2025. So even potential solutions from foreign markets aren’t providing much relief. Despite record beef imports in 2025, prices have risen 14% over the past year, proving that more imports do not lower costs.
The Long Road Ahead to Recovery
Beef prices are expected to keep rising for some time. Diminished cattle supplies are likely to drive prices to new record highs in 2026. Beef prices are expected to stay high for the next several years as ranchers work on rebuilding their herds. This isn’t a problem that fixes itself quickly. Experts don’t expect this beef cycle to end until 2028 at the earliest, as they believe cattle numbers will continue to shrink.
Rebuilding the herd will take time. Ranchers must hold back young female cattle for breeding, not slaughter – the very step needed to expand supply. That will keep beef scarce and expensive into next year. Every heifer kept for breeding is one less animal going to market right now, which means supplies get even tighter in the short term. If we actually begin retaining heifers to put into the breeding herd, that actually is going to reduce total domestic beef production because we have fewer animals going to the feedlot, which will keep prices supported even more. Within a three-year period, we’ll start seeing that increased production feed into the system.
