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“We are in the middle of a classic cattle-cycle downturn,� said Mario Ortez Amador, collegiate assistant professor of agribusiness and entrepreneurship in the Virginia Tech-Department of Agricultural and Applied Economics. “U.S. beef production is declining because the national herd has shrunk to its lowest levels in decades.� 

David Bieri concurs; he’s an associate professor in the Virginia Tech-School of Public and International Affairs and an associate professor of economics.

“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,� he said.

What is driving the reduction in beef production in the United States?

“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,� Ortez said. “The result is fewer calves coming through the pipeline. Because it takes about 18 to 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 (and) livestock does too.

“Incentives also matter. 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 the pricing consumers see right now?

Bieri said, “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, ranchers are selling cattle rather than breed them. 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?

“Ortez said, “On the demand side, beef demand has been remarkably resilient. 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.�