R-CALF: Why Is Herd Shrinking Amid Record Beef Prices?

It’s time we consider facts, not beef industry propaganda.

Fact No. 1: The U.S. beef cow herd is the smallest it’s been in seven decades.

Fact No. 2: Both domestic beef demand and consumption have increased over the past decade.

Fact No. 3: For the past 2 ½ years, cattle have commanded the highest nominal prices in history – nominal meaning the price isn’t adjusted for inflation.

Fact No. 4: For the past 5 ½ years, consumers have been paying the highest nominal beef prices in history.

These facts are inarguable. They’ve been measured and confirmed with trusted data from the U.S. Department of Agriculture and Kansas State University. And it is these facts that are now being frequently discussed by major media outlets.

The current media narrative goes something like this: Cattle supplies are at a 70-year low, beef prices are skyrocketing, and America’s ranchers are receiving the highest prices in history for their cattle. Now the world’s largest meatpacker, JBS, said in remarks to the Financial Times that America needs to import more beef because U.S. ranchers can no longer produce enough beef to support domestic demand.

And there’s the propaganda – a global beef packer is trying to persuade America to agree to even more beef imports to supplement the reduced amount of beef being produced by American cattle ranchers due to the shortage of cattle in the U.S. herd.

But before we jump onto the globalists’ propaganda wagon, let’s take a critical look at the problem and then decide if the right solution is to welcome more beef imports into the United States. We’ll define the problem clearly, and that is: America has not maintained sufficient cow numbers to produce enough beef to meet domestic demand.

Many media commentators have pointed to the widespread drought that began in late 2020, which triggered the most recent herd liquidation, as the primary reason our cow herd began shrinking.

So, let’s go back to facts. Four decades ago, the U.S. imported 2.5 billion pounds of imported beef and beef from imported cattle. That volume represented about 10% of domestic beef consumption. Since then, imported beef has increased 2 ½ times, and last year the U.S. imported 6.4 billion pounds of beef and beef from imported cattle, which represented about 22% of domestic consumption.

What this tells us is that the U.S. has long underproduced for the domestic market, and the U.S.’s dependency on foreign beef is growing. And what this tells us is that the growing volume of imports has not just supplemented domestic production but it has been supplanting domestic production.

You see, if imports were simply supplementing the U.S.’s domestic production, then the percentage of domestic consumption attributed to imports would have remained at about 10% over time. But that’s not what happened. The percentage of domestic consumption attributed to imports has more than doubled. And that means that as domestic consumption has increased, imports captured more of that increase and domestic production captured less.

Another way to think of this is that as domestic beef consumption increased over the past four decades, imports have outpaced domestic production in satisfying that increased consumption.

And now we know why the domestic cattle industry has been shrinking over the past four decades – when increased domestic consumption signaled the need for more domestic beef production, the globalists increased the volume of beef imports, thus depriving domestic cattle ranchers the opportunity to keep pace with the increased consumption.

Now the effects of relying on ever-increasing volumes of imports to satisfy growing domestic consumption include reducing demand for U.S.-born and -raised cattle and their price. And this, in turn, reduces the profitability for domestic ranchers. And now we know why over half the beef cattle ranchers in business just four decades ago are gone today.

So, beware the propaganda-based solution to today’s problem – the solution of inviting more imports to supplement domestic production, as this is the very strategy that has been shrinking the U.S. cattle industry for the past four decades.

The real solution is to protect the U.S. market from the influx of cheaper imports to incentivize the domestic cattle industry to expand production. This solution will meet our national security needs of maintaining food self-sufficiency, revitalizing our hollowed-out rural communities, attracting new entrants, and creating more jobs across rural America.

Oh, but won’t imports reduce consumer beef prices? Well, since 2017, imports increased about 43%, and All-Fresh consumer beef prices increased 42%, so those increased imports did not lower beef prices over that recent eight-year period.

-RCALF-USA