Beef Prices Hit Record Highs. Here’s Why Steak Is So Expensive

With beef prices climbing to record highs, many consumers across the country, reeling from sticker shock, are wondering aloud why a ribeye steak costs nearly $22 per pound. Economists say the reasons behind it have been building for years, driven mainly by drought‑induced herd losses and strong demand — not just general inflation.

According to USDA Economic Research Service data, the average retail price for beef set a record in April at $9.64 per pound, up about 13% from the previous year. While inflation has played a role, agricultural economists Brenda Boetel and Jeffery Swenson say today’s beef prices are being driven primarily by a historic shortage of cattle meeting steady consumer demand.

“The most important factor is the shrinking U.S. cattle herd,” said Boetel, an agricultural economics professor at the University of Wisconsin – River Falls. “As of Jan. 1, the national herd stood at about 86.2 million head ‒ the smallest since 1951 and nearly 9% below its peak in 2019. Fewer cattle mean less beef, and when supply tightens while demand holds firm, prices rise.”

Drought Casts a Long Shadow on the Beef Industry

The roots of today’s tight supply stretch back years. Boetel says a prolonged drought across major cattle‑producing states forced ranchers to sell animals earlier than planned, including breeding cows needed to rebuild herds. When pastures dry up and hay becomes scarce or expensive, producers often have little choice but to reduce numbers — a process known as herd liquidation.

“That liquidation has long‑lasting effects on beef supply,” Boetel said. Unlike crops that can be replanted each season, cattle production follows a biological timeline. Even when prices encourage expansion, rebuilding a herd takes years.

“If a producer keeps a heifer today, it can be two to three years before her calf enters the beef supply,” Boetel explained. “There’s no way to fix a shortage like this quickly.”

Why the Demand for Beef Hasn’t Cooled

Despite higher prices, Americans haven’t backed away from beef. Swenson points to strong retail sales and shifting food trends as key factors keeping demand high.

“There’s a growing focus on protein in the diet,” said Swenson, meat and livestock specialist for the Wisconsin Department of Trade and Consumer Protection. “People are paying attention to protein intake the same way they used to count calories.”

Along with focusing on protein, Swenson says beef farmers are doing an excellent job of improving the quality and taste of beef.

“Part of this is through genetics, but cattle are also spending more days on feed, leading to high degrees of marbling,” Swenson said. “People are seeking out beef because the quality and consistency has improved. That keeps demand strong even at higher prices.”

Will Ground Beef Be Priced Out of Reach?

Ironically, higher‑quality beef has created challenges in one of the most affordable parts of the meat case. As more cattle grade Choice and Prime, less lean trim is available — the component essential for making ground beef and processed products like snack sticks.

“Heavier cattle help offset lower supply somewhat, but beef production so far this year trails last year by about 7%, while cattle harvest is down roughly 9%,” Swenson said.

The shortage of lean trim has pushed ground beef prices higher, even as cost-conscious shoppers have always steered toward ground beef as a lower-priced alternative. To fill that gap, Swenson says beef imports — particularly from countries like Brazil, Australia and Canada — have increased. Even so, imported beef still accounts for a minority of consumption and hasn’t been enough to fully offset domestic shortages.

Imports Help — but Don’t Solve the Problem

U.S. imports of cattle from Mexico, primarily feeder cattle destined for feedlots, remain heavily disrupted.

“Historically, Mexico supplied over 1.8 million head of cattle to the U.S. annually,” Boetel said. “With domestic calf supplies already tight because of herd liquidation, disruptions in Mexican feeder cattle imports further tighten feedlot inventories and reduce further beef production. The result is an upward pressure on wholesale and retail beef prices.”

Imported beef from countries such as Brazil, Australia, Canada, New Zealand and Mexico makes up close to 20% of U.S. consumption, up from 10% to 15% in recent years. Much of it is used in hamburger production. Still, Americans are expected to have about one pound less available per person this year than last, Boetel said.

“Imports help supplement supply, but they are not large enough to offset the shortages entirely,” Boetel said.

What’s Next for Beef Prices?

The future of beef prices will be influenced by supply and demand. Simply put, either demand will decrease or the supply of cattle will increase, Swenson says.

“In the short term, the demand for beef is typically high and all of June, with some cuts like ribeye and other steaks to decrease around the Fourth of July when grillers turn their attention toward burgers, brats and hot dogs,” he said. “While this may cause a drop in beef prices overall, look for ground beef prices to increase in July and August. Long-term demand may be impacted by higher prices with customers looking to substitute beef with pork or poultry. We haven’t seen that happen yet.”

Longer term, the outlook depends on whether supply can catch up — and that remains uncertain.

“Pasture conditions in many parts of the country have been impacted by continued drought and forage supplies are tight. While many farmers and ranchers would like to increase their cowherds, conditions just aren’t as favorable as they would like,” Swenson said.

High land, labor and interest costs also continue to discourage expansion, as do the age of owners.

“Many producers are reaching retirement age, while younger generations are often reluctant to enter the business because of high startup costs and financial risk,” Boetel says. “Urban development has also reduced grazing land in some regions, limiting opportunities for herd growth.”

Ultimately, high beef prices reflect a historic shortage that cannot be solved quickly. Many analysts now believe it could be years before the cattle cycle fully turns.

“Until we see meaningful herd expansion, beef prices are likely to stay elevated,” Boetel said. “This is a supply problem years in the making — and it will take years to correct.”

Swenson says many predict it will be 2030 before the pendulum swings the other way.

“If that holds true, beef prices could remain at high levels for another four years, but again, this will depend on Americans’ appetite for beef,” Swenson says.

This article originally appeared on Wisconsin State Farmer. Reporting by Colleen Kottke, USA TODAY NETWORK / Wisconsin State Farmer. USA TODAY Network via Reuters Connect.