Why Beef Costs More — And What American Ranchers Actually Need

Originally written by Luis Mata, CEO and co-founder of Meat N’ Bone, for Flavor & Founders, his personal newsletter on the business of food, brands, capital and technology.

America has fewer cattle, higher production costs and strong demand. Imports can relieve the pressure, but sustainably cheaper American beef requires making it worthwhile for ranchers to rebuild the herd.

I buy beef for a living, so for the past few years I have had some version of the same conversation almost every week. Why is beef so expensive? Depending on whom you ask, the culprit is feed, inflation, drought, the supermarkets, the big meatpackers, government regulation or tariffs. Lately Washington has offered its own answers, first by making it easier to import more beef and now by going after the concentration of the processing industry.

There is some truth in almost all of those explanations. The problem is that they obscure something much simpler. America has fewer cattle, it costs more to raise and finance them, and Americans have not stopped wanting beef. At the beginning of 2019, the United States had almost 95 million cattle and calves. At the beginning of 2026, it had 86.2 million, including just 27.6 million beef cows. The calf crop was smaller again last year.

When there is less of something people still want, its price goes up. The unusual part is how long it takes the beef industry to respond.

You cannot manufacture a cow

If demand for televisions increases, a factory can add another shift. If a restaurant fills every table, it can extend its hours. A rancher cannot simply decide to manufacture more cattle next quarter.

To expand a herd, a rancher has to keep a young female he might otherwise sell. She has to mature, become pregnant and have a calf. Then that calf has to grow before it ever becomes beef. USDA estimates that the decision to retain a replacement heifer can take roughly three and a half years to produce another slaughter-ready animal.

That delay helps explain how we got here. During the drought years, pasture deteriorated and hay became expensive. Ranchers responded the way rational business owners would: many reduced their herds rather than continuing to feed animals at increasingly unattractive economics. Initially that did not look like a shortage because those cows went to slaughter, temporarily putting more beef into the market. American producers also became incredibly efficient, producing heavier animals and more beef from a smaller herd.

The problem arrives later. A cow sold in 2022 does not produce another calf in 2024. Eventually there are fewer young cattle going into feedlots, fewer finished cattle reaching processors and more buyers competing for every animal that remains. Productivity can postpone that moment, but it cannot repeal biology.

The early signs of rebuilding are finally appearing. Ranchers are beginning to retain more young females. That is encouraging, but even that can tighten beef supply temporarily because an animal kept for breeding is one that is not being sold today. The cure for the shortage initially makes the shortage a little worse.

The problem is not simply expensive corn

Feed is another convenient explanation for high beef prices, and it matters, particularly when drought forces ranchers to replace grass with purchased feed. But it is not the whole story. USDA's 2025 estimates put feed at roughly $445 per cow against a fully allocated economic cost of about $1,762. The rest includes land, labor, equipment, veterinary care, financing and the rancher's own capital.

More importantly, one of the most expensive inputs today is the animal itself. A feedlot has to buy a calf before it feeds one. When there are too few calves, their price rises enough to overwhelm savings from cheaper corn or fuel. The same logic applies to a meat processor. Its biggest raw-material cost is not electricity, packaging or labor. It is the animal walking into the plant.

That matters because it cuts against the idea that American beef has become expensive because America is bad at processing it. An international study comparing slaughter and processing costs, excluding the cattle, actually found the American grain-fed system cheaper per kilogram than comparable Australian and Brazilian operations.

America knows how to process beef efficiently. What it does not have right now is enough affordable cattle to put through those plants.

Look at what is happening elsewhere

Brazil and Australia make the contrast easier to understand. Brazil increased beef production last year while American production declined. Australia has also been producing enormous volumes after rebuilding its herd and improving productivity. Those countries have their own problems, from Australian labor costs to Brazilian infrastructure, but they entered this period with far more cattle available for slaughter and large pasture-based systems capable of supplying the world market.

Argentina is particularly useful to the United States because its grass-oriented system produces the lean beef America needs for hamburger. American grain-fed cattle produce excellent marbled steaks, but they also produce considerable fatty trim. Ground beef often needs leaner meat blended into it, which is why imported grass-fed beef can complement American cattle rather than simply replace them.

Japan offers another lesson. It has an expensive domestic beef industry, especially at the premium end, but it does not insist that every pound of beef consumed domestically must come from Japanese cattle. It imports ordinary beef while protecting and supporting a differentiated domestic industry. There is nothing contradictory about doing both.

That is a much better framework for thinking about American trade policy than simply declaring imports good or bad.

Washington can make hamburger cheaper. It cannot create cattle.

The administration first expanded lower-tariff access for another 80,000 metric tons of Argentine beef this year. That sounds enormous, but it represents less than 1% of annual U.S. beef production. In August, Washington went much further, opening another 300,000 metric tons of lower-tariff access for lean beef trimmings over roughly three months. The larger program is significant enough to move the lean-beef market and could genuinely help ground-beef prices.

So I would not call the policy meaningless political theater. Imports are one of the few tools available that can increase supply within months rather than years, but they are a bridge, not a solution.

An Argentine shipment cannot create another calf in Texas. It cannot restore pasture after drought, lower the cost of ranchland or finance a producer who is deciding whether to retain another 100 heifers. If imports suppress cattle prices too aggressively just as ranchers are considering rebuilding, they can even work against the long-term goal by weakening the economic signal that tells producers America needs more cattle.

That is why the government's newest response is also worth examining carefully.

After ranchers pushed back against the import policy, President Trump turned his attention toward the large meatpackers, arguing that four processors dominate the business and proposing to make it easier for ranchers to process their own beef. The underlying concern is legitimate. The four largest firms handle roughly 85% of steer and heifer purchases, and USDA has found evidence that concentration can weaken competition for cattle. Ranchers deserve more buyers and a competitive market.

But Washington risks solving yesterday's bottleneck. More processing capacity does not create more cattle. In fact, USDA is currently offering up to $500 million to support independent slaughter facilities precisely while those facilities are dealing with an unusually difficult cattle environment. If you add more processors while the number of animals remains fixed, those processors simply compete harder for the same cattle. That may be good for ranchers and good for competition, but it is not an immediate recipe for cheaper beef.

The concentration problem exists. What does not exist today is evidence that a lack of slaughter capacity is the main reason consumers are paying so much for beef.

What supporting American ranchers should actually mean

This is the part of the conversation that matters most to me, and to how we think about the industry at Meat N' Bone. Supporting American agriculture should mean more than putting a flag on a package, imposing tariffs on foreign beef or promising consumers artificially low prices. It should mean creating an environment in which an American rancher believes raising cattle is still a good business five or ten years from now.

If America wants cheaper domestic beef in the future, ranchers need a reason to keep more heifers today. That means access to favorable long-term financing and loan guarantees for herd rebuilding, sensible tax and investment incentives, better drought insurance, improved water and grazing infrastructure, and enough competition that producers know they will have a fair market when it is time to sell. Most of all, it requires some certainty. A producer making a three-and-a-half-year biological investment cannot efficiently operate under a policy framework that changes every time supermarket prices become politically uncomfortable.

Government has an important role in removing those barriers, particularly where drought, financing or market concentration prevent otherwise healthy producers from investing. But after that, it should resist the temptation to engineer the price of cattle itself. Make capital available. Keep markets competitive. Reduce unnecessary friction. Give ranchers a reasonable degree of certainty, and then let the free market do what it is supposed to do.

High cattle prices are uncomfortable for consumers today, but they are also sending an important signal to producers: America needs more cattle. If policymakers spend all their energy suppressing that signal, they risk prolonging the very shortage they are trying to fix.

Imports can help us through the next year. Competition among processors can make the industry healthier. Neither substitutes for rebuilding the American herd.

If America wants cheaper American beef tomorrow, the answer is not forcing cattle prices lower today. It is giving American ranchers a reason to raise more cattle.