AMARILLO, Texas (KAMR/KCIT) — By now…You’ve heard all about how the ongoing drought in the area is affecting beef prices at the grocery store, but there’s another aspect driving those high prices, shrinking cattle inventory.
“One of the things that’s important for consumers and producers to recognize is where we are in the current cattle cycle,” said Jason Smith, Assistant Professor and Extension Beef Cattle Specialist at Texas A&M Agrilife Extension. “We’re on the downward slope of the cattle cycle.”
It’s a supply and demand problem, that means high prices for the near future.
“As we reduce inventory, potentially marketing cattle from pasture-based operations, what that translates to is less calves, and potentially a lighter supply of beef,” Smith explained.
According to the USDA , the U.S. beef cattle herd was a little more than 30 million head in January, down two percent compared to 2021. The estimated Texas cattle inventory was five point one million, a three percent reduction from 2020.
The biggest reason for shrinking cattle inventory, ranchers are marketing their cattle earlier than usual because of the cost of maintaining them at the ranch.
Higher costs, forcing some tough decisions.
“Producers have to start making choices of is it worth it to continue to feed the cattle on these high prices?,” said Kelly Giles, co-owner of Giles Angus Ranch. “Do I need to cut back? Is this the most efficient cattle that I’ve got?”
So why is this happening?
No rain, no forage, which means, “they become even more expensive, so that adds an additional challenge onto our ranchers,” Smith explained.
Without forage, that means they have to buy feed, or the cattle must be marketed to break even.
“Sold for salvage value. That’s mostly old cows, bulls,” Giles said.
One year of drought, setting us up for years of higher prices.
“The calf crop we raised last year, is the beef we’re eating this year. Everything’s a delayed effect. We’re going to decrease beef production by by about 5% going into 2023. It’ll continue to decrease on into ’24 and ’25,” Giles added.
The steaks will remain high, at least for the near future.