Beef prices are staying high because the U.S. cattle herd has dropped to the smallest level in 75 years, a change driven by drought, rising feed costs and an aging ranching workforce, experts at Montana State University and Oklahoma State University say. Eric Belasco, head of agricultural economics at Montana State, points to drought as a core culprit, while Derrell Peel at Oklahoma State explains how long it takes to rebuild herds. The industry’s structure, where four major processors dominate, and recent Department of Justice scrutiny add another layer of strain. USDA figures show retail beef prices and consumer spending both rising, underscoring how persistent this pressure has become nationwide.
The most basic cause is persistent and severe drought across the West and Plains that has stripped grasslands and tightened forage supplies. Ranchers faced with dead pastures and little water have had to sell off animals early, including breeding cows that are crucial for future calf crops. That means fewer calves are coming up the pipeline, a problem that compounds year after year rather than reversing quickly.
Producers are also squeezed by higher input costs, especially for hay and other feed, which amplifies the pressure from weather. When hay yields fall, feed prices climb and ranchers must make hard choices about herd sizes and timing of sales. These financial realities have driven long-term reductions in the herd that are not easy to undo.
“The biggest thing has been drought,” Eric Belasco, head of the agricultural economics department at Montana State University, told reporters, pointing to the broad geographic hit on grazing resources. With roots of the problem in the landscape itself, short-term policy fixes or subsidies can only do so much until forage conditions recover. For many operators, selling breeding stock was a survival choice, even though it slows future recovery.
Rebuilding animals to market weight and restoring breeding herds takes time and biological capacity, which creates an unavoidable lag in supply. Derrell Peel, an agricultural economics professor at Oklahoma State University, puts the timing plainly: “The fact of the matter is there’s really nothing anybody can do to change this very quickly,” he said, emphasizing the multi-year nature of recovery. Bringing cattle to market typically takes about two years, while replenishing cow numbers requires several more calving cycles to restore scale.
Beyond weather and costs, the processing side of the business matters. Four big companies—Tyson, JBS, Cargill and National Beef—handle roughly 85 percent of grain-fed cattle processing, concentrating market power in a few hands. That concentration has led to regulatory attention and a Department of Justice inquiry into pricing and competition in the meatpacking sector. Critics say the consolidation can amplify price swings, while industry defenders argue the market remains functional under current structures.
Those forces show up at the grocery counter. USDA data tracked a rise in the average retail price of beef from roughly $8.70 per pound in March 2025 to $10.08 a year later, near a 16 percent increase. Consumers kept buying through the price jump: in 2025 Americans spent over $45 billion on beef and purchased more than 6.2 billion pounds, according to industry data compiled by those who track retail demand. Spending rose about 12 percent year over year while the volume sold increased more than 4 percent, signaling robust demand even as prices climbed.
The net effect is a market with tight supply, steady consumer demand and limited short-term fixes. Analysts at the Kansas City Federal Reserve note how drought-driven reductions in hay and pasture production feed directly into higher costs and smaller herds. For shoppers, it means feeling higher prices now; for producers, it means a multiyear path to restore herd sizes and stabilize retail costs once forage and herd dynamics realign.
