Have you noticed the White House and USDA Secretary Tom Vilsack has been silent lately about their usual haranguing of meatpackers? Reason: The U.S beef herd has shrunk to its smallest size since 1962. As a result, meatpackers are paying considerably more for cattle, which cuts into their profits. Analysts told Reuters that “the amount of money meatpackers earn buying cattle and converting them into meat fell below $40 per head of cattle in April, after topping $700 per head in May 2020.”
“Packers are scrambling,” Derrell Peel, an Oklahoma State University agricultural economist, told Reuters. “They will likely try to pass on costs to customers, charging more for ground beef and steaks at a time of high inflation, analysts said, but it is still a question whether higher beef prices will ruin consumers’ appetites.”
Meanwhile, the Biden administration continues to pump money into boosting the ability of smaller operators to compete with the packing giants by building local and regional processing infrastructure.