What's causing record high US beef prices?

Here is a story making headlines in the economy: What's causing record high US beef prices? Image source, via Getty ImagesBySam FenwickBusiness reporter, NewsPublished1 hour agoWith US beef prices soaring to record highs, you might think that South Dakota cattle rancher Eric Gropper would be celebrating. Yet while the cost of the meat in US supermarkets is now 12% higher, external than it was a year ago, a rise more than three times the rate of general inflation, Gropper says that he and all the other beef farmers aren't making any more profit than usual.

The World Service's Follow the Money series spent a week tracing the American beef supply chain to find out what has caused the price jump and discover where all the cash is going. The rancherImage source, Eric GropperImage caption, Cattle farmer Eric Gropper is selling his animals for record highs, but his costs have also shot upEric Gropper has about 350 breeding cows on around 8,000 acres of grassland in south-west South Dakota. Most of it he leases from the Pine Ridge Indian Reservation.

Economic Details

He is seven miles from the nearest paved road, and two and a half hours' drive from the closest town of any size. Gropper doesn't set the price for his calves. Instead once a year he takes them to a livestock auction where buyers place bids and the hammer decides.

Right now the bids are the highest he has ever seen - around $2,500 (£1,883) for a 600lb (272kg) calf, up from $2,000 two years ago. These record prices are driven by a simple fact – there are not enough cattle. Due to a combination of drought in many states, and disease pressure, at the start of this year the US had fewer cattle than at any point since 1951.

, externalGropper is experiencing drought first hand, as the 13 natural wells across his land that provide ground water for his cattle have run dry. He has to use a water tanker instead. Image source, Eric GropperImage caption, Eric Gropper farms his cattle the old-fashioned way - on horsebackDue to the national shortage of cattle, Gropper is getting record prices for his.

Analyst Views

But unfortunately his costs have equally climbed to new highs. A new pick-up truck that once cost $40,000 now runs to $100,000. A wooden fence post has gone from about $6 to as much as $19.

A quarter-mile roll of barbed wire has doubled, from $60 to $130. Everything he uses day to day, he says, has jumped in price since the Covid pandemic. And with little grass on parched fields – well over 60% of US cattle are now grazing on drought-hit land - farms like his are having to buy in hay, silage and other fodder for their cattle.

"I'm able to pay my bills, but my input costs are so drastically high that if we didn't have these record prices we'd all be broke. I sit down to do my taxes, and it feels like I made a lot of money. But in the end I really didn't make any more.

Economists are analysing what the news means for the markets.