Record-high Prices Create Opportunity for Ranchers

The U.S. beef industry is going through a major restructuring, and recent events suggest that this time, the changes are likely to be permanent. While economic fluctuations and changing consumer tastes have resulted in periodic highs and lows in the past, recent developments point to a permanent change in the position that beef occupies on the American dinner plate.

Two of the three largest beef processors in the U.S. — Tyson Foods and JBS USA — have recently closed facilities in Utah, Illinois and Pennsylvania. Additionally, Tyson has announced it will sell another facility in Washington. These closures have accelerated the rate at which packers are reducing their operations, which is estimated to have declined by up to 20% over the past six years.

While Tyson has announced it will shift some of the operations from the closed facilities to other processing sites in Kansas, Nebraska and Texas, the changing economics of the beef industry suggest that further restructuring may be on the way, and a turnaround is unlikely. Tyson projects possibly more than $500 million in losses on its beef segment in 2026.

What’s Going On?

Several key factors are driving the changes in the beef industry, including:

  • Nationwide, the U.S. cattle herd is at its lowest point in 75 years, and about 17% of cattle ranches have been lost since 2017. As a result, the national cattle herd has declined. From 2023 to 2025, the cattle herd declined by about 400,000 head, to a total of 6.7 million.
  • Over the past 50 years, changes in dietary habits and international competition have contributed to the decline of the U.S. cattle herd. Consumers are turning more to chicken and other meats, and meat imports from such countries as Australia, Canada and Brazil have captured about 22% of the U.S. market.
  • Increasing costs of inputs such as feed are forcing some small producers out of the cattle market.

These and other factors could drive temporary, cyclical changes in the beef industry, a scenario we’ve been through before. But the closures of the processing facilities and the increasingly entrenched economic factors make it clear that the current industry restructuring is permanent.

If the herd gets back up to its previous size, it will have to be done by large producers, as too many small and medium-sized cattle producers — up to one-third in Kansas, by one observation — have already cashed out.

Opportunity for Small and Medium Producers

Amid change and turmoil, there is sometimes opportunity.

Thanks to the law of supply and demand, the shrinkage of the U.S. cattle herd and other factors have driven beef and cattle prices to all-time highs. Hoof weight prices right now for live cattle range from $217 to $224 per hundredweight. Before the Covid 19 pandemic, those prices hovered around $120, and during the pandemic they dipped as low as $80.

For some further perspective, in 2020 a cold cow could bring a price of about $850. Today, she brings a price of more than $3,000. So it follows that in 2020 you could still find hamburger in the grocery store for 99 cents a pound. Today, you’re paying $7 to $8 a pound, and a good steak might go for $25 to $30 a pound.

While some consumers are hurt by these prices, other consumers are driving the market toward more premium, expensive cuts. They may be reducing their consumption of beef at the home dinner table to one night a week, but it’s one great cut on the plate.

What this means for small to medium-sized producers is that they have the financial flexibility to cash out and retire, depending on what their personal goals are. A significant portion of cattle producers in the Midwest are among the last of the Baby Boomer generation, and many of them don’t have a younger generation in the family that wants to take over the cattle operation. In their 60s now, they are positioned take advantage of current record-high cattle prices and sell out so they can retire.

But for those who want to stay in the game, those high cattle prices make continued cattle ranching very lucrative, and it’s likely to stay that way for a long time. The consumer market has adjusted to significantly higher beef prices, and with increased profitability in cattle ranching, there’s little pressure to return to the way things used to be.

A word of perspective — just five years ago, we were in the throes of the Covid 19 pandemic, when cattle prices fell to $80 per hundredweight. Many cattle producers succumbed to the financial pressures and had to sell out.

Today, we’re in a different place. Things are changing rapidly, and that can be uncomfortable. Nobody wants to see the cattle industry, which has been key to the Kansas agricultural economy for generations, shrink. But with change comes opportunity. Small and medium-sized producers today have a chance to evaluate where they are in their lives, assess the value of their operations and make a choice that will set them up for the rest of their lives.

It’s good to be in a place where you can’t make a bad decision.

Questions?

If you would like to discuss what the future holds for your cattle operation, and the options that are available to you, contact an Adams Brown ranch accountant.