Ground beef is the new egg as the media has turned its attention to a new grocery item impacted by inflation. The average price for a pound hit $6.12 in June, up 12% YoY, and the highest price recorded since the government began collecting data in the 1980s.
Some news outlets blame tariffs on Brazil that have not yet gone into effect, but Brazil only imports 5-7% of the overall supply. The United States chiefly supplies itself with ground beef, with domestic production accounting for 75-80% of the overall supply. The problem is that the US has had six consecutive years of herd contraction, and the current supply is unable to meet demand. As of January 2025, cattle inventory reached 86.7 million head, 1% down YoY, and the smallest inventory since 1951.
One must recall how the previous administration was pushing forth the net-zero emission agenda. Farmers willingly reduced herd size to avoid threats of taxation. From 2021 to 2022, the EPA touted a 2% drop in methane from enteric fermentation, but that was primarily due to shrinking beef cattle populations.
Weather was also a main driver as droughts that began around 2020 in abundant farm areas cut down cattle size. Overall inflation has caused the cost of food to soar for farmers as well, with feeder cattle prices up 9% YoY.
The US increased beef imports by 24% from 2023 to 2024 to offset domestic constraints. Australia supplies around 7% to 10% of all beef, followed by Brazil, with New Zealand accounting for 3% to 4% of the supply, Uruguay for 2% to 3%, and Argentina with 1% to 2% of the total supply. Still, America is largely self-sufficient in supplying ground beef.
Now this is simply the ground beef supply as live cattle is a different trade. Naturally, the US looks to its neighbors, Mexico and Canada, for live imports, with Canada supplying 15% to 20% of live cattle and Mexico supplying up to 15%. Even though the US has the lowest head inventory on record since 1951, the majority of live cattle used to create ground beef is domestic. Now, Mexico has a massive screwworm outbreak from late 2024 to the present day. The US suspended all live cattle imports from Mexico in May to prevent the disease from spreading, which lasted into July and impacted peak seasons.
Ground beef prices are up due to an imbalance in supply and demand. The headlines are blaming Trump tariffs for this inflation without understanding that prices naturally rise when demand outweighs supply.
