Shoppers may be in for a shock at the price of beef in supermarkets.
Prices in the beef and veal category rose 14.7% from September 2024 to September 2025, while overall grocery prices rose 3.1% (the latest publicly available Consumer Price Index data due to the government shutdown in October).
But expenses for American farmers are also rising. Input costs for ranchers have increased by more than 50% over the past five years, according to the American Farm Bureau Federation.
“As a beef producer, it’s hard to say that the price of beef is necessarily too high. So if you’re paying $6 for a latte at Starbucks and you’re paying $6 for a pound of beef, that pound of beef can feed a family of three,” said Tyrone Lieneman, co-owner of Linetics Ranch in Princeton, Nebraska.
The main reason for the soaring beef prices is the record low supply of cattle. At the beginning of 2025, the national herd was the smallest since 1951.
Cattle cycles are the natural expansion and contraction of the U.S. herd and are tied to supply and demand. It usually occurs every 8 to 12 years.
If producers can command higher prices for their cattle, they are more likely to retain more female cows, called heifers, for breeding. As the supply of cattle increases, prices will eventually fall and the herd will shrink again.
“It’s a big question for producers right now,” said Adam Wegner, director of marketing for the Nebraska Beef Council. “They have to make a 50-50 decision: Do they sell these cows to the supply system or do they keep them? And when there’s money on the table, I think there’s an incentive to be willing to sell the cows to the food supply system, especially when demand from consumers is so high.”
Severe drought can also affect ranchers’ decisions about whether to keep cattle for breeding.
“When we have a drought, we can only produce minimal feed, hay and alfalfa,” Lienemann said. “There’s still a lot of cattle out there and they still need that feed.”
During periods of drought, ranchers often supplement pasture rations with grain. Although grain prices have been significantly lower since 2022, they can still represent unexpected costs for producers.
“What we’re experiencing right now is kind of a combination of drought, high demand, and low heifer retention, which in some ways compensates for this herd size problem that America has today,” said Nate Lempe, CEO of Omaha Steaks. “We’ll have to form a herd.”
The company has not raised prices in more than three years, but said it is now feeling the pinch.
“The price of beef has gone up so much that it’s starting to hurt our bottom line,” Lempe said. “We’re always looking internally. How can we find efficiencies? How can we invest in our business to produce more volume at less cost? But there’s a breaking point, right? There’s a point where the raw materials you need hit a certain price and you have to start passing some of that on.”
Despite smaller herd sizes, overall beef production is increasing as the U.S. produces larger cattle. Additional supply, primarily ground meat, also comes from beef imports, which have been steadily increasing over the past decade.
Currently, the tariff situation in Brazil is rapidly evolving, and in Mexico, parasitic infections in cattle are further driving up prices for consumers. Still, experts say domestic herds are most important for long-term relief.
“In the short term, if we start actually retaining heifers to go into breeding herds, total domestic beef production will go down because fewer cows will actually go to feedlots, so that will actually maintain prices in the short term. But within the three years that we’re talking about, you should start to see increased production coming into the system and beef prices and cattle prices should start to (soften) as well,” said agriculture official Andrew Griffiths. Professor of Resource Economics at the University of Tennessee.
Watch this video to get an exclusive look at Omaha Steak’s processing facility and learn more about how high inflation is impacting the beef industry.
