Experts warn of ‘meat recession’ as beef supply shrinks; prices to rise

In an Instagram post, online meat delivery company Good Ranchers warned consumers that “a meat recession is knocking and supply is about to be tight” as beef supply continues to shrink. According to The United States Department of Agriculture (USDA), the number of cattle moving from pasture into a feedlot to be conditioned for slaughter in September fell 4% nationwide year-over-year. In certain areas, such as Kansas, the drop was as high as 11%.

“The cattle heard has shrunk due to droughts and pandemic prices pushing ranchers to sell to stay alive,” Good Ranchers said in the post. “This means our total meat supply for the coming year is down significantly. This is one of the main reasons a meat recession is coming.”

The drought Good Ranchers referenced in its post has been lingering in key U.S. cattle producing states in the Southwest such as Kansas, Nebraska, Oklahoma and Texas since 2021. According to data from the U.S. Drought Monitor, areas of Texas and the Oklahoma panhandle have not experienced material precipitation since September 2021.

“There’s been an acute drought in those states for really the better part of 2022,” Walter Kunisch, senior commodities strategist at Hilltop Securities, told FOX Business. “That drought has been so prolonged, the opportunities to graze or for ranchers to put cattle in the pasture has sharply declined.”

On top of the drought, breeders are also culling more unbred female cattle at a faster pace. This effectively reduces the supply of future animals for slaughter.

“Our replacement heifers – the young cows that will produce future calves to help rebuild the herd – are at their lowest number since the USDA started tracking them in 1973,” Good Ranchers said in its post. “There’s no quick fix for that problem.”

These issues, combined with higher commodity and operating costs, is creating “persistent higher cattle prices, which can lead to higher beef prices,” according to Kunisch. He estimated the U.S. beef cattle supply will continue to contract throughout 2023, continuing the meat recession and further pushing up beef prices for consumers “well the first half of 2024.”