President Donald Trump is blaming the meat packers and U.S. cattlemen for rising beef prices, but the tariffs on beef from Brazil, Australia, New Zealand, Uruguay, feed, farm equipment and machinery are all adding to the price surge.
The United States is a big buyer of Australian, Brazilian, and New Zealand beef exports.
Brazil is the second-largest beef-producing country and the largest beef-exporting country in the world.
Brazilian beef exports tracked by Panjiva plummeted in July and August after multiple tariffs resulted in a layered 76.4% total rate being implemented for Brazilian beef. Trump imposed a 50% tariff rate for many Brazilian goods in July. Beef exports have found a new home, being diverted to other markets like China.
Exports of beef from Australia, New Zealand and Uruguay to the U.S. have also decreased as a result of tariffs.
The pullback in exports has reduced supply and is adding to pressures in an already tight U.S. beef supply chain.
“When you impose an extra 50% tariff on a major supplier like Brazil, importers may keep buying and pass costs along, or they may stop buying, but that means less supply to meet the demand,” said Dan Anthony, president of economic research firm Trade Partnership Worldwide. “Either way, you expect prices to go up, especially when imports from Australia, New Zealand, Uruguay, and other key suppliers face new tariffs too,” he added.
The most recent consumer price index report from the Bureau of Labor Statistics for the month of September showed prices for a variety of uncooked beef products rising year over year between 12% and 18%.
The compounding effect of tariffs comes at a time when the U.S. cattle herd is at near a 75-year low, and consumer demand for beef has grown.
Cattle ranchers have had difficulties increasing the herd because of drought, which has diminished the amount of grasslands to feed their herds, and the higher costs in buying feed. Some imported fertilizers have faced double-digit tariffs, which have raised the cost of growing the crops (corn, soybeans) that are used in animal feed.
Tariffs on essential items like steel and aluminum have also increased the cost of farm equipment (tractors, grain bins) and repairs.
All of these added expenses carve out money from the coffers of ranchers and farmers that would be used for investing back into their operations.
“We’re in one of the toughest cattle cycles in history,” said sixth-generation Texas rancher James Clement III. “We have the smallest pipeline of future cattle and even with today’s prices, ranchers can’t speed up the process to rebuild the national herd, which will take time, grass, and rain,” he said.
Replacement heifers are down to a 20-year low.
Ranchers say it takes years to see a return on buying heifers.
“The fundamentals are tight, the runway is long, and the slightest shock makes an already fragile rebuild even harder,” Clement said. “This is a foreign concept to many other industries where production can be ramped up or down in weeks,” he added.
One of the biggest headwinds curtailing investment is the current political environment.
“Producers start second-guessing whether to hold back heifers or take the money today because uncertainty adds risk to ranchers wanting to retain or purchase heifers to rebuild their herds,” Clement said.
President Trump added to frustration among ranchers when he announced as part of a deal with Argentina in October having the country export beef into the United States to help lower beef prices, which the National Cattlemen’s Beef Association said would harm rural America, comments that helped to sink the price of cattle futures.