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Beef Industry Chaos: Tight Supplies, Strong Consumer Demand and Political Interference

Thu, 13 Nov 2025 19:42:19 GMT

The current state of the cattle market and beef industry has been described as chaotic. “There’s chaos in cattle,” as Chip Flory, AgriTalk host, put it.

The industry turmoil follows recent statements made by President Donald Trump regarding the need to lower beef prices as well as his request for the Department of Justice to immediately begin an investigation into meatpackers for driving up the price of beef.

Derrell Peel, Extension livestock marketing specialist from Oklahoma State University, affirms these are unique times, emphasizing while political factors have always indirectly influenced agriculture, it’s unprecedented for the cattle and beef markets to be at the center of direct political debate.

On a recent AgriTalk segment, Peel points out the inherent biological and production constraints of the cattle industry — particularly the fixed timeline to raise cattle — make quick fixes impossible. Both Flory and Peel stress that no political policy can shorten the cattle production process; any effective supply response requires patience and long-term adjustment.

Packers Under Fire

The concept of industry consolidation and foreign packer ownership has long drawn scrutiny with frequent government investigations. Peel says highly concentrated industries such as beef packing have been targets for skepticism and regulatory attention for over a century, to the point suspicion of packers is almost “a cultural thing” within segments of the industry.

He characterizes the latest call as another attempt to target convenient scapegoats rather than addressing deeper systemic realities of supply and demand.

“The reason we have the industry structure we do is because the economies of size and cost efficiencies are such a powerful economic force,” Peels explains.

He confirms researchers have long studied market power, and while concentration does have a small negative price impact for producers, the efficiency and cost-savings from large-scale firms more than compensate. These benefits, he says, keep cattle prices higher for producers and beef prices lower for consumers than they would be with a less efficient structure.

Dissecting the economics of margin markets Peels explains why price changes in different parts of the beef supply chain — cow-calf, feeders, packers and retailers — don’t move in lockstep. He uses a “bungee cord” analogy to illustrate the complex, dynamic and time-lagged interactions linking cattle prices at the farm with retail beef prices.

“All cattle prices and beef prices are ultimately connected, but they’re not connected with a stick or a chain,” Peel summarizes.” They’re connected with a bungee cord. There’s just an enormous amount of dynamics in this thing.”

Regarding the foreign ownership debate, Peel says there is no evidence foreign ownership alters packer behavior within the U.S. marketplace. He emphasizes foreign firms have made large investments in U.S. facilities and continue to operate them by the same market logic that would govern domestic ownership.

He also points out it is unclear who else would be in a position to make such significant investments if these foreign companies were not involved. This pragmatic view suggests the ownership issue might be less important than is commonly believed, at least concerning everyday operations and market outcomes.

A Lot Hinges on Rebuilding the Cow Herd

In his latest article, “ All Bets are Off ,” Peel says: “The latest edition in the torrent of recent political attentions directed at the cattle and beef industry includes allegations of market manipulation against the beef packing industry. Beef packers are the one segment that has been most negatively impacted in the current market, incurring huge losses due to poor margins and limited cattle supplies.”

(Meat Institute)

Peel reports packers have been losing enormous amounts of money for about the past 18 to 24 months. According to the Meat Institute, packer margins slipped into the red in September 2024. Through the week ending Oct. 4, 2025, packer margins were a negative $126.50 per head, up slightly from a year earlier at a negative $125.65 per head, according to Sterling Profit Tracker. The outlook for the year is a negative $165.96 per head packer margin.

“There’s just simply not enough cattle for them to operate at cost efficient capacities,” Peel explains.

This negative trend was anticipated — the reduced supply of cattle has made it difficult for packing plants to function at cost-efficient capacities, leading to the accumulation of operating losses. Peel points out the combination of low unit margins and insufficient cattle supplies challenges the economic viability of packers, further illustrating the complexity of the current environment.

This decline in inventory is not the result of a single factor but is driven by several years of drought and other market pressures. It is clear high beef and cattle prices are a result of these tight supplies and, according to Peel, these high prices are likely to persist for several years. The industry simply cannot turn around production levels quickly, and it will take time — a matter of years, not months — for conditions to normalize.

“Using logic that only works in the office of a politician, packers are supposedly wielding unacceptable market power while paying record high cattle prices and artificially raising beef prices … but not enough to avoid losing a couple hundred dollars on every animal they process — certainly many millions of dollars,” Peel says. “If beef packers had any significant ability to exercise market power, I am certain that we would not have record high cattle prices and packers would not be losing money.”

Peel suggests the federal government attacks on beef packers are aided and supported by a vocal minority of the cattle industry and a few sympathetic politicians who view packers as a perennial villain and always worthy of attack anytime the opportunity is presented.

“The timing of such attacks this time is particularly puzzling as dismantling the packing industry would certainly jeopardize current record high cattle prices and the best economic returns most producers have ever enjoyed,” Peels says. “I guess some cowboys just can’t stand prosperity.”

R-CALF CEO Bill Bullard says the cattle market is fundamentally broken citing years of an inverse relationship between falling cattle prices and increasing retail beef prices when the only ingredient in beef is cattle. Read more about his perspective.

Patience not Politics

Beef and cattle prices, Peel notes, are historically high, a result of industry-wide low cattle inventory. Rebuilding the nation’s cow herd will be a long, slow process, keeping prices elevated for an extended period. And Peel says there is no definitive evidence producers are saving heifers to start the rebuilding process.

“2025 may prove to be technically the cyclical low, but 2026 is going to be barely bigger, if it is, and no growth in 2026 and probably none in 2027 ... it’s 2028 into 2029 before that turns into increased beef production,” Peel predicts.

He summarizes neither regulatory nor political action will can speed up the rebuilding process. It will take years of concerted effort, market healing and stability before the industry can expect a meaningful rebound in herd numbers and production — a reality that requires patience across the industry.

“There is absolutely nothing anybody can do to make beef prices go down, or cattle prices, other than maybe tear up the industry completely,” Peels says. “And if we tear up the industry, it’ll make cattle prices go down, but it won’t make beef prices go down. It’ll make beef prices go even higher for consumers and the only way to fix this is to give the industry time to rebuild, and that’s going to take two to four years if we ever get started.”

He says a majority of cattle producers understand the beef industry is extremely complex and all segments are critical and essential.

“Though the outcome of current political actions is uncertain, the potential for long-term harm to the industry is substantial,” Peel says. “Anytime politics trumps economics, the strong supply and demand fundamentals that have determined the outlook for the industry to this point become irrelevant. Expectations for prices and production going forward are now completely clouded…therefore… all bets are off.”

Your Next Read: You Be The Judge: The Big Bad Beef Packers Are On Trial

Are We Seeing Signs of Herd Rebuilding?

Mon, 15 Sep 2025 13:46:26 GMT

The U.S. beef cow inventory has reached its lowest point since 1962, marking what appears to be the bottom of the current cattle cycle. Tight supply is driving the strong pricing environment beef producers are enjoying today.

“For cow-calf producers right now, things are as good as they’ve probably ever been,” says Troy Rowan, University of Tennessee assistant professor. “Even though things are really good, producers are conscientious and vigilant about potential challenges,” Rowan summarizes.

Agreeing with Rowan, South Dakota cattleman Ken Odde adds while profits are currently strong, inflation quickly erodes economic gains. He stresses the importance of risk management and diversification.

Early Signs of Herd Rebuilding?

This is the million-dollar question: Are there encouraging signs of expansion?

“The beef industry is not currently in herd expansion mode, with producers hesitant to retain heifers due to high costs and economic uncertainties,” says Dave Weaber, Terrain senior animal protein analyst.

In Drovers State of Industry Report to be released the week of Sept. 15, we breakdown the July USDA cattle inventory and cattle on feed reports. While the USDA reports showed the smallest U.S. herd in history and continuing tightening numbers on feed, analysts predict producers have not experienced the highest cattle prices, yet.

“Our national herd size has the industry at an interesting point,” Rowan says. “Prices are at all-time highs, inputs are reasonable and more cow-calf enterprises are profitable than ever. When the industrywide rebuild will happen remains up in the air, but producers are keeping in mind that the high-flying industry right now is not going to stick around forever. They’re starting to adopt new technologies, leveling up their crossbreeding programs and expand opportunities for non-cattle related income on their ranches.”

Weaber adds producers need to be intentional about herd expansion, understanding the financial implications of adding new cattle.

Beef-on-Dairy Fills the Beef Supply Gap

“The current dynamics of supply is going to be a challenge,” says Jarrod Gillig, Cargill senior vice president, managing director for beef.

Gillig summarizes the cattle industry is experiencing a critical period of transition. He doesn’t expect the cow herd to return to previous peak levels of 32 million head. Instead, he predicts the gap in supply will be filled by beef-on-dairy calves.

Nick Hardcastle, Cargill senior director of meat grading and technical specialist, explains how the beef-on-dairy calves are an upgrade to the traditional Holstein steer and the positive impact they are making on beef supply.

“Beef-on-dairy is more desirable because it helped overcome several Holstein difficulties,” he says. “Improvements include red meat yield — more meat to a consumer — as well as improved acceptance in branded programs.”

Hardcastle says the beef-on-dairy cattle are filling the supply gap by filling pens in the Plains states where feeders are needed, and they are widely accepted by feeders and packers.

Defining Future Beef Producer Success

Odde says the beef industry is not just surviving but positioning itself for significant transformation.

“Producers who remain flexible, technologically savvy and strategic in their approach will be best positioned to thrive in this changing environment,” he says.

Weaber agrees saying successful producers will be those who can adapt, manage costs effectively and align themselves with evolving market trends.

“Don’t let cost get away from you,” Weaber warns, emphasizing that “being a low-cost, high-productivity producer means you get to make money seven, eight or nine years of the cycle.”

He stresses the importance of understanding financial implications, particularly during market transitions.

“If we’re not working on the business, we can’t work in the business,” Weaber adds, summarizing his philosophy regarding producers’ need to adopt more strategic, data-driven approaches.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

Your Next Read: 47% of Beef Producers Plan to Increase Herd Numbers

Feed Grain Supply Boost Driven by Corn Yield, USDA Predicts

Fri, 17 Nov 2023 14:35:01 GMT

The U.S. feed grain supply is expected to grow by 3.4 million metric tons (mmt) to 439.3 million, propelled by a projected 1.9-bushel-per-acre increase in corn yields for the 2023/24 corn production forecast, reports the USDA Economic Research Service (ERS) in the recent November feed outlook report .

Only partially offset by a 6-bushel-per-acroe reduction in the U.S. sorghum crop, the increase in corn still averages to overall higher projected global and U.S. coarse grain exports this month.

A rise in world corn exports is pushing the record-high trade (for the international October to September trade year) further up, notes the report. An increase in supplies (higher beginning stocks and greater output) exceeds the rise in coarse grain use, boosting stocks.

The USDA’s National Agricultural Statistics Service (NASS) increased its national corn production forecast in the November Crop Production report. The projected U.S. corn production for 2023/24 is now 15.2 billion bushels, a 170-million-bushel rise from the previous month. This is attributed to an increase in yields to 174.9 bushels per acre, up from October’s forecast of 173 bushels per acre. The harvested area forecast remains at 87.1 million acres.

While yield forecasts were adjusted for some states, major producers like Illinois, Indiana, Minnesota, and South Dakota saw increases contributing to the overall national yield rise. Illinois accounts for over 19 percent of the total increase.

Corn imports during the first month of the 2023/24 marketing year were robust, reaching just over 3 million bushels, nearly matching volumes from September 2022 and 2021 combined. However, with the expected growth in domestic corn production, demand for foreign corn is anticipated to weaken, leaving the 2023/24 corn import forecast unchanged at 25 million bushels. The projected increase in corn production brings the 2023/24 U.S. corn supply forecast to 16.62 billion bushels, 1.5 billion higher than 2022/23, notes the report.

U.S. corn use is expected to grow in line with the projected supply increase. Feed and residual corn use is raised by 50 million bushels to 5.65 billion, supporting the growing number of feedlot placements at the beginning of the marketing year. The corn-for-ethanol fuel use forecast is also raised by 25 million bushels to 5.33 billion, driven by strong ethanol demand. The report notes a slightly lower 2022/23 fourth quarter corn-for-fuel ethanol use estimate, now at 5.176 billion bushels.

U.S. corn exports for the 2023/24 marketing year have started well, with September volumes at 125 million bushels, 25 million higher than September 2022. Export commitments through November 2, 2023, are 31 percent higher than the same period last year at nearly 760 million bushels, notes the report. Combining these factors with a growing domestic supply, the 2023/24 corn export forecast is increased by 50 million bushels to 2.08 billion.

Despite the anticipated increases in U.S. corn use, they do not exceed the projected supply gains, the report explains. Consequently, 2023/24 corn stocks are 45 million bushels higher at 2.16 billion bushels. The average price received by U.S. corn farmers is expected to decrease from last month’s forecast of $4.95 per bushel to $4.85 per bushel.

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Young Farmer Cashes In On Corn With Cattle

Mon, 07 Aug 2023 15:10:31 GMT

At a mere 28 years old, Tony Schwarck jumped headfirst into a high-effort and high-risk business venture. After a decade of working with his parents and grandparents on their row-crop operation, he knew his future in farming would need to take a different path. Farmland and cash rents were sky-high in his competitive area of northern Iowa, so expanding their corn and soybean acreage to support three families was a big hill to climb.

Tony and his wife, Aarika, began researching ventures to complement their existing operation and generate new income. They had two resources during the winter months—time and corn. The couple explored several diversification options , but it was beef finishing that finally penciled out. The Riceville, Iowa, couple became farmer feeders, and in that first year, 2013, they marketed 300 beef heifers.

“We wanted to utilize our homegrown corn,” Tony says. “A young producer has time and not a lot of equity, so livestock is a great fit. We take the corn we raise, feed it to cattle and they are giving us a byproduct we can apply to our fields to help us grow better corn. It’s really added value to our acres of corn, and now we concentrate on marketing corn through cattle.”

This year, the Schwarcks are on track to market 2,500 head of cattle. They have also expanded their crop business to 1,200 acres of corn and soybeans, up from the first 160 acres Tony rented on his own in 2006.

Tony is armed with considerable management skills and sheer nerve. His ability to reimagine and build a venture from the ground up are just a few of the reasons he earned the 2019 Tomorrow’s Top Producer Horizon Award .

“Tony’s work ethic and decision-making abilities are unparalleled,” says Robert Williams, a CPA with Hogan Hanson and the Schwarcks’ long-time adviser.

Analyze. Monitor. Act. When the Schwarcks decided to become farmer feeders, they faced a big challenge: a lack of capital. They knew their plan could work. They just needed to get the bank on board.

This new venture created an opportunity to find a new lending partner. Their lender, Eric Paulson, helped them restructure debt and set them up on a borrowing base. Each month, the Schwarcks and Paulson analyze that borrowing base.

“This monthly review has made me a better manager, as it allows me to constantly know our financial numbers,” Tony says. “Every month Eric is looking at our numbers. If we have a good month, he points out what we did correctly. If we have an off month, we can identify problems and potential problems a lot quicker.”

“Tony and Aarika have utilized timely financial analysis toward managing their growth and improving efficiencies,” says Paulson, senior agricultural loan officer with Wells Fargo in Mason City, Iowa. “They are constantly asking for ways to improve both day-to-day and strategic operations.”

Aarika has taken over the farm’s record keeping and accounting. She created two accounts, one for cattle and one for grain, so they could properly assess financial decisions.

Numbers were always the basis of decisions for the Schwarck family, starting with Tony’s grandfather, Chris Schwarck and father, Dan Schwarck. “When we had meetings, even when I was young, the numbers were discussed,” Tony says.

This process of sharing financials with successors is key in making successful management transitions, says Dick Wittman, a family business consultant and Idaho farmer.

“Doing so exposes your successor to your business culture,” Wittman says. “Plus, someone wanting to join the operation needs to know the scale and scope of the business.”

“Feeding cattle has made me a better farmer.”

Comfortable Cows. Strict financial analysis led the Schwarcks to expand their finishing operation in 2017. They built a state-of-the-art cattle facility that houses 600 head. The building’s monoslope pitched roof and curtains allow sunlight and cool air in but keep snow and rain out.

“We can can’t completely control the environment, but we can really help it,” Tony says.

The Schwarck team uses a cloud-based software program, Performance Beef Livestock Analytics, to track data such as the cattle’s weights, feed ingredients and costs. Every day the cattle’s rations are automatically recorded using an iPad linked with the scale on the feed truck.

“This lets us track performance and weight,” Tony says. “We keep track of all costs, including freight, vaccines and vet expenses, death loss and any money we have invested in a hedge account. This allows us to be current on breakevens and billing.”

Typically, the feeder calves arrive at Schwarck Farms straight from a breeding ranch and weigh 550 lb. to 650 lb. Around 220 days later, they are ready to be sold, weighing around 1,400 lb.

The Schwarcks’ row-crop operation provides 60% of the corn they feed to the cows. The balance of their corn production is sold to local ethanol plants, from which they buy distillers’ grain.

To reduce costs, the Schwarcks traded their hopper trailer for a belt trailer so they can haul corn to the ethanol plant and reload it with distillers’ grain for the feed yard. “This alone saves our operation roughly $800 per week,” he says.

This constant eye on costs helps Tony smartly buy feeder cattle. “That’s one thing I have to work on,” he says. “If the numbers don’t work—pass. They sell feeder cattle every day of the year.”

Constantly, Tony sees how his experience as a farmer feeder improves his crop operation and vice versa. “Raising a market steer is the same philosophy as growing an acre of corn,” he says. “It’s the little things that count—that’s what separates big yields from small yields. Feeding cattle has made me a better farmer.”

For instance, having interests on both the supply and demand sides of the marketing ledger provides perspective. “Farmers are sitting on corn waiting for a better market, and we are moving that corn all the time and catching profit on it with the cattle,” Tony says.

For grain marketing, Tony develops what he calls a “strike zone” for prices. “When the market rises over our cost of production, I start making small sales. As the market continues to rise, I continue to sell until we are 60% sold,” he says.

Time To Delegate. As Tony has shifted into his leadership role, he’s assessed how he spends his time. “Being a young producer, I felt I needed to be the one who planted, fed the cattle, sprayed, etc.,” he says. “Now I know employees place a stronger bond with their jobs when they realize they have purpose and take pride in their work.”

Beyond family members, Tony employs two full-time and two part-time team members. His goal is to align employee strengths with daily roles and to provide a professional environment.

Tony says he’s lucky to have both his father and grandfather as mentors because they fall on two ends of the spectrum when it comes to risk. “I’ve learned from my dad to not bite off more than you can chew, and I’ve learned from my grandpa an opportunity doesn’t present itself very often, so be ready,” Tony says.

Looking forward, Tony is focused on fine-tuning his cost of production and maximizing profit.

“We’re margin operators in every aspect of our operation—whether that’s growing an acre of corn or producing a market-ready calf. The margin is thin, so we want to maximize every dollar we spend.”

Watch a video about Tony Schwarck’s operation and learn more about the Tomorrow’s Top Producer Horizon Award at bit.ly/Tony-Schwarck

A Snapshot of Schwarck Farms

A Family Affair: Tony Schwarck is a fourth-generation farmer in Riceville, Iowa. In 2004, he joined his family farm, which includes his parents, Dan and Laurie Schwarck, and grandparents, Chris and Ann Schwarck. “It’s a father’s dream to have your son follow in your footsteps,” Dan says. Tony and his wife, Aarika have a daughter, Annalee, 2.

Crop Farming: Tony’s crop operation includes 1,200 acres of corn and soybeans, while the family’s combined operation is 2,600 acres. The Schwarcks analyze soil and yield maps to set yield goals. Last year, they overhauled their 16-row corn planter with high-speed planting capabilities. “It was almost like getting a bigger planter since we can cover more acres in day,” Tony says.

Beef Finishing: In 2013, Tony and Aarika started a beef finishing operation. In the first year, the couple marketed 300 beef heifers. In 2019, they will market 2,500 head of cattle. Nearly all the cattle they finish are Black Angus, and they use the Iowa Cattle Marketing Group to negotiate the best price for fat cattle.

Leadership: The Schwarcks support many local organizations and causes, such as the Riceville Fire Department, Riceville First Foundation, Wapsie Great Western Bike Trail and the Riceville FFA Chapter. They are also members of the Iowa Cattlemen’s Association.

Photos: Pat Lichty, Top Producer