06/09/2026
This has been a hot topic lately. Let me see if I can make it clearer. Find you a comfortable chair for this.
How Much Should Beef Cost ??
The last report on the big packers, showed that they are losing over $ 358 per head. So if you multiply that by 530,000 cattle per week, that comes to over $ 189 million dollars lot in one week. So how much should beef cost? Apparently it's not high enough in the grocery store if they are losing that much money?
We've had folks upset about our price increases over the last three weeks. So how should I price beef, should I lose money putting out a good dry-aged steak? The question remains, how much should beef cost? It shows a broken system.
The cow calf producer usually loses money, but right now, they are making some good returns, replacements are high. The feeders and backgrounders in between the feedyards struggle with high replacement costs and usually put insurance on cattle. Feedyards can pencil in a $ 200 per head loss at times. Now the packer is losing lots of money they say and so we ask the question again. How much should a steak and ground beef cost?
The question is bigger than " what should beef cost "?
The cattle beef chain is unusual because every segment can be under pressure at the same time:
* Cow calf producers historically lose money for years and then have a few profitable years.
* Stocker/backgrounder operators often get squeezed by high calf prices.
* Feedyards may place cattle knowing they're projected to lose money.
* Packers can lose money on slaughter margins.
* Retailers and restaurants still get blamed for high prices.
That sounds impossible, but it happens because each sector is buying and selling at different times, under different conditions.
The Real Question: It isn't " how much should beef cost "?
It is " What price is required for every link in the chain to earn a sustainable return?"
Right now, cattle supplies are historically tight. The U.S. cow her is reduced. Cattle are at record prices, some have doubled in the last 2 years. Fewer cattle means:
* Higher calf prices
* Higher feeder prices
* Higher fed cattle prices
* But consumers are still buying
Why are packers losing money? Large packers built plants designed for abundant cattle supplies. Today there seem to be fewer cattle. If a packer has a plant capable of harvesting 5,000 per day and can only get 4,000 per day, their fixed costs don't disappear.
So even while beef seems expensive in the grocery store, the margin between:
* Live cattle cost
* boxed beef value
can be negative......
What should a steak cost?
A dry-aged steak should not be price based on what consumers wish it cost.
It should be priced based on :
1. Cost of Animal
2. Processing Cost
3. Aging shrink/ yeild from carcass to box
4. Labor
5. Rent, insurance
6. Utilities
7. Reasonable Profit
If all that adds up to $ 26 dollars a lb. for a ribeye, then charging $ 14 dollars lb. doesn't make us a hero. It makes us the next bankrupt meat market.
Local beef perspective:
Our situation is different from big packers and grocery stores.
A large packer:
* harverst thousands of cattle daily
* boxes beef immediatly after cool down
* gains efficiences from scale
Local small scale processor and retailer:
* Raise and buy local cattle
* Process locally
* Dry-age for 21 days
* Have retail locations
* Sell a premium product
* Fully traceable, USA product
Those things cost money and the extra quality cannot be compared to grocery store beef.
It would be similar to comparing:
* A craft brewery to a mass produced beer or,
* A local bakery loaf to factory bread
The broken part of the system feels like:
Beef often gets treated like a commodity at retail while being produced through a highly variable, capital intense chain.
People spend $3.00 on a candy bar, $ 8.00 on coffee, $ 19.00 on fast food and then object to a price on a premium steak that came from a locally raised animal, processed locally, and dry-aged for three weeks and sold by a local business.
Our view: All these different areas of production need profit to stay in business.
* Cow/ calf producers
* Backgrounders
*Feedyards
*Processeors
*Retailers
Consumers are not wrong to feel sticker shock, beef has gotten higher.
Producers are not wrong to charge what is required to survive.
A steak and ground beef should cost what it cost to allow every link in the chain to remain in business and still give the consumer enough value that they can enjoy a steady supply chain.
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