An Unfortunate But Necessary Discussion on Beef Prices

So, you’ve probably seen on the news or read about the beef shortage that the country is forecasted to experience.  According to the USDA numbers, the amount of cattle in the USA is at the lowest level ever recorded since they started keeping numbers in 1972.  

The reasons for such low numbers reported are many, but include droughts / weather conditions over the past couple years causing farmers to decrease their herd sizes, high interest rates, and high input costs (feed, fuel, etc) as the cost of everything has been rising.  

Here at Longbottom Farm, we’re usually insulated against many of these factors, as we don’t use grains / feed (except for minerals and Non-GMO alfalfa as treats), but the problem we’re facing as a small farm is the cost of buying replacement cattle is up almost 50% and our processing costs are up ~ 20%.  This combined with gas, hay, and all other inputs that have risen dramatically over the past couple years, mean we to have to adjust our prices to absorb these increases.  

Understanding Our Operations

Part of our operation includes buying weaned steers / heifers when they’re in the 500 lb range and ~ 6-9 months old.  Then we raise them over 1.5 – 2 years.  It’s literally $1000s of dollars more we’re going to have to pay this year in order to purchase these replacement cattle to ensure we have beef for the future.  

There is also a fear that prices will continue to go up as it takes a couple years for actions implemented today to affect the future market tomorrow.  In short, high prices for cattle means producers will likely ramp up their breeding / calving provided weather permits, but that effect won’t be seen for a year or two.  

Adjusting Our Prices

What this all means is that we’ll need to adjust our prices on beef this year.  We increased prices last year, but only on the high end items like steak, etc and that was to keep pace with the rising costs of replacement cattle at that time, as well as inputs such as hay and minerals.  We kept ground beef and some of the staple items the same without raising prices but unfortunately that’s no longer sustainable.  

Of course no one wants to hear about higher prices, as it seems to be a theme over the past couple years with inflation and the cost of everything going up.  Unfortunately, when everything (calves, feed, hay) are rising, if we don’t follow suit, we can’t pay for the cost of keeping the farm running and then we’re out of business.  

It’s for that reason and to sustain our operations that we have to raise our prices in 2024.  I’d like to say this is a temporary measure, but unfortunately it doesn’t seem like prices are coming down anytime soon (if ever).  

What This Means for You

Now, that said, I don’t think the USA is running out of cattle.  We’ll import more which will raise prices a bit in the stores, but beef will still be there.  I say this as there has been some doom / gloom reporting which I won’t name as I’m not giving them free viewers, but it’s exaggerated in my opinion and the market, while it may suffer in the short term, will fix itself.  

To help ease increasing prices, we are freezing any price increases for the next 30 days, and then limiting any price increase to 15%.  The goal here is to soften the blow and not increase our profits.  We know that most of you are working families just like us, and we don’t want to add to the ever increasing inflation burden you’re already experiencing.  Unfortunately when everything we rely on to run our business costs more, our price must reflect those increased costs to sustain our operations.  Even with the price increases, we’re still looking at a challenging environment going forward, especially if we experience a drought or event that further increases prices on hay and processing.  

Looking Ahead

What are we doing here at the farm to try and combat some of this? 

First, we’re considering starting our own breeding program.  This usually works better for selling calves into commercial market (Much less hay and no processing costs), but still worth looking at.  Downside to this is that it means feeding more hay (2-3 years vs 1-2 years) in addition to feeding breed stock year round that won’t go into production. So yes, no cost for replacement cattle, but increased cost of all the inputs.  

We purchased hay equipment late last year!  A big upfront cost but if we can offset the cost of hay, that’s a game changer.  Our hay costs have hit 5 digit numbers depending on the year.  Question is if we can produce enough on the fields we’re cutting.  

We’ve doubled our egg laying flock last year which is another lever we can pull to increase production (to offset cattle losses).

On farm processing of broilers is another avenue we’re looking at (again to offset cattle losses).  

That’s a small window into some of the decisions small farms face.  In short, we’re hoping to increase other enterprises while weathering the cattle situation that we hope (and anticipate) will correct over the next couple years.  

To close, thank you for your past and ongoing support.  Lexi and I chose farming, because we wanted to produce healthy and unadulterated food for our family free of misleading labels and fluff.  Animals raised on pasture like they used to before commercial farming took over.  Your support has not only allowed us to realize that dream, but also pursue producing food for others who share those same values and concerns.  Thanks from Lexi and I for supporting small farms and know that our commitment to providing you and your family with the best we have to offer remains first and foremost in this farming journey.