A severe drought grips the Western U.S. has caused an unexpected plunge in the cattle herd, indicating 'meatflation' will be sticking around this year as consumers pay near record-high beef prices.
U.S. Department of Agriculture's (USDA) biannual cattle inventory report for the second half of 2021 shows that the U.S. herd fell 2% a year ago. Bloomberg's survey estimated a 1% decline.
"Plains squeezed supplies of hay and feed for cattle, prompting some ranchers to sell to slaughterhouses animals usually held for breeding. Now, deepening drought in the southern part of the Plains -- where most cattle in the U.S. are raised -- could force another round of herd reductions later this year," Bloomberg said.
Derrell Peel, an extension livestock marketing specialist at Oklahoma State University, warned a "drought is looming large."
"The cycle we are in right now is a liquidation phase," Peel said. He means that worsening drought conditions will likely lead to more herd reductions.
According to the U.S. Drought Monitor, the Western U.S. is plagued with a severe drought, reminiscent of the 1930s Dust Bowl era. The unrelenting drought will likely worsen in the months ahead.
Declining herd count is a significant concern for beef packers who face tighter markets that could send meat prices even higher. Consumers are already paying near-record high prices and could result in another price shock ahead of summer.
Meanwhile, the misguided Biden administration is approaching the meat crisis entirely wrong, blaming greedy meat processors for meatflation. But the fact is, there's a lot more to the story than the White House admits. From declining herds, labor shortages, soaring shipping costs, snarled supply chains, and rising commodity costs, many of these inputs are increasing costs than greedy meat processors.
As shown below, Americans pay some of the highest costs ever for ground beef at the supermarket. Still, under President Biden's plan to tame meatflation, prices have yet to come down.
Worst comes to worst, the Biden administration could just tell Americans who can no longer afford beef just to eat protein-packed bugs. Ultimately, that's what the elites want us peasants to eat.