In today’s Beef Buzz, Senior Farm and Ranch Broadcaster Ron Hays speaks with cattle market analyst Don Close of Terrain, who says government intervention is not the answer to rebuilding the U.S. beef cow herd. While some have suggested offering incentives to producers to retain replacement heifers, Close believes the cattle market is capable of correcting itself without artificial assistance. “Leave the market alone,” Close said. “The famous Reagan quote is, ‘I’m from the government, and I’m here to help you.’ Markets are a self-adjusting system if it’s simply allowed to work.”
Close acknowledged there are areas where government support could improve efficiency but questioned whether taxpayer dollars should be used to reshape the industry. “If you take the recent announcement of the money for the small processors, can we improve efficiency on that side? Absolutely,” he said. “But to say that you’re going to offset with small regional production the efficiency of the large packers—there’s not enough money to throw at that problem.”
If government assistance is going to be offered, Close believes helping producers rebuild cow numbers would make more sense than investing heavily in processing capacity. “I really think there’s more potential good to come from a program to help these guys buy some replacement females or secure feed needs… than I do think pouring that much money into the processing side,” Close said.
Still, he emphasized that he would rather let the marketplace work on its own.
Ground Beef Demand Remains Exceptionally Strong
Close also addressed criticism surrounding imports of foreign lean beef, saying many producers overlook how important those imports are to meeting consumer demand. “If you just take the insatiable appetite the U.S. has for ground beef,” Close said, “I don’t care if we’re talking the quick-serve restaurant avenue or retail, I don’t see any slowdown whatsoever of our domestic demand for ground beef.”
With the U.S. cow herd at historically tight levels and rebuilding expected to take several years, Close said domestic supplies simply won’t meet demand for lean beef used in hamburger production. “We are not going to have that availability of ground beef product,” he explained. “We’re not going to have the amount of lean product to blend with the mountain of 50s we’re generating by feeding cattle as heavy as we are.”
Because of that imbalance, imports will remain essential. “For the long run, certainly the intermediate run, the U.S. is going to continue to see large imports of lean manufacturing beef.”
Consumers Continue Supporting Beef Despite Higher Prices
Despite record-high cattle and beef prices, Close said consumers have continued to demonstrate remarkable demand for beef. “They have absolutely hung with us,” he said when asked about consumer spending.
As herd rebuilding eventually begins, Close expects retail beef prices to climb even higher over the next several years. “As we look over the next two to three years and the time it’s going to take to rebuild numbers, retail prices are going to go higher,” he said.
Close isn’t convinced beef is overpriced when compared to the broader economy. “If you look at beef prices in relationship to the Consumer Price Index, if you look at retail beef prices in relationship to average hourly wage, I don’t know that I’m convinced that beef is actually too high. It’s just that beef is easy to isolate as a target.”
Looking ahead to 2027, however, he expects the market to become more challenging as consumers face additional economic pressures beyond food prices. “While the consumers are still staying with us and I still think there’s some room to the top side, we’ve got to be more cognizant that gasoline prices and other contributing factors… we’re finally starting to see some resistance above the market, not just the short supply side driving prices higher.”
China’s Long-Term Demand Faces Demographic Challenges
Close also discussed export opportunities, particularly China, where recent trade developments have raised hopes for expanded beef sales.
While he believes China can remain an important customer in the near term, Close cautioned producers against assuming that market will continue growing indefinitely. “The China problem is a way more complicated issue,” he said.
Close pointed to demographic trends as the larger concern, noting China’s aging population and declining birth rate are expected to reduce food consumption over time. “As populations age, before population numbers ever start to contract, your number of elderly and retired people exceeds the number of young working family people, so the need for food and the consumption of food starts to decline,” he explained.
He said China provides one of the clearest examples of that trend. “Their fertility rate right now is something slightly below one. You see that thing getting long-term contracting.”
While trade agreements may improve short-term opportunities, Close urged the beef industry to remain realistic. “I don’t want to throw cold water on the idea that short term can they still be a good trading partner? I believe they can,” he said. “But I think we need to be really cautious and go in with eyes wide open when we look at their demand going forward. I just think if we look at that deal… and think we’ll always have that market, I simply don’t believe that’s true.”
Africa Holds Promise, But Growth Will Take Time
As the U.S. beef industry looks to diversify export markets, Close said Africa offers opportunities, although meaningful growth will require patience.
He noted that the U.S. Meat Export Federation has already had success marketing variety meats to African countries. “I think there’s business to be had there, particularly some of the success that USMEF has had with getting livers and some offal products into Africa,” Close said.
However, he doesn’t expect Africa to become a major destination for premium beef cuts anytime soon. “To see any time soon that develops into meaningful whole muscle cut business, it’s going to take a while.”
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR above for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
