Follow the money: The beef with US beef

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0:40Somewhere in America tonight, someone's cooking burgers in the backyard. And whoever it is has probably noticed something. The beef costs more. A lot more. Beef and veal prices in America are up almost 13 % on a year ago, stakes up nearly 15%. Overall, inflation isn't even a third of that. I'm Sam Fenwick and welcome to the documentary on the BBC World Service. Today we're following the money from the rancher to the restaurant and the grocery store. Why are prices so high and who's actually making money out of what you eat?

1:28Pick up three things from a US meat counter this week. A pack of mince, a steak and a burger. All three cost much more than they did a year ago. And behind every one of them is the same chain. And it starts with a cow. Now, there are fewer cows in America right now than at almost any point in living memory. Because what you're seeing at the meat counter is really the end of a much longer chain. There are four links. The rancher, the feedlot, that's basically a giant cattle fattening yard, the meat packer and the restaurant that finally puts the burger on your plate. And we're going to follow the money through all four and find out who's actually getting richer and who's getting squeezed.

2:11Eric Groper is a fourth generation cattle rancher in southwest South Dakota, a Native American who leases his land from the Oglala Sioux tribe. His farm is remote, two and a half hours drive in each direction to the closest towns. He sells his calves once a year at a local sale barn. As a cattle rancher, you are a price taker. You get what's given, right? I don't get to set my price. I sell at a local sale barn. My calves are open to the world, we'll say. Anybody can bid on them. And that's what I get. Once a year, that's my calf crop. Just give us an idea of what the price is that you're getting.

2:52It's a rough figure, but about$2 ,500 a head for a 600-pound steer at the sale barn right now. $2 ,500. Yep. We're record cattle prices right now. The year before that, they were 18 to 2 ,000. So for once, it seems like the rancher might be holding the cards. The US cattle herd stood at 86.2 million head at the start of this year, the smallest since 1951. And fewer cows means higher prices because there's a short supply and therefore people are willing to pay more for them. So is Eric better off? Yes and no. I mean, it feels really good. You're able to pay your bills, but your inputs are still so drastically high that if we didn't have these record prices, we'd all be broke.

3:38So I sit down to do my taxes and it feels like I made a lot more money, right? I'm playing with a lot more money. But in the end, I really didn't make any more because pickup trucks. I have to have them. They're essential to my operation. They cost 80 to 100 ,000 for a new one now, where they used to be 30 to 40. A roll of barbed wire, it's went from$60 for a quarter mile roll to 130. Even though Eric's running costs have risen, the price he's getting for his cows has gone up by a lot. And that's because of shrinking cow herds. But how has that happened? Well, producer Gideon Long is here and he's going to explain.

4:19Yeah, Sam, so this is partly to do with the cattle cycle. So roughly every eight to ten years, the herd builds up as ranchers keep cows for breeding. And then it declines again and then it builds again. But it's been exacerbated in the last couple of years by drought. Well over 60 % of the cattle in the US are now grazing on land which has been impacted by drought. And what does that mean? It means that ranchers have to buy feed instead and that makes it much more expensive. and when they're facing these tough conditions and when prices are high for their calves the temptation is to sell now rather than keep their cows for breeding that means fewer cows for breeding and fewer calves in the years to come so expensive feed for those calves but it isn't just the weather is it Gideon no it's not just the weather they're also facing a threat from a flesh-eating parasite called screw worm now the US hasn't had screw worm in its herd for decades but it was detected in Mexico a couple of years ago and it is moving north.

5:17So the Americans have effectively shut the border with Mexico to cattle. And that's quite a big deal because before this outbreak, around a million animals were moving north annually into the US. So that's also squeezing supply. And a lot of these ranchers, they're also reaching retirement age as well. They are. And that's another reason why the herd isn't rebuilding faster because the average American cattle producer is in his or her late 50s or 60s, close to retirement and some say that their sons and daughters are not necessarily willing to follow in their footsteps. Now Eric Groper's calves don't go straight to slaughter.

5:51When they're about six months old they go to a feedlot to be fattened on grain. Now these can be vast areas of land where cattle are penned and fed on grain instead of grass. Some of the biggest hold well over a hundred thousand animals at a time. Almost all of America's beef will pass through one of these feedlots. About 95 % of US cattle are finished on grain in a feedlot in the last few months of their life. Brenda Botell is a professor of agricultural economics at the University of Wisconsin River Falls and she studies exactly this part of the chain. A feedlot is basically where the animals are going to go in order to be able to be finished.

6:34They are typically in a confined area, they're given unfinished grains until they hit a certain weight. And then once they hit that certain weight, they're taken to the packers for harvesting. They can arrive anywhere from 400 pounds to around 800 pounds, and typically around 1500 pounds is what we're going to be looking at to finish. Now, the US Department of Agriculture says that that process can take anywhere from three to 10 months, depending on the animal. Cattle and beef prices are quoted per hundred weight. That's£100. And a steer is a young male on its way to being fattened up. The prices the feedlots pay tells you everything about how tight this market is right now.

7:18They are up considerably. If you're looking at feeder steers in the southern plains and you're looking at about 700 to 800 pound animals, they're up about 28 % relative to what they were last year. Last week, they averaged$381. These are record prices. So record prices again in this part of the chain. What happens then when the same animal comes out the other side ready for the packer? Are they being charged more too? On July 2nd of 2026, we sold cattle for$255.25 per hundredweight. Last year, on this date, it was$233 in 21. They were$126. So since 21, we've had a 103 % increase in prices. So the price a feedlot gets for a finished animal has more than doubled in five years.

8:14So who's benefiting from those high prices? If I was looking at the industry as a whole right now, the ones on an aggregate level that would be seeing the greatest profit potential would be the cow-calf producer. Then we'd look at where the cattle feeders have the next greatest potential. And then I'd say the packers. And the packers are where they've been experiencing a lot of red lines right now, just simply because of the high prices that they're having to pay. The beef prices are up 13 to 16 percent, but that calf that you're selling is up almost 28 to 30 percent. So the ones who are bearing the brunt would be the packers.

8:50They're kind of getting squished right now. So Gideon, we're halfway through the chain. Where has the money got to? Well, so far, everyone is getting more money. The rancher's calf is well up on last year. We heard that from Eric. Brenda's told us the feedlots finished animal has more than doubled in price since 2021. But at every step, the inputs, the cost of the inputs has also gone up. Feed, fuel, equipment. Eric was telling us, for example, how much the price of wooden fence posts has gone up and he needs thousands of them on the acres that he's ranching. So more money coming in, but that doesn't necessarily mean that they're making more money, keeping more money.

9:31This is Business Daily from the BBC World Service. I'm Sam Fenwick and today we're following the money behind your burger. Why are beef prices in the US so high?

9:45The United States is about to mark its 250th anniversary. And so on the Global Story podcast from the BBC, we're telling surprising tales of American influence on the world stage and in ordinary people's lives all across the globe. We have this ability to export our story and a lot of people have bought it. I feel like the American dream is alive but not well. From the BBC, it's the United States at 250. Listen on BBC.com or wherever you get your podcasts. Now the third link in the chain is the meat packer, the plant where the animal is slaughtered and prepared, ready to go to supermarkets and wholesalers.

10:26And this is where meat production turns political. Just four companies handle most of America's beef. Tyson, JBS, Cargill and National Beef. Between them, they control around 85 % of the market. One of them, JBS, is Brazilian-owned, and national beef is majority Brazilian-owned. In November last year, President Trump posted on Truth Social calling for an investigation into meatpacking companies. He said that they were driving up the price of beef through illicit collusion, price-fixing and price manipulation. He directed the Department of Justice to carry it out. U.S. Agriculture Secretary Brooke Rollins gave an update on that investigation in May of this year.

11:10The rate of this four-firm control has accelerated since the 1970s. According to USDA data, concentration for cattle slaughter of these four was only 25 percent in 1977 and jumped to 71 percent by 1992. As mentioned today, it is an astounding 85 percent. This has led to a frightening landscape for cattle ranchers. Industry consolidation reduces options for our ranchers looking to sell their cattle. It weakens their negotiating power and it risks reliance upon a single buyer. So in about 50 years, four companies have gone from controlling a quarter of America's beef slaughter to controlling nearly all of it.

11:54R-Calf USA, a national ranchers group, has its own antitrust lawsuit against the big four. Eric Groper, who we heard from earlier, is its vice president. Target and McDonald's have sued the meatpackers overpricing too. We asked all four meatpacking companies to talk to us. None responded. The industry's trade body did, at least in part. The Meat Institute wouldn't comment directly, but sent us a statement that it issued after Brooke Rollins' press conference. And it said that beefpackers, large and small, have been losing money nearly every month in the last 18 months. On the ground, one of the small operator still standing has numbers to prove that.

12:36Jamie Cromley owns Harpleys Meatpacking in central North Carolina, one of the thousands of smaller operators competing for what's left outside the big four. She buys live cattle and slaughters them. She explains what she's paying for an animal now against what she was paying three years ago. $100 to$120 live weight three years ago. And now you're talking about 165 to 180. So much of that goes into location where you're at, the type of animals you're buying. But I mean, you're definitely seeing a large increase, you know, somewhere between 30 and 60 % of an increase. Can you cope with that kind of increase?

13:18You know, I think that the packing portion of the supply chain could cope with it if the actual amount that you're getting for the animal, the meat, the revenue you're bringing in from the actual sell of all the products was in alignment with that increase. Right now, that is not happening. Most of the animal goes into what's called 90-10 trim, the lean beef that ends up in what most of us would call mince. And although the price per pound has gone up too, Jamie's still making a loss on it? Three years ago, that market would have been$2.75. Now, if you look at the beginning of this year, we were hovering around$3.62.

14:00And this summer, we're sitting at about $4.60. Now, one would look at that and say, the price has gone up. So how are you losing profitability wise? But when you look at the actual cattle pricing that has increased, it has not necessarily increased at a rate to cover that. That's where you start to see that we aren't able to make the money off of all of the finished products that we need to cover the costs of the actual live animal. Tyson, one of the big four meatpackers, has told its own investors much the same story. It lost more than$500 million on beef across the first half of its financial year.

14:42And with meatpackers and processors chasing fewer and fewer cows, Jamie says business is tough. How long do you think you can carry on? I think that's such a hard question of how long you can carry on. But we are trying to figure out how to reduce our expenses. We're trying to figure out how to be more efficient because many of us are running at a lower capacity in our plant than what it's meant for because we simply cannot get the cows because there's a cattle shortage. My plant can do$425 to$450 a day. I'm not operating at that level. I'm operating at 350 a day. So I am running inefficiently.

15:21You know, we're just trying to figure out how to be more efficient and to reduce those expenses, trying to control the things that we can control while we can't control the market.

15:32The chain doesn't end on a shelf. It ends on a griddle. Paul Urban owns Block 16, a burger restaurant in Omaha, Nebraska, and they didn't set out to sell burgers at all. We opened it by accident. We took over an old gyro shop and planned on turning it into a fine dining destination and one thing led to another and now we do a lot of fun burgers and sandwiches and we do a different special every single day of the year. We've done a little over 4 ,000 specials now. He's in cattle country. People here absolutely love their beef. He goes through about 300 pounds of ground beef a week. That's around 2 ,800 burgers a month.

16:14And every one of them starts with what he pays for the meat. We're using a local farm out of Pender, Nebraska called North 40. They're producing some amazing, it's 100 % American Wagyu beef and we're paying about$6 a pound for ground, which is almost unheard of, honestly. It's still higher than it used to be, but it's great beef. When Block 16 opened, Paul sold his burgers for$8.95. Today, the prices increased to$11.95. And he says even with a$3 increase, it isn't enough to make a decent living. Say we add it all up, we get a 25 % food cost and maximize our profit. Maybe we have to charge$13 for a burger.

16:56Well, we don't feel comfortable doing that. I wouldn't want to walk in here and have to pay$13 for a cheeseburger. So that's when we kind of drop it down and we don't make the profit that we would like. but you're still getting people through the door and, you know, it's not always about the money. He absorbs at least some of the difference and takes a thinner margin to keep prices down and customers coming back. 30 % is our cost. We're making far less than that. We make, I would say, 5%. It's very small when you figure in all of the labour and all of your overhead and, you know, your day-to-day operational costs.

17:295%. So that's what's left for the man at the very end of the chain after the rancher, the feedlot and the packer have taken their cut. Now he's tried to get round the price of beef. He once cut his patties with mushroom, 40 % mushroom, 60 % beef. It was fantastic. It's also great for the planet and it's healthier and it just did not go over well at all. People, at least around here, they want their beef and they don't want anything else mixed in with it. So he went back to all beef and quietly changed something else instead, the cuts of the meat he uses. We've pivoted on a lot of our sandwiches where we've been able to get pretty creative with some cheaper cuts of meat.

18:10We just got in some beef knuckle and some top sirloin and we're just using it in different ways and we're able to make a little money off of that and it's still pretty dang delicious. So that's the restaurant's answer to the record cattle price. Not a bigger menu price but cheaper cuts and thinner margins. So Gideon we followed the whole way down. The rancher, the feedlot, the packer and the restaurant. Now everyone has said the same thing, that they're not getting richer despite prices reaching record highs. But surely someone has to be. So who is it? Well the truth is nobody really because they're all selling at higher prices but they're also buying at higher prices.

18:51And that's same for the packers, it's same for the wholesalers, for the restauranteurs, everyone along the chain. They're all turning over more money than they used to but almost none of them is keeping more of it. So the extra money that I'm paying for my burger where's that actually going? It's not really going into anybody's pocket every link is paying more for the same animal and passing most of it on so the money isn't being made it's being eaten by scarcity scarcity of cows. So we're back to where we started with those small cow herds so the£11.95 that you pay for a burger in Omaha isn't a profit that someone's taking off the top.

19:28It's the price of there not being enough cattle. America has fewer of them than at almost any point since 1951. And Gideon, you can't just conjure up a cow overnight, can you? You can't. I mean, it takes the better part of three years to turn a breeding decision into a burger. And that's been exacerbated by drought that broke two years ago. And that is still setting menu prices in Omaha and in the United States. And it will keep upsetting them for years yet whatever this year's antitrust investigation finds. So the president's hunting for a villain, the ranchers are suing. But the thing pushing up the price on your plate isn't a company deciding to take more.

20:07It's a shortage that started with the weather working its way down the chain until it reaches you. Perhaps the biggest surprise, despite all these price rises, demand from consumers has remained stable. That's Follow the Money from the BBC World Service. I'm Sam Fenwick. The producer today was Gideon Long. And to hear more from the world of BBC Business, search for Business Daily wherever you found this podcast.