He’s served snacks at the McDonald’s drive-thru, hosted a Big Mac feast at the White House and sold Trump Steaks on cable TV. But even a red-meat-loving president-elect like Donald Trump is unlikely to save the struggling U.S. beef sector.
Severe livestock shortages, which have fueled supermarket price hikes and wiped out billions in profits for meat processors, are expected to worsen further ahead of the next election cycle. The U.S. cattle herd is already the smallest since 1961, after years of low prices, severe drought and rising costs forced farmers to send more females to slaughter. Now, the possibility of new tariffs and immigration reform risk further tightening supply.
“All the things he’s talking about have a greater potential for negative consequences than positive,” Derrell Peel, a professor of agricultural economics at Oklahoma State University, said of Trump’s policy promises. “Over the next two to four years, the fate of the U.S. livestock sector is pretty much determined” – and not good.
For generations, Americanism and the livestock industry have been closely linked. Since the cowboys Immortalized on movie screens to the roasts, cheese steaks and brisket that adorn regional tables, the entire beef sector – from livestock to restaurants – plays a prominent role in the country’s national identity.
But raising cattle has become increasingly difficult, even before Trump’s return to Washington. Thanks to a combination of high interest rates, expensive feed prices, farmer debt, bad weather, and a shift in consumer preference toward cheaper chickens, struggling farmers have been culling heifers at a very rapid rate to rebuild livestock numbers. calves needed to expand herds. In fact, the beef cattle shortage has become so severe that some dairy farmers are raising dairy-beef hybrid calves to sell them in the meat market when supplies are low.
Cash Carruth, who manages about 250 head of cattle in Bloomfield, New Mexico, is among the ranchers who are crafting near-term growth plans after struggling with low beef prices for most of the last decade.
Although prices have been recovering, many ranchers are unable to replace their finances.
“This extra thing we’re doing now isn’t necessarily room for expansion, but it’s to help us with the band-aid we put in place from 2015 until 2022,” said Carruth, 47. He is now selling “all the calves he can” rather than keeping them for breeding. “Everyone is trying to make up for those mediocre years, especially if you borrowed money.”
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The bearish cycle was not expected to last so long. Last February, the U.S. Department of Agriculture (USDA) expected livestock supplies to begin rebuilding in 2025. Now it is saying the recovery will not begin in a meaningful way until 2027 as rising costs Loans and poor pastures mean it is very risky to hire new cows – as the investment takes a few years to materialize.
Even though the beef sector has gone through periods of growth in recent decades, the number of animals has fallen by almost 40% since its peak in 1975. During the current down cycle, which began in 2020, the herd has been declining at the fastest rate. rapid since the great agricultural crisis of the 1980s.
In beef, “there are no clear signs of sustained herd rebuilding intentions,” Tyson Foods CEO Donnie King said on a Nov. 12 conference call with analysts. Over the past two years, cattle shortages have wiped out billions of dollars in operating profit from Tyson’s beef operation, prompting the company to say it expects a loss in fiscal 2025, the second period in a row.
And then there’s the Trump factor. While he is very popular among farming communities – having won the vote in every major beef cattle-producing state – his promised immigration reform and tariffs add another layer of uncertainty.
U.S. meatpacking jobs are often filled by foreign workers, and while large companies require employees to prove their employment status, reduced future immigrant flows will likely bring higher labor costs for companies like Tyson and JBS, Barclays analysts wrote in a note. A surge in applications for asylum and other immigrants granted temporary work permits during the Biden administration has alleviated labor shortages that have plagued the sector, particularly during the pandemic. A new approach to immigration has the potential to create a “more onerous” hiring process, reducing the number of potential employees and increasing costs, JBS said in a recent filing.
“These are hard jobs to fill, and they’re jobs that most Americans don’t want to do,” said Bloomberg Intelligence analyst Jen Bartashus.
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Audits and “enforcement raids” are likely to increase when Trump returns to office, as enforcement of immigration laws was the highest ever during the president-elect’s first term, the labor law firm wrote Littler Mendelson in note. More than 680 people were arrested during 2019 raids on Mississippi poultry plants, and a raid on a Tennessee livestock processing plant the previous year affected about 100 other people. Even if all workers are compliant, this can be an expensive and time-consuming process.
The first Trump administration “was scary, but now even more so because they will have more power,” said Magaly Licolli, co-founder of Venceremos, an Arkansas-based poultry worker advocacy group. “The situation in immigrant slaughterhouses will become very ugly.”
And the outcome of new tariffs is still uncertain. Producers have increasingly relied on meat imports to meet domestic demand for ground beef and burgers. By 2024, beef imports to the U.S. will total about 2 million metric tons, a new record. Foreign meat now represents more than 15% of domestic consumption, also an all-time high. U.S. producers are also sending a lot of meat abroad.
If Trump 2.0 implements new tariffs to stem the flow of beef from abroad, it could give U.S. ranchers a lifeline, said Bill Bullard, CEO of R-CALF USA, a group that represents U.S. beef cattle producers. USA. The increase in supplies from abroad has given Tyson, JBS, Cargill Inc. and National Beef Inc. — which together control about four-fifths of U.S. slaughter capacity — the ability to keep a lid on the prices they pay for U.S. cattle, he said. Tyson did not respond to a request for comment, while National Beef, JBS and Cargill declined to comment.
The tariffs “will give our industry an opportunity to invest in expansion and begin to rebuild the herd that has been shrinking at an alarming rate,” Bullard said. “In the long term, consumers will be better served because we will no longer be so dependent on imported products.”
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But what’s good for ranchers in the long run won’t please grocery shoppers today. While a smaller supply of imported goods may encourage farmers to reinvest in their livestock, until that happens, Americans who voted for Trump based on his promise to lower the prices of domestic staples may be sorely disappointed. And higher beef prices will only accelerate the shift to other proteins that is already occurring.
“If beef prices increase, we should really look at prices relative to chicken,” said David Anderson, professor and economist of livestock extension and food marketing at Texas A&M University. “It’s this demand picture that can really control rising beef prices because consumers will respond to relative prices.”
