Follow the Money: The beef with US beef

**Sam Fenwick** (0:05)
Somewhere 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. Steaks are nearly 15%.
Overall, inflation isn't even a third of that. I'm Sam Fenwick, this is Business Daily from the BBC World Service. Today, we're following the money from the rancher to the restaurant and grocery store. Why are prices so high? And who's actually making money out of what you eat?
Pick 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, there'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. Eric Gupta 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, seven miles from the nearest paved road, 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.

**Eric Groeper** (1:58)
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.

**Sam Fenwick** (2:15)
Just give us an idea of what the price is that you're getting.

**Eric Groeper** (2:20)
It's a rough figure, but about $2,500 a head for a 600-pound steer at the sale barn right now.

**Sam Fenwick** (2:27)
$2,500.

**Eric Groeper** (2:28)
Yep. We're record cattle prices right now. The year before that, they were 18 to 2,000.

**Sam Fenwick** (2:35)
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?

**Eric Groeper** (2:56)
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. So 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 money, 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 rolled to 130

**Sam Fenwick** (3:33)
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.

**Gideon Long** (3:46)
Yeah, Sam, so this is partly to do with the cattle cycle. So roughly every eight to 10 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.

**Sam Fenwick** (4:26)
So expensive feed for those calves, but it isn't just the weather, is it, Gideon?

**Gideon Long** (4:31)
No, it's not just the weather. They're also facing a threat from a flesh eating parasite called screwworm. Now the US hasn't had screwworm in its herd for decades, but it was detected in Mexico a couple of years ago.