Three Bad Ways to Save the Beef Herd
Despite record high beef prices, the American beef herd is at a record low. In fact, it’s the smallest it’s been since 1951. While that doesn’t tell the whole story — larger, faster growing animals mean that more beef is produced domestically than 75 yeards ago, despite the similar herd sizes — it’s undeniable that farmers and ranchers have not kept pace with demand.
As I explained in Unherd last month, the dispersed nature of beef production and the long time frames involved make it particularly slow to change, and I don’t think there are any good options for increasing domestic production long term. These are the possible approaches as I see them.
Option One: Tariffs and Quotas
Production costs in America are higher than in many other places, particularly countries like Brazil and Australia. For decades there have been limits on how much beef can be imported from each country, which artificially increases the price of beef in supermarkets and also artificially increases the prices paid to America’s cattle ranchers. Doing away with all the trade restriction would bring down grocery store prices, but it would also speed up the decline in domestic production, since American producers unable to compete on price would go out of business.
But doing the opposite, bolstering tariffs or outright banning import from foreign countries might have the opposite effect. Without the downward price pressure of cheap imported beef American producers could be sure of consistent high prices, which would presumably encourage them to increase the size of their operations.
That’s one theory. But there would also be a danger that consistently high beef prices would encourage consumers to shift more of their grocery budget to cheaper chicken and pork, with beef becoming a luxury item.
The bigger problem is that there is no political will for this sort of protectionism. High grocery prices, and high beef prices in particular, have been a regular topic of news coverage. It is very unlikely that any elected official of either party would pursue such an obviously unpopular policy.
Option Two: Direct Subsidies
If restricting the beef supply isn’t a good approach, what about subsidizing the domestic industry? In theory, this would be pretty straightforward; the government could set a target per pound price for beef animals at various weights, then pay farmers the difference between the target price and the market price. In other words, it could let the market set the price, then provide direct support to give give American beef farmers a bonus.
This may sound reasonable in the abstract, but it would cause big problems. First, the variations in quality between different animals would mean either an extremely granular scheme, with government inspectors assigning a grade to each animal sold, or one in which speed of growth would be the only consideration, rather than marbling, confirmation, or any of the other things that make a good beef cow.
But the bigger problem would be cost. This would amount to a huge, direct incentive to maximize cattle numbers. As it succeeded at growing the domestic herd, which I’m quite confident it would do, it would grow more and more expensive, since each extra cow would add to the bill. It would amount to taxing the American people as a whole to subsidize the habits of the most enthusiastic burger lovers and the pocketbooks of ranchers.
Option Three: Let the Market Work
As I mentioned, pork and chicken are currently far cheaper than beef. They have achieved this by consolidating into massive factory farms and by using intensive breeding. Both of these are much harder to do with beef. Cows live much longer and reproduce much more slowly than chickens or pigs. Further, they have evolved to eat grass rather than more concentrated foods, which means it has always made sense to raise them mostly on range or pasture to begin with, even if they are destined to end their lives fattening on grain in feedlots.
But I’m not convinced these are insurmountable problems. I think it’s entirely possible that in a decade or two the American beef industry will look more like the American pork and chicken industries. That is, it will be much more consolidated, and its cows will grow far faster than they currently due while eating mostly soy and corn. The result will be very cheap, bland beef that is just good enough to keep people buying it.
This would be terrible. Feedlots are already bad enough. I shudder to think what a vertically integrated factory beef farm would involve, and even more I dread what the cows that could survive in such a scheme would look like. But if history is any guide, it is the most likely path for an increased domestic beef supply.
Super Secret Bonus Option Four: We All Become Romantics
The three previous options describe the dynamics of the beef market as I see them. I don’t think there are any viable governmental interventions, and I am worried about the solutions the market alone will provide.
But there is undeniably interest in local food, and this interest has been sustained over decades. I’m not sure it’s growing, but it’s certainly not a fad. Given this, perhaps worrying about the U.S. beef herd is thinking about the problem on too large a scale. Perhaps it would be better to focus on the health of far more regional farming economies.
I don’t think this would ever make beef cheaper. Low prices are the one thing a globalized market can reliably deliver. But perhaps, as we collectively venture further and further into a world in which every second of life has been commoditized, we will see the value in building an economy that is at once more capacious and more particular.
If that sounds too vague, wait for next week’s post, in which I’ll do my best to explain.