How Beef Got So Expensive
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What factors contributed to the rise in beef prices?
Omaha, Nebraska, 6 o'clock dinner reservation. The Thomas family, party of six, is settling into one of the great old-school steakhouses in the Midwest. It's the kind of place with low lighting and heavy chairs. The room smells like brown butter and seared beef fat.
It's old-timey. It's kind of got the wooden exterior. The floors are creaking when you walk in.
That's our colleague Patrick Thomas, as in the Thomas family, party of six.
You've kind of got that brassy Sinatra type of music, old-world type of steakhouse.
I'm going to go from the most tender all the way up to our most heavily-barbled cut. So our most tender cut here will be the filet.
So what brought you to that steakhouse in Nebraska?
My family still lives out there. My brother was actually graduating high school.
Oh, wow. Congratulations. I heard his name is Ryan. It's another Ryan. What a great name.
How's your steak?
My steak's delicious, very tender and juicy.
But while the steak was delicious, the price was a lot harder to swallow.
You know, so a 11-ounce filet, $62. A bone-in ribeye, 25 ounces, that's going to be about $90. That seems expensive for Nebraska. And the tomahawk, that's $137.
Wow. It's not just expensive for Nebraska. It's expensive everywhere. Beef prices are skyrocketing at restaurants, grocery stores, all over America. Welcome to the era of the $100 steak.
I went to the restaurant's Yelp page to find a picture of what the menu looked like 10 years ago, and it's about double from what it was 10 years ago.
Wow.
Why is beef so expensive? Beef is a very complex supply chain, but the answer is very simple. We don't have enough cattle in this country right now.
Welcome to The Journal, our show about money, business, and power. I'm Ryan Knudson. It's Wednesday, June 10th. Coming up on the show, where's the beef?
How has the cattle auction scene changed recently?
The reason beef is so expensive right now has everything to do with the animals.
Our colleague Patrick grew up in Nebraska, aka the beef state, and recently went to a cattle auction about four hours outside Omaha. If you've never been to a bull sale before, there's one thing Patrick says you need to watch out for. Flying poop.
You have the bull running into the ring, who kind of trots out right away, he's kicking up some of the manure, and sometimes, you know, he runs by and the manure will kind of fly up a little bit, so you got to be careful if you're in the front row.
Yuck. Right now, the best cattle in America are worth a fortune.
Here at the T.D.
Angus bull sale, ranchers pay astonishing amounts of money for breeding bulls, the fathers of future herds. Some will sell for as much as a new Cybertruck. On this spring day, all eyes in the room were on a hulking bull named the Man in Black. His breeders call him a, quote, man amongst boys. In the end, he's sold for $75,000. No bull.
Sold the bull, $75,000, $75,000.
The man in black is basically the start of the supply chain. He'll go on to father potentially dozens of calves each year, calves that will make up part of the nation's cattle herd. But the cattle herd in the U.S. has dramatically shrunk. It's now at its smallest size in 75 years. There simply isn't enough cattle. And America wants beef. The shortage is making the auctions really competitive.
You have guys been described as vicious because you'll have, you know, sometimes personal vendettas take place if they want to drive the price higher on somebody.
And sometimes it gets pretty bloody in there. I mean, the knives come out from all different directions.
That's Sean Lockery, one of the ranchers who tried to win the Man in Black. Sean is a sixth-generation Great Plains cattleman. Sun-browned skin, broad shoulders, cowboy hat. Competition is so fierce that Sean will sometimes send in a decoy to bid on his behalf, just to throw off his rivals.
They make it a lot more competitive than it used to be. It gets very cutthroat. It gets a little, you know, it can get edgy at times.
Patrick caught up with Sean outside the sale barn. So, how do you think you made out today?
Bid on four bulls today, and...
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