Ask John Wildenborg if he thinks Canadians will be paying more for steak during future barbecue seasons, and the owner of Calgary specialty butcher shop Master Meats doesn鈥檛 hesitate.
鈥淧rices are definitely going to go higher, no ifs, ands or buts about it,鈥� he said.
鈥淚t keeps me up at night, actually, thinking about coming into the summer and where prices are going to be. It鈥檚 not a good situation.鈥�
Beef 鈥� whether in the form of a juicy burger or a classic tenderloin steak 鈥� is a mainstay of many Canadians鈥� diets. Its popularity is the reason why consumer demand for beef has historically remained strong, even through periods of economic downturn when Canadians have less money in their wallets.
But the business of beef is changing, in large part due to consecutive years of severe drought across North America鈥檚 main cattle-producing regions. From parched southern Alberta to water-scarce east Texas, ranchers have been due to a lack of grass for grazing. The resulting shortfall in cattle supply is reducing overall beef production and helping to push retail beef prices higher.
鈥淎 10-ounce New Yorker right now 鈥� would cost around $20. Three years ago that was maybe a $15 steak,鈥� Wildenborg said.
鈥淎nd this is usually the slow time of year for beef, but wholesale prices haven鈥檛 dropped off at all since Christmas. I鈥檓 paying 40 per cent higher than I was last year at this time.鈥�
Food in general, as consumers know, has increased in price over the last three years due to the COVID-19 pandemic and an overall rising cost of living. But while inflation is starting to moderate in a number of food categories, the drought factor means beef prices are not.
鈥淲hen you talk to producers, whether it鈥檚 in the Canadian provinces or key cattle-producing regions of the United States, many producers will tell youthey鈥檝e had to experience two 鈥榟undred-year droughts鈥� back-to-back over the course of 10 years,鈥� said Lance Zimmerman, a Kansas-based senior beef analyst with Rabobank.
鈥淎dd to that a global pandemic and all the challenges that go along with that, and we鈥檝e had a 10- to 15-year period that鈥檚 been particularly challenging for a lot of cattle producers. It has led to a lot of liquidation.鈥�
Liquidation is when a rancher makes the decision to sell off a greater proportion of heifers and cows for slaughter rather than retaining them to grow his or her herd. Ranchers may decide to do this because of a variety of factors, including high input costs, limited labour availability and high interest rates, as well as the challenges associated with long-term drought.
In Canada, the size of the national cattle herd has been declining for years, a trend that continued last year amid a punishing drought in Western Canada. This country鈥檚 beef cow inventory fell in 2023 by 1.5 per cent to 3.66 million animals 鈥� the lowest level since 1989.
South of the border, U.S. Department of Agriculture figures show an even more dramatic story. There, the national cattle herd has been contracting for five years, reaching 28.2 million animals in 2023. That鈥檚 the smallest number of cattle the U.S. has seen since 1961.
Fewer cattle means less beef production, which translates to fewer exports as well as higher prices at the retail counter.
鈥淯nfortunately for the consumer, those prices are going to ratchet higher,鈥� said Zimmerman.
鈥淥n a U.S. basis, retail beef prices are currently about US$8 a pound, and by our estimation, over the next several years we can expect another dollar-and-a-half increase, quite easily.鈥�
In southeast Alberta, near the tiny community of Jenner, rancher Brad Osadczuk shipped some of his cattle east to Saskatchewan last summer to graze on rented pastureland. It was the only way he could feed them because his own grassland was entirely depleted by drought.
鈥淭his past year was the worst year for drought in adult life and I was born in 1971,鈥� Osadczuk said. 鈥淥ur native prairie just never turned green.鈥�
While Osadczuk was able to avoid reducing his herd size, he said many ranchers in his area have been choosing not to replace cows after they sell them for at least the past five years.
鈥淲e鈥檝e been mitigating drought for a long time,鈥� he said.
鈥淪o we鈥檙e kind of at a point in this part of Alberta where our herds are pretty small already.鈥�
Even if the current drought cycle were to end this year, cattle numbers can鈥檛 rebound overnight. That鈥檚 why experts say the new era of higher beef prices is here to stay, at least for a while.
鈥淭his isn鈥檛 a short-term thing,鈥� Osadczuk said.
鈥淔or a female calf that is born today, it鈥檚 four years before that female can have its own calf that can end up in the food chain.鈥�
Anne Wasko, a Saskatchewan-based market analyst with Gateway Livestock, said North American cattle and beef supplies will remain tight for several years, and much is riding on Mother Nature.
鈥淲e鈥檙e going to be looking at smaller supplies in 鈥�24, 鈥�25 and possibly out as far as 鈥�26,鈥� she said.
鈥淲e truly need moisture, first and foremost, to turn this boat around.鈥�
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Amanda Stephenson, The Canadian Press
