Beef cattle producers face higher input costs, with feed prices up 16% since 2021

Annual U.S. retail prices for beef and veal are projected to rise 6% to 7% in 2022 relative to 2021. In May 2022, the farmer’s share of the retail value of beef also increased year over year, but rising input costs, especially for cattle feed, may limit farmers’ ability to benefit from higher cattle prices.

Based on the USDA, Economic Research Service’s commodity cost and return estimates, feed expenses are the largest operating cost for cow-calf producers, comprising 75% of these costs in 2021. Prices for beef cattle feed were up 16% in May 2022 relative to May 2021.

High fertilizer prices have contributed to increased feed costs while drought conditions have squeezed feed grain and hay supplies. The 2021-2022 season-average farm price for corn—the primary grain fed to cattle—is currently projected at $5.95 per bushel, the highest SAFP since the 2012-2013 marketing year.

Like corn, the SAFPs for other feed grains including sorghum, oats, and barley are projected to increase in 2021-2022 relative to 2020-2021. The SAFP for hay, an important supplement to cattle grazing, is estimated to be 16% higher in 2021-2022 compared to the average price over the preceding 9 years. As of Aug. 9, 2022, it was estimated that 46% of hay is growing in areas experiencing drought. In addition to rising feed costs, elevated diesel fuel and farm labor costs have also put pressure on farmer margins.