Why Is Ground Beef So Expensive? (Top 10 Reasons)

 

Ground beef can make some of the tastiest burgers and fillings for meals for little cost.

At least that used to be the case, but ground beef prices have become more expensive as of late.

The average price for a pound of ground beef is just below $5 a pound.

It’s only in the past few years that the price has gone up, which may make you wonder what’s causing the price increase.

Here are 10 reasons ground beef is expensive these days.

 

Why Is Ground Beef So Expensive? (Top 10 Reasons)

 

1. Supply Ripples From COVID-19

 

One of the reasons behind higher ground beef costs is a ripple of what occurred during the COVID-19 lockdowns.

When the pandemic waged through the country, the government had everyone on lockdown at home.

Those who could work at home did.

It shut restaurants down and forced many of them to adapt to new ways to serve their customers.

The only place that people could reliably get food, at least in the beginning phase of the lockdowns, was the grocery store.

This meant there was a large chunk of businesses no longer ordering food from farmers and food companies.

Farmers, in particular, found themselves with no one to sell meat or cows to.

Food companies had to reduce how many ingredients they were buying to make their products because they only had grocery stores to sell to.

They didn’t have their usual restaurant customers to rely on.

Since they didn’t need as many ingredients, they were buying less from farmers.

This left farmers with more cows to feed than they could afford.

They weren’t getting enough money from their sales to justify keeping their cows.

By keeping their cows, many of them would likely become bankrupt.

In an effort to survive and keep the farm going, farmers had to cull their herds.

They killed their cows to curb their expenses.

The problem with this is that it led to a shortage of beef when restaurants opened up and life returned to relative normal.

There was a sudden increase in demand and farmers were unable to meet it.

It can take several years for farmers to replenish their stock of cows.

They have to breed them and then let them grow to ideal weights for maximum profits.

That takes time.

Meanwhile, the demand for beef only grows.

Ground beef is expensive due to the lack of supply of meat after farmers culled their herds during the COVID-19 pandemic.

 

2. Labor Shortages At Processing Plants

 

It isn’t only farmers who are experiencing problems with getting a supply of ground beef out to customers.

Meat processing plants that make ground beef are also experiencing labor shortages.

Part of the problem came as a result of the COVID-19 pandemic.

When there was less need for meat because of the lack of open restaurants, meat processing plants also had more employees than they could use.

They had to scale back their operations to save on costs.

This meant that many meat processing plants ended up firing some of their workers.

When the lockdowns lifted and the demand for meat rose, the same processing plants found themselves in a sudden need for workers and fast.

However, they’ve had problems acquiring them.

Part of the reason is that the workers that they let go aren’t too keen to return to a business that cut them loose when they needed the money the most.

Another reason is that many workers are looking for more security following the pandemic.

Some want higher pay to be able to afford the rising costs of living.

Others want more benefits like better healthcare.

Thanks to stimulus checks, some of these workers were able to hold off on jumping at the first employer that offered them a job.

They have more negotiating power.

This has made hiring workers slow for some meat processing plants that aren’t willing to make the changes to attract new workers to their plants.

With few workers, the factories are unable to produce as much ground beef as they did when they were operating at full capacity.

Even if they had all the supply of meat that they could want, the lack of workers inhibits their ability to produce as much ground beef as they would like in a given day.

Since they’re unable to produce as much ground beef, there’s less in the market for stores and restaurants to buy.

That means the ground beef sells at a higher price.

To cover the cost, stores and restaurants have higher prices on their meat products.

Ground beef is expensive because of labor shortages causing supply problems in meat processing plants.

 

3. Expensive Chemical Fertilizers

 

Another factor that’s adding to the cost of ground beef is the high price of chemical fertilizers.

Cows primarily graze on grass for food.

However, during times of drought, farmers will feed them grains to keep them fed.

Considering that cows eat a lot of food, farmers end up paying for a lot of food.

Even outside of droughts, farmers still feed cows grains to help fatten them up.

Grains often undergo various rounds of fertilizer to grow healthy and strong.

It helps increase the yield which means there is more grain to sell.

The problem with grain is that it has become more expensive due to expensive chemical fertilizers.

There are many global factors impacting the price of grain.

An export ban on fertilizer from China is one of the reasons.

A recent strike in Canada’s rail industry has also blocked the import of fertilizer from that country.

There’s also the fact that certain minerals used to make chemical fertilizers are also in high demand in other industries.

Lithium-ion batteries, for example, require some of the same chemicals used to make P-fertilizer.

Biofuel also diverts some crops from what would normally go into the fertilizer production plant to biofuel production plants instead.

All these factors together are driving up the price of fertilizer.

Since fertilizer is more expensive, grain is more expensive.

Since grain is more expensive, feeding cows is more expensive.

That makes beef more expensive to buy.

Ground beef is expensive due to the high prices of fertilizer for grain.

 

4. Lack Of Competition

 

Another serious cause of expensive ground beef is the lack of competition among beef producers.

In the United States, four companies produce over 80% of the country’s beef.

The lack of competition means that they’re able to set whatever price they want with little consequence.

When competition exists in a market, it drives prices down in favor of consumers.

That’s because businesses compete with one another by attracting customers to their stores with low prices.

Each tries to outdo the other until both parties reach a certain amount where they can go no lower.

At that point, it’d start to cut into their profits and make them lose money.

Before then, however, customers can enjoy prices that match their budgets.

Without competition, businesses don’t feel any pressure to lower their prices.

They don’t have to worry about another business undercutting them and stealing customers.

Instead, they’re able to set their prices exactly where they want them to earn a certain amount of profit.

When business costs start to rise, the businesses can raise their prices unchecked.

There’s no one to keep them from doing so.

That’s exactly what’s happening with ground beef.

Ground beef is expensive because there’s a lack of competition with only four meat production companies.

 

5. Drought

 

Another major reason behind the increase in the price of ground beef is the drought that most of the western part of the United States is experiencing.

In particular, the states that produce the most beef are the ones experiencing a drought.

Texas, California, and several other states are in a serious drought that’s cutting into their operating costs.

Drought impacts the price of ground beef in a few ways.

The first is that there’s less water for cattle to drink.

Some ranches rely on natural sources of water to keep their cows hydrated.

Others use wells and aquifers to keep a steady supply of water.

All these sources of water require rain to refill them.

When rain doesn’t occur, the amount of water continues to dwindle more and more.

Hot temperatures also make this problem worse since it results in more evaporation of the water.

Without water to give to their cattle, ranchers have to import water.

That’s an expensive undertaking, but it’s one they have to pay for to keep their cows alive.

Drought also impacts grains and other crops that ranchers use to feed their cows.

It even impacts the amount of grass that grows which feeds them.

When food supplies are low, this is another cost that they have to pay to keep their cows fed and healthy.

Since the farmers and ranchers are taking on higher costs, they need to make up for those costs through the revenue generated by their ground beef sales.

That means higher prices.

Ground beef is expensive because of the drought forcing farmers and ranchers to increase their operational costs.

 

6. Wildfires

 

Perhaps another problem caused by drought is the increase in wildfires.

These are also having an impact on the price of ground beef.

Wildfires are especially common in California, but they’re not restricted to that area.

Wildfires have occurred in several states that are experiencing a drought.

With less moisture in the air, it’s easier for the dry brush to catch fire.

From there, the fire can swell and cause serious damage.

This impacts the price of ground beef in a few ways.

Ranches and farms that are destroyed due to wildfire will need to build entirely new facilities.

To help recover from their losses, the price of their ground beef will likely be high for some time.

Those who don’t lose their ranches to fire may lose feeding grounds or ranges to it.

That means they’ll have to import food while spending money on rehabilitation efforts to restore the land.

One of the big problems with wildfires is the smoke it generates.

The smoke can make cattle ill and completely ruin their meat.

This can create a shortage which increases the price of ground beef.

It can also impact grain yields which then impact the price of ground beef.

Smoke removes oxygen from the air and also blocks out the sun.

Grain, which requires UV radiation to grow, can’t access its main source of energy.

As a result, it either dies or doesn’t grow as healthily as it might have.

With less grain, ranchers have to pay more for the supply that does exist to feed their cows.

It results in a higher production cost which means higher buying costs for customers.

Ground beef is expensive because of rampant wildfires.

 

7. Higher Packaging Costs

 

When it comes to packaging meat, there are a lot of costs associated with it.

Ground beef producers use a ton of polystyrene to package their meat.

The plastic helps preserve the meat as well as keep it clean.

It’s also more convenient to buy it in a plastic shell rather than a bag since you can open the shell up rather than having to slide the meat out of a bag.

The problem with polystyrene and similar plastics is that they’ve become expensive to make.

Part of the reason it’s expensive is the reduced production in oil and gas refineries.

Polystyrene and other plastics are byproducts of these refineries.

When production isn’t at max, there are fewer plastic products coming out of the plant, too.

With fewer plastic packaging products available, it becomes a mad dash to get those that are available.

Polystyrene packaging has uses in several different industries and markets.

It’s a safe plastic that’s easy to use and mold to one’s needs.

Since there’s a lot of demand for it, when supply is low, the price for it increases.

When it comes to ground beef and meat in general, producers use a lot of polystyrene.

It’s shipped to their plants in polystyrene and shipped out in polystyrene.

Since it costs more to use it, it also means they have higher prices on selling their ground beef.

They have to cover the costs associated with their packaging.

Ground beef is expensive because of the higher prices in polystyrene packaging.

 

8. Carbon Dioxide Cooling Costs

 

While carbon dioxide is often the enemy behind climate change, it also plays an important role in the meat industry.

Ranchers use carbon dioxide to stun cows before they’re taken for slaughter.

They also use it to keep their meat cool.

This allows them to transport ground beef across long distances.

The problem with carbon dioxide is that it’s very expensive.

That’s because most plants and farms get their carbon dioxide from natural gas refineries.

Carbon dioxide is a byproduct of the natural gas refining process.

The problem with that is that natural gas has also had high prices.

There are a few reasons behind those higher prices.

The first is the shutdowns that occurred during the COVID-19 pandemic.

Factories either closed down entirely or had reduced staff working in the plants.

This meant that there was less gas, and thus carbon dioxide, produced each day.

That created a shortage.

With these refineries also facing problems with labor, it’s made the costs even higher.

As a result, natural gas is higher which means carbon dioxide is higher.

Since there’s a lot of demand for natural gas, and natural gas is an important part of keeping homes warm in winter, a lot of focus went to producing that over carbon dioxide.

This made the shortage of carbon dioxide even worse.

Due to the shortage, the price of carbon dioxide has increased.

In fact, Britain has warned its food producers that carbon dioxide prices may increase by 400% in the next few months.

With that added cost to their operations, it’s driven up the cost of producing ground meat.

This results in high prices on ground beef.

 

9. Transportation Costs

 

The cost of transporting products is also increasing.

Transporting ground beef is already an expensive process.

That’s because meat plants have to hire refrigerated trucks.

These are more expensive to operate and need regular maintenance to ensure the refrigeration units continue to function over the drive.

Ground beef is also quite heavy when transported by the ton.

That means shipping costs are going to be high.

There’s also a problem with truck driver shortages.

Citing low pay and other hazards in the job, truck drivers are refusing to work until they get higher pay.

Trucking companies that have complied have also raised their prices for their services to cover their new costs of operation.

This means that meat plants have to pay higher prices to use them to deliver their meat to their buyers.

With higher costs of transport, the companies have to raise prices on their products to cover them.

Ground beef is expensive because of the increase in transportation costs.

 

10. High-Quality Meat

 

A final reason ground beef is expensive has to do with the quality of meat.

Many consider ground beef as one of the cheapest parts of the cow.

However, even with ground beef, there are different grades.

Some ground beef also comes from different parts of the cow.

Sirloin and chuck, for example, are two areas where you might get your ground beef from.

The quality of this meat differs based on the cow.

The USDA also grades the meat to determine its quality.

The best meat has the prime grade.

This indicates that the meat came from young cows who were healthy and fed well.

It often means the meat has a good amount of marbling which impacts its flavor and texture.

If you buy ground beef with a prime grade, then you can expect it to be more expensive than choice or select grade.

That’s because the farmer likely put more costs into their cows to make them the best possible.

With more costs come higher prices.

Ground beef is expensive if you choose to buy high-quality meat that pushes it into a prime grade.

 

Conclusion

Ground beef is often a staple food when it comes to things like meatballs, tacos, and burgers.

However, the environment, ripples from COVID-19, and lack of competition among meat producers have made the price skyrocket.

It may take several years before cattle supply returns to what it once was, but once it does, the price of ground beef might finally decrease.