State of the Beef Industry

Rebuilding the U.S. Cow Herd: A Calculated Climb

Fri, 19 Sep 2025 12:14:48 GMT

Lance Zimmerman is a senior beef industry analyst with RaboResearch Food & Agribusiness and helped provide research and insights for Drover’s State of the Beef Industry report.

Cow liquidation is in the rearview. Heifer retention is underway. The U.S. cattle cycle is officially shifting into rebuild mode, but this recovery will not be a stampede. It’s shaping up as a slow, strategic climb.

Beef processing bottlenecks, persistent drought, soaring feed costs, labor shortages and post-pandemic friction kept cow-calf margins relatively tight from 2016 to 2022. Some of those pressures have eased, but with herd numbers set to grow, others could easily resurface. As producers hold back more heifer calves this fall, herd replenishment remains a cautious and calculated exercise.

Rabobank expects the Jan. 1, 2026, beef cow inventory to be 28 million head, up 200,000 head from the prior year. A second increase of less than 500,000 head is likely over the following year. In short, do not expect dramatic shifts early in this rebuilding effort. From 2024 to 2026, the nation’s beef cow herd will hold relatively steady (see Figure 1).

Figure 1: U.S. beef cow inventory on January 1

(USDA, Rabobank 2026-2030 forecast)

More meaningful herd growth is forecast from Jan. 1, 2027, into the early 2030s. But even then, the peak inventory projection is likely to be 500,000 to 1 million head below the 2019 highs, and that is not necessarily a bad thing.

Thanks to long-term efficiency gains across the U.S. beef sector, a rebuild topping 30.5 million cows might be more than enough to hit new record high in total production. Per capita beef supplies could reach levels not seen in more than two decades. Still, adding upward of 2.5 million cows during this next phase will be complicated.

According to the latest Farm Journal State of the Beef Industry survey , just 47% of producers are considering expanding their cow herd within the next five years, a four-point drop from last year’s already modest number.

Factors Affecting Herd Building

The hesitation is rooted in hard realities. Rising input costs, from fencing and equipment to replacement heifers, are straining budgets. And it is not just the higher price tags. Volatility is adding pressure. Fluctuating expenses are muddying financial planning, tightening cash flow, and making profit targets feel increasingly out of reach.

Access to pastureland is still a sore spot. Prices keep climbing, while land-use restrictions and expanding suburbs are blocking opportunities for cattle producers.

Federal government shifts are not helping morale either. Regulatory red tape and compliance demands already pull significant time and resources. Adding the moving target of trade policy and a maze of new rules, and producers find themselves burning hours to stay current. The burden is exhausting.

Behind much of the fatigue in cattle production lies a familiar challenge: aging producers and a shrinking labor pool. Finding help is tough and getting tougher.

Older ranchers worry about health, longevity and who will take the reins next. Meanwhile, the next generation faces a different battle: securing capital, gaining know-how and finding tenacity that defined those who came before. The grit is there — so are the obstacles.

Given these constraints, can the beef cow inventory forecast outlined earlier really take shape in the coming years? Improving drought conditions and profitability help. Survey responses suggest it will take even more than that.

USDA’s latest Census of Agriculture reveals a clear trend: big cow-calf operations are getting bigger. Since 2012, producers with 200 head or more added 2.2 million cows, a 20% jump. Meanwhile, operations less than 200 head lost 2 million, an 11% drop. The shift was established by 2017 and accelerated into 2022.

Rabobank sees the 2027 census amplifying the trend: big operations getting even bigger. They have the capital cushion to absorb risk and make bold moves without jeopardizing the ranch. That is critical when bred cow and heifer prices push past $4,000 per head in the next few years and calf prices soften as supply grows later in the cattle cycle.

Producer age matters even more in this rebuilding effort. According to the 2022 Census of Agriculture, beef cattle operators now average 58.3 years old, the oldest among all U.S. livestock and poultry producer groups.

Younger ranchers might be more willing to bet bigger during this rebuild. For many families, it’s a natural handoff, an exit lane for older operators to transition decision-making to the next generation. Also, herd expansion could unlock new revenue and pull sons and daughters back into the ranch.

Cow-calf producers stand apart in the beef supply chain as fixed-cost operators in a largely margin-driven sector, but that distinction is blurring.

As herd size grows larger and ranch leadership skews younger, margin thinking will gain ground. Larger producers focus on profit per cow or per acre. Younger ranchers lean into data and strategy.

With volatile market prices and uncertainty surrounding the cattle business, margin-minded cow-calf operators are not just likely to evolve during this cow herd rebuild. They are essential to the U.S. restocking effort.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

For more insights to the report as well as producer and economist perspectives, watch the State of the Beef Industry Webinar exclusive on FarmJournal.tv . The panel includes Ken Odde, a South Dakota cattle producer, along with Matt Perrier, Angus seedstock producer from Kansas, and Lance Zimmerman, RaboResearch senior beef industry analyst. You won’t want to miss their thoughts on the beef industry today and in the future.

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— Lance Zimmerman serves as RaboResearch Food & Agribusiness’ senior beef industry analyst. Discovering and implementing decision-friendly business solutions for agricultural and food companies has been the focus of his career. Growing up on a western Kansas farming operation that includes a commercial cow-calf herd has fueled his passion for the industry.

Are We Seeing Signs of Herd Rebuilding?

Mon, 15 Sep 2025 16:41:54 GMT

The U.S. beef cow inventory has reached its lowest point since 1962, marking what appears to be the bottom of the current cattle cycle. Tight supply is driving the strong pricing environment beef producers are enjoying today.

“For cow-calf producers right now, things are as good as they’ve probably ever been,” says Troy Rowan, University of Tennessee assistant professor. “Even though things are really good, producers are conscientious and vigilant about potential challenges,” Rowan summarizes.

Agreeing with Rowan, South Dakota cattleman Ken Odde adds while profits are currently strong, inflation quickly erodes economic gains. He stresses the importance of risk management and diversification.

Early Signs of Herd Rebuilding?

This is the million-dollar question: Are there encouraging signs of expansion?

“The beef industry is not currently in herd expansion mode, with producers hesitant to retain heifers due to high costs and economic uncertainties,” says Dave Weaber, Terrain senior animal protein analyst.

In Drovers State of Industry Report to be released the week of Sept. 15, we breakdown the July USDA cattle inventory and cattle on feed reports. While the USDA reports showed the smallest U.S. herd in history and continuing tightening numbers on feed, analysts predict producers have not experienced the highest cattle prices, yet.

“Our national herd size has the industry at an interesting point,” Rowan says. “Prices are at all-time highs, inputs are reasonable and more cow-calf enterprises are profitable than ever. When the industrywide rebuild will happen remains up in the air, but producers are keeping in mind that the high-flying industry right now is not going to stick around forever. They’re starting to adopt new technologies, leveling up their crossbreeding programs and expand opportunities for non-cattle related income on their ranches.”

Weaber adds producers need to be intentional about herd expansion, understanding the financial implications of adding new cattle.

Beef-on-Dairy Fills the Beef Supply Gap

“The current dynamics of supply is going to be a challenge,” says Jarrod Gillig, Cargill senior vice president, managing director for beef.

Gillig summarizes the cattle industry is experiencing a critical period of transition. He doesn’t expect the cow herd to return to previous peak levels of 32 million head. Instead, he predicts the gap in supply will be filled by beef-on-dairy calves.

Nick Hardcastle, Cargill senior director of meat grading and technical specialist, explains how the beef-on-dairy calves are an upgrade to the traditional Holstein steer and the positive impact they are making on beef supply.

“Beef-on-dairy is more desirable because it helped overcome several Holstein difficulties,” he says. “Improvements include red meat yield — more meat to a consumer — as well as improved acceptance in branded programs.”

Hardcastle says the beef-on-dairy cattle are filling the supply gap by filling pens in the Plains states where feeders are needed, and they are widely accepted by feeders and packers.

Defining Future Beef Producer Success

Odde says the beef industry is not just surviving but positioning itself for significant transformation.

“Producers who remain flexible, technologically savvy and strategic in their approach will be best positioned to thrive in this changing environment,” he says.

Weaber agrees saying successful producers will be those who can adapt, manage costs effectively and align themselves with evolving market trends.

“Don’t let cost get away from you,” Weaber warns, emphasizing that “being a low-cost, high-productivity producer means you get to make money seven, eight or nine years of the cycle.”

He stresses the importance of understanding financial implications, particularly during market transitions.

“If we’re not working on the business, we can’t work in the business,” Weaber adds, summarizing his philosophy regarding producers’ need to adopt more strategic, data-driven approaches.

The State of the Beef Industry Report includes input from nearly 500 beef producers. The annual report provides information to help producers when making decisions. Click here to download the full report.

Your Next Read: 47% of Beef Producers Plan to Increase Herd Numbers

Beef-on-Dairy: A Revolution in American Beef Production?

Mon, 11 Sep 2023 16:23:54 GMT

Editor’s Note: This article is the fifth in a series that comprise Drovers 2023 State of the Beef Industry. The full report will appear as a 16-page special section in the September 2023 issue. Additional articles from the series will be published in this space in the following days.

Beef-on-dairy is arguably the most significant advancement for the U.S. beef industry in a generation, and no current review of the State of the Beef Industry would be complete without examining its impact.

Further, the recent growth of beef-on-dairy has been significant enough that it could alter the cyclical impact the beef industry is experiencing from drought-forced herd reductions. For instance, Patrick Linnell says CattleFax estimates the industry will produce 2.92 million beef-on-dairy calves this year and 3.22 million in 2024 (see chart). Some industry observers believe those estimates are conservative.

Regardless of the exact number, Dale Woerner, animal and food science professor at Texas Tech University, told Drovers, “The number will continue to grow as the beef cowherd shrinks.”

That’s due, primarily, to the growing acceptance of beef-on-dairy calves by both cattle feeders and beef packers, and the realities of empty pens and shackle space the industry faces over the next few years.

Targeted Breeding

“Right now, everybody needs cattle,” says Jared Wareham, North America NuEra business development manager at Genus ABS. “The beef-on-dairy crosses, especially the good ones, are in high demand.”

When the beef-on-dairy segment first began to develop a few years ago there was little attention given to the genetics of the beef semen used because it was assumed the result would produce a more valuable calf. That was true, but Wareham says that shotgun approach has given way to much more targeted breeding.

“We saw good crossbreds and bad ones, and nobody wants bad ones,” Wareham says of the early efforts to implement beef-on-dairy. “But the focus on creating the good ones continues to rise, and now we have enough feedlot performance and carcass data to make more of the good ones.”

But the rise in beef-on-dairy is also influenced by the modern dairy production system. Today’s dairy industry, with a relatively stable cowherd of 9.3 million to 9.4 million highly efficient cows, operates under an intense genetic selection system to identify the most productive dairy heifers. The development of sexed semen has become a common tool used to further those efforts and sexed semen allows dairy producers to produce optimal replacement heifers from their best dairy cows with the genetically inferior cows available for breeding to beef sires.

In other words, sexed semen helps reduce the number of dairy cows needed to produce dairy heifers, thus allowing more dairy cows available for breeding to beef sires. That advancement has led to a dramatic decrease in the use of dairy semen and a corresponding increase in the use of beef semen. In fact, the use of beef semen has nearly tripled since 2017.

Advancing Sustainability

At the outset, cattle feeders knew a beef-on-dairy cross would grow faster, be more tolerant of extreme weather conditions and produce a beefier carcass than traditional dairy calves, but that’s a low bar for today’s beef industry, and many feedlots and packers are adjusting their sights much higher.

“At first everybody saw beef-on-dairy as a way to create a dual-stream production system for milk and beef,” Wareham says. “In the beginning, breeding those dairy cows was just a stab in the dark. We used Angus genetics, but now we’re seeing a number of composite sires designed specifically for beef-on-dairy be quite successful.”

Packers and retailers also have a favorable view of the beef-on-dairy segment. For instance, a research project by Woerner and colleagues found strip loin steaks from beef-on-dairy cattle have improved color and shelf-life performance, as well as improved steak shape compared with traditional, straightbred dairy cattle. On average, the research found beef-on-dairy cattle produce carcasses with greater red meat yield than conventional Holstein steers, and high-yielding beef-on-dairy cattle can yield as high or higher than conventional beef cattle.

Woerner and his colleagues at Texas Tech have also collaborated with Cargill for over three years on the Dairy Beef Accelerator, a program to better understand the opportunities of beef-on-dairy. That research has documented several benefits for producers, packers, consumers and the environment. Some highlights:

Compared to purebred dairy calves, beef-on-dairy calves can provide higher-quality beef products without impacting current milk production efficiencies.
Beef-on-dairy calves show greater feed efficiency, which lowers the environmental footprint from their production.
Increased feed efficiency significantly reduces greenhouse gas (GHG) emissions.
The practice benefits meat quality. Beef-on-dairy delivers increased volumes of higher-grading beef carcasses, providing feedyard operators more access to value-based marketing opportunities.

“The beef and dairy industries can to work together to produce even more efficient beef animals,” Woerner says. “Crossbreeding dairy cows to complementary beef sires can advance sustainability by reducing the environmental impact and improving profitability.”