The U.S. cattle herd is the smallest it's been in 70 years. In June, the price of ground beef rose over $6, the highest since the government started tracking in 1980. A smaller cattle herd has led to higher prices paid to ranchers, higher beef prices for consumers and lower greenhouse gas (GHG) emissions tied to cattle. Historically, the cattle herd has fluctuated up and down and the industry expects the herd to increase again in future years. But should it? Who does a larger cattle herd benefit in the highly consolidated system we have today? A smaller cattle herd could provide lessons for a just transition in livestock, where new policies support farmers and ranchers, the climate, and our food system.
A shrinking herd and the cattle cycle
The U.S. cattle herd, which includes beef and dairy cattle, is now at 86.7 million head, entering its sixth year of contraction. This is the lowest level since 1951. Weather patterns consistent with climate change are contributing to that decline — a 2021 drought in the Great Plains shrunk the herd faster than expected and moved to the Central and South Plains in 2022 and 2023. The U.S. now has its smallest beef cow herd since 1961and smallest calf crop since 1941. Not surprisingly, beef production is projected to be 4.4% lower in 2025 than last year.
Aside from weather changes, the cattle cycle is driven by cattle producers’ response to markets. Higher market prices signal ranchers to expand herd sizes, though such an expansion can take several years. Cattle producers expand by retaining (instead of raising for slaughter) female breeding calves. The females that are retained will not produce a calf until two years of age, and that calf will take an additional 18 months to grow before it is ready for slaughter. But according to cattle industry experts, ranchers are not yet holding back breeding calves and instead are cashing in on the higher priced market. Questions remain about how much and when a herd rebuild will occur.
Other countries are also seeing smaller cattle numbers. Canada’s cattle herd is the smallest it has been in 36 years, partially due to drought. Mexico, also facing drought, will likely have a smaller herd size this year. The EU herd size and calf crop has been declining since 2016, and forecast to shrink for the ninth successive year in 2025, according to the USDA. But cattle herd sizes globally continue to rise, largely due to increases in South America and Australia.
Cattle’s vulnerability to climate change
Climate change itself is playing a role in shrinking cattle herd sizes in parts of the world. Cattle are affected by climate change in multiple ways. Because most U.S. beef cattle are on pasture for up to a year before moving to feedlots to be fattened up on grains like corn, they are vulnerable to natural weather disasters, such as wildfires and drought. A USDA report published last year highlighted climate change’s damaging impact on pasture quantity and quality around the world. The EPA reports that cattle are highly vulnerable to heat stress, which can lead to disease and reduced fertility. Heat stress will likely make it difficult to raise cattle in certain parts of the world in the future, even for cattle bred for hot and humid climates.
The most recent report from the Intergovernmental Panel on Climate Change (IPCC) finds that “increasing variability in grazing systems has negatively affected animal fertility, mortality and herd recovery rates.” Projecting forward, the IPCC concludes that “climate change will increasingly expose outdoor workers and animals to heat stress, reducing labour capacity, animal health, and dairy and meat production.”
Climate change and heat stress affect dairy cows by decreasing appetites, increasing thirst and agitation, and vulnerability to illness. A warming climate also affects dairy production — one study from the University of Illinois found that Midwest dairy cattle lose up to 8% of a day’s milk following a day of heat stress. Smaller herds without fans and sprinkler systems are often more severely affected.
Smaller herd = lower greenhouse gas emissions
Cattle also contribute to climate change by emitting methane through their gas (i.e., their burps) and manure. Liquified manure systems like those used at some of the largest dairy farms can emit both methane and the potent GHG nitrous oxide. When manure is applied (often over-applied) to fields as fertilizer, it can run off into waterways, contributing more nitrous oxide emissions.
Countries around the world and at the UN are grappling with how to reduce livestock’s GHG emissions, particularly the potent GHG methane. The latest U.S. EPA Greenhouse Gas Inventory (still in draft form) reports livestock as the second-largest source of agriculture emissions. But those livestock-related emissions have slowly dropped since 2019. Enteric fermentation emissions from cow burps dropped from 197 million metric tons of CO2 equivalent (MMT) in 2019 to 187 MMT in 2023. Manure-related emissions dropped during the same period from 66.7 MMT in 2019 to 65.1 MMT in 2023. The EPA attributes the decline to the drop in the cattle herd, and livestock methane emissions are expected to decline further from 2024 through 2026 as the cattle herd continues to decline to historic levels. If those cattle numbers rise, emissions will increase once again.
As a short-lived pollutant compared to carbon dioxide, methane has received increased attention as a critical target in reducing emissions. Methane stays in the atmosphere for around 12 years, whereas CO2 can stay for up to 1,000 years. In 2021, more than 120 countries committed to reduce global methane emissions 30% by 2030 (based on 2020 levels). Recent efforts to reduce methane emissions from livestock have focused on new technology, including feed additives, improved livestock breeding or capturing gas from giant manure lagoons. But the EPA data reaffirms a tried-and-true strategy to reduce methane emissions: reductions in the number of cattle.
Smaller herd = better prices for ranchers
A smaller herd has meant higher live cattle prices for U.S. farmers and ranchers, and the USDA projects beef and feeder steer prices in 2025 and 2026 to exceed last years’ records. With relatively low feed grain prices, some cattle producers are benefiting. “Fed cattle passed the $2 per pound mark for the first time and all of these classes of cattle have set new record prices already in January,” said Oklahoma State agribusiness professor Darrell Peel earlier this year. The beef cattle market is paying so well that the dairy publication Milkweed describes it as an effective option for dairy farmers facing low milk prices.
It follows that higher prices for farmers and ranchers leads to higher prices for consumers, and consumer beef prices have risen by 12% over the last year. But tight supplies are also an opportunity for the big beef companies to take advantage of ranchers and consumers. The beef industry is enormously concentrated: only four companies — Tyson, JBS, Cargill and Marfrig/National Beef — control 85% of the U.S. market. Ranchers have sued all four companies for price fixing, with JBS paying $83.5 million to settle the case earlier this year. The companies also face a consumer-focused price fixing lawsuit, which claims the companies artificially raised prices.
All four companies produce beef in multiple countries, which further complicates the domestic market for U.S. farmers and ranchers. Following the passage of the North American Free Trade Agreement (NAFTA) in 1994 and the updated United States-Mexico-Canada Agreement (USMCA) in 2020, U.S. beef production has been deeply integrated with Mexico and Canada, creating what is essentially a North American cattle herd. On average, 1.17 million live cattle annually are brought across the border from Mexico into the U.S. In 2024, nearly 800,000 live cattle crossed the border from Canada into the U.S. for processing. Large multinational meatpackers are able to use these live cattle imports to blunt paying higher prices to U.S. cattle producers.
Another way global meat companies manage U.S. beef supplies and prices for consumers is through imports. Imports now make up 15% of U.S. beef consumption. In fact, the U.S. has had a beef trade deficit for many years, meaning that it imports more beef than it exports. In 2025, the U.S. trade deficit for beef, calculated as the difference between export and import volumes, is projected at 1.8 billion pounds, which would be the largest deficit since 2006. The U.S. does not have mandatory Country of Origin Labeling (COOL) for beef, so consumers often don’t know where their beef was produced. Top countries for beef imports include: Canada, Mexico, Brazil, Australia and New Zealand. The U.S. is also a major beef exporter. But the USDA projects beef exports will fall to a near-term low of 2.3 billion pounds in 2027, which would be the smallest since 2010. The main customers of U.S. beef are Japan, South Korea, China, Mexico, Canada and Taiwan.
The Trump administration’s tariff fights with major beef importing countries further complicates markets for ranchers and consumers. Currently, cattle and beef from Mexico and Canada are not facing tariffs, as they fall under the USMCA. But Trump has called the USMCA a transitional agreement, and questioned whether it is needed any more. Tariff fights with major beef export markets, like Japan, South Korea and China, make it difficult for ranchers and food companies to plan for the future. The Trump administration’s threat to place a 50% tariff on Brazilian beef imports could further tighten U.S. markets for consumers. An additional challenge is the northern march of the screwworm, a parasite deadly to cattle that appears to be making its way to the U.S. The USDA has blocked live cattle imports from Mexico until they believe the screwworm threat is contained.
Several big meatpackers and dairy processors are banking on a future cattle herd expansion. JBS is investing $200 million to expand its meat processing capacity in Colorado and Texas. Walmart opened its own beef packaging plant in Kansas last month. According to CoBank, the U.S. will see an unprecedented $8 billion in new dairy processing investment through 2026. Some of the new plants are poised to come online in 2025, with about half of the investment in the cheese category.
Cargill and Tyson are going in the opposite direction — in December 2024 Cargill announced it would be laying off 5% of its workforce, linked to low crop prices and the declining cattle herd in the U.S. In June 2025, the company announced that it would be making a $90 million investment in further automation in its Colorado plant to preserve more meat per cow, in light of the cattle shortage. In February 2025, Tyson closed a beef and pork processing plant in Kansas due at least partly to tight cattle supplies.
Herd size and a just transition
There is currently little to no public discussion about what size the U.S. cattle herd should be, from either a market or climate standpoint. Beef and dairy farmers are understandably nervous, as they’ve seen their numbers shrink dramatically over several decades. On average, around 21,000 independent cattle ranchers went out of business annually between 2017 and 2022. The U.S. lost half its remaining 72,000 dairy farms from 1997 through 2017. Now, many of the larger meat and dairy companies are asking farmers to reduce their climate footprint, often without covering costs or paying a higher price. Discussions about the climate footprint of cattle can be seen by farmers as just another threat that could push beef and dairy producers out of business.
Other countries are starting to tackle climate challenges around livestock within a just transition framework. While just transition concepts in the United States are more advanced when discussing energy and coal communities, a just transition for food systems looks at where climate goals intersect with issues such as nutrition and hunger, rural economies, fair markets for farmers, workers and consumers, water quality and quantity, cultural respect and biodiversity preservation.
Last year, Denmark passed a groundbreaking new policy developed by farmers, workers, environmentalists and business leaders that combined a tax on livestock emissions and limits on nitrogen fertilizer use, with subsidies for farmers (including to move animals onto pasture), land protection and upskilling trainings for workers. Europe has launched a Strategic Dialogue on agriculture that includes a transition toward sustainable livestock. The UN Food and Agriculture Organization (FAO) will host a global conference on the Sustainable Livestock Transformation later this year. In some cases, farmers are playing an important role in developing policies that improve on-farm economics and benefit the climate.
The drop of the U.S. cattle herd has not been the result of an intentional policy, and in part has been driven by climate change itself. But the short-term outcomes, better prices for ranchers and lower GHG emissions, could be the basis for a conversation about what a future policy framework might look like. Such a framework might include:
- Reforms to trade policy that limit the ability of meat companies to use imported live cattle and beef or dairy products to undercut U.S. markets. Mandatory COOL would create more transparency for consumers.
- A combination of trade and farm program reforms that could better balance supply and demand, including for cheap (often below cost) feed. The U.S. protects its sugar market through tariff rate quotas on imports, ensuring a fair price for U.S. farmers and consumers. Canada has long implemented dairy, egg and poultry supply management programs, which also limit imports to ensure fair markets, while preventing the farm consolidation seen in the U.S. The National Family Farm Coalition is advocating for a similar form of dairy supply management in the U.S.
- Reforms to U.S. farm policy that could prioritize investment in local and regional markets, greater climate resilience in livestock systems (such as more trees on pasture and breeding improvements), climate-friendly government food purchasing, and less emphasis on production for exports and financial support for intensive cattle feeding operations through government-backed loans and conservation payments.
- Additional policies could focus on ensuring more competitive and transparent markets (including in the beef sector) and economic development programs that support more decentralized meat processing, worker training and infrastructure investments supporting more farmer and worker ownership.
The Trump administration’s climate denial, dismantling of key government agencies and scientific institutions, along with an erratic trade policy and attacks on immigrants, are understandably drowning out the need for a thoughtful discussion on a just transition for livestock in the U.S. While the Trump administration has pulled out of the Paris Climate Agreement, many states still have GHG emission reduction targets, and other countries include livestock in their national climate plans.
Meanwhile climate change itself marches on, posing enormous challenges to ranchers and cattle health. What is the right size for the U.S. cattle herd that could bring multiple benefits? It is undoubtedly a complicated question, but a conversation we need to start.
