It was unnaturally quiet in the Salina sale yards in central Utah on Oct. 21 — two days after President Donald Trump announced he would focus on bringing down grocery beef prices.
ValJay Rigby, president of the Utah Farm Bureau, was there.
“They had a really nice group of 480-pound spade heifers, and they actually no-sale’d them early on in that auction because they couldn't get any bidders,” he said.
The buyers’ reaction to the president's proposition to quadruple Argentinian beef imports was immediate.
“Everybody was sitting around, and the bidding was really quiet at the beginning,” he said.
Bidding picked up as the day went on, once buyers realized they still had orders to fill, because the “demand is there,” Rigby explained. He believed the initial reaction illustrates the emotional response a random statement from Trump can elicit from a market.
“When he talked about it, the price dropped, but it was kind of an artificial manipulation of the market,” he said.
The political wisdom is that Trump’s plan is an attempt to reduce beef prices for shoppers. Jeff Young, president of the Utah Cattlemen's Association, doesn't think importing beef from Argentina will do much for consumer prices in the long run. But, like what Rigby witnessed at the stockyards, when the president speaks, it certainly causes a stir in the market for ranchers.
“I don't really feel like the Argentine beef issue should have that much impact on the market, but the talk about bringing prices down immediately drove the market down and has hurt quite a few producers,” he said as he drove his truck to check on his cattle at his Summit County ranch.
There's a big hole in the beef supply chain for a few reasons.
First, the 50% tariffs placed on Brazil earlier this year went into effect in August and led to a dramatic drop in beef imports. Leading up to July, Brazilian beef imports had been at a historic high.
Second — and an even bigger reason — is that the United States is not getting cattle from Mexico right now. The U.S. Department of Agriculture closed the southern border in July to keep out New World Screwworm, a flesh-eating parasite wreaking havoc on the Mexican herd.
Young said Trump's import plan to lower prices won't fill the hole left by Mexico and Brazil.
“It's a far greater quantity that would normally come here than the beef that would be imported from Argentina.”
In the week after the president made his announcement, cattle prices dropped by just under 20 cents per pound.
“That's probably a $300 a head loss on that animal now,” Young explained.
If you put that across a herd of 200, producers are looking at a loss of $60,000. Considering small family farms make up 95% of farms in the U.S., “that’s pretty impactful,” Young said.
America’s cattle herd is at a seven-decade low, and costs on the farm are high, said John Newton, vice president of public policy and economic analysis at the American Farm Bureau Federation — contributing to high cattle prices.
Combine that with a historic drought and the long-lasting impact the pandemic has had on processing capacity, and farmers have been left in a tight spot.
“You combine all of those factors, and we've got high cattle prices,” Newton said.
He said the agricultural industry is vulnerable to inflation in wages and costs, like transportation, seen across the globe.
At the end of the day, Trump’s plan to increase imports from Argentina is unlikely to have a significant impact on beef prices at the grocery store, according to Newton, if there is no effort to lower production costs in the U.S.
Following the immediate price drop seen at cattle markets across the country, prices are beginning to climb to where they were before Trump made his announcement.
“It’s the psychological effect of saying we’re going to do everything that we can to lower consumer beef prices,” Newton said.
“It creates a lot of economic uncertainty for them, and I think that’s why we saw the responses that we did.”
