“If cows had litters, this would be a whole different conversation, but they don't. Once you get into a hole like we are now, it's a multi-year process to get out of it.”
Freakonomics Radio · Ideas & Essays · October 2026
Peel is explaining why beef prices can't come down quickly. A cow has one calf at a time, and a rancher who wants to rebuild the herd has to keep a heifer for breeding and not send her to the feedlot, so the only way out of a shortage is to make supply even tighter first.
Transcript
Yeah, no, it's not a demand-driven thing. It tends to come from the supply side. It comes from those long-term adjustments of production and the fact that we're operating with a forage base that's, well, it's inherently variable. Then that's what makes the cattle cycle unpredictable sometimes. Let's say you've got too many animals and the prices start to drop. If a producer says, oh, the market's telling me to cut back on production, what is he going to do to cut back on production? He's going to sell some cows. The cows are really the source of supply for the whole industry. Those cows go to slaughter. So if we have too much and prices are dropping, the way we solve that is by making it worse by putting even more supply on the market.
And if prices are low, then the incentive to have bigger herds, I assume, diminishes, yes.
That's right. So it goes the other way at the bottom of the cycle, which is where we are now. We don't have enough animals. Animals and the market wants more, but beef production is unique because cows, first of all, they're big, slow-growing animals, and they have one offspring at a time. And so, if a cow has a calf, we're trying to do two things. We're trying to maintain beef production. We're also trying to rebuild the herd. If that calf that hits the ground is a female, we have a choice. She can become part of the beef supply sooner. It'll still take a couple of years to grow her out. But if we want to save her for breeding, then we have to not put her in the feedlot. So, when we don't have enough and supplies are tight, the only solution to that is to make the supply even tighter, which is the dilemma we're caught in right now. You know, if cows had litters, this would be a whole different conversation, but they don't. Once you get into a hole like we are now, it's a multi-year process to get out of it.
So, how deep is this hole? Beef
cow slaughter is down over 40% in the last four years. So, that supply has really gotten dramatically tighter. Ground beef prices have gone up proportionately more than the rest of beef prices, all of which have gone up significantly because of the situation we find ourselves in.
And therefore, Derrell Peel tells us,