David Guthrie works a cattle farm in Siloam Springs, a small town near the Oklahoma state line. Guthrie, like many in the beef industry, is seeing his cattle sell at record highs.
"We're getting more for our cattle," he said, "much better than we were five years ago."
The price of getting Guthrie's cattle to grocery stores and restaurants has increased 85 percent in the past five years, according to a report by the National Agriculture Statistics Service released earlier this month.
In that time, the amount spent on poultry, livestock and related expenses has grown to $45.1 billion from $24.4 billion. Farmers who survived the 2012 drought, like Guthrie, can charge high prices for their cattle, which are still in short supply.
These skyrocketing expenses for livestock and poultry have been passed on to the consumer, pushing prices up in grocery stores and restaurants across the country, said Travis Justice, executive director of the Arkansas Beef Council.
Prices for ground beef have been soaring in the past five years. In December 2012, the price for a pound of ground beef was $3.08. By May 2015, a pound cost $4.14, according to the Bureau of Labor Statistics.
Justice said this increase is largely because the demand for beef hasn't fallen, but the supply has.
"So far we've seen consumers willing to pay higher prices," he said. "And we've got the lowest inventory of cattle we've had in 60 years."
The industry is trying to rebuild, which means prices should go back down eventually, Justice said. Farmers have been holding back heifers that would normally go to market in order to grow herd sizes.
Guthrie said he is getting back up to his normal herd size, about three years after the drought.
"I just try to retain cattle numbers to about 200 to 220 mom cows," Guthrie said.
Justice said there are signs the industry is starting to turn itself around.
"We can't just turn on and off the production chain," he said. "It takes roughly three years to turn that cycle around."
Cattle are the slowest animal to bounce back from the drought because of the animal's biology, Justice said.
He said the cattle industry is also more vulnerable to weather conditions than other meat producers who raise their animals entirely indoors.
"The cattle industry still lives and dies by the weather," he said. "Three-fourths of that animal's life is spent outside."
Arkansas was among the hardest hit states in the drought in 2012. Over 74 percent of the land area in Arkansas was under extreme or exceptional drought. All counties in the state were declared a drought disaster by the U.S. Department of Agriculture, according to the department's website.
The dry conditions doubled the price of hay, and herd sizes fell as farmers were forced to send heifers to slaughter instead of breeding them.
Farmers also collectively spent $63.7 billion on feed in 2014, according to the report by the National Agricultural Statistic Service.
Justice said that drove some in the industry out of business.
"Those producers that are still in the business are seeing favorable prices right now, but that comes at the cost of some not still being in the business," he said.
Guthrie said the cost of hay and feed is still increasing, putting a dent in his profits.
Combined with other expenses, like the price of the animals, U.S. farmers and ranchers now spend more than $100 billion on livestock-related expenses.
"I think that's what's driven the cost up as much as anything," he said.
SundayMonday Business on 08/24/2015