First generation farmers Grant Cadwallader and his wife Alex Few know first-hand the volatile and challenging environment of the beef industry.

Located on the Willwood, Cad’s Farm is a no-till operation that added cattle in 2021 to increase organic matter and natural nitrogen for improved soil health.

“We got into the cattle business because I believed it was the right thing to do for the land,” Few said. “You complete the natural life cycle of adding ruminant contents to the soil, which makes the soil healthier. You can reduce synthetic input costs by just having live animals eating a pasture.”

In rangeland conditions it takes time to see the benefits from the cattle, but on irrigated farmland, they saw improvements the following year.

“You could actually see the difference from what was grazed to what was hayed,” Cadwallader said. “What was hayed had more input cost, more nitrogen and synthetic fertilizers and whatnot. So we always do rotational grazing, and you could see a difference in the field that had been rotated five different times and mowed down compared to the mechanical operation of two cuttings.”

Starting with just five cows, they’ve gradually grown the cattle business, processing 17 head for local consumption last year. However in the years since they’ve dealt with high production expenses, as well inflation in the price of fuel and equipment. This has made maintaining herds exceptionally expensive. 

“When we brought those first five cows to the farm, we paid $1,100 a head for an animal that we could have finished out in three to six months,” Few said. “Today in order to buy that same quality of animal, we spend $3,000 a head. The cattle market has changed that much.”

Historic crisis

Anyone who has purchased beef recently has likely experienced sticker shock at the record high prices. This is in part because the national herd is the smallest it has been in 75 years and it’s still shrinking. There were 28.5 million beef cows as of July 1, down 1% from a year earlier, while the calf crop was down 2% to 32.5 million head, said John Hewlett, UW Extension’s ranch and farm management specialist in the Department of Agricultural and Applied Economics in Laramie.

And drought, high interest rates and production costs are slowing the cattle industry's recovery.

In Wyoming, herd size and grass availability are both shrinking. As of Jan. 1, the state had 1.16 million head of all cattle and calves, down 5% from 1.22 million a year earlier, and 621,000 beef cows, down 5% from 651,000, Hewlett said. Beef replacement heifers fell to 120,000 head, and the 2025 calf crop came in at 590,000 head, also down 5%. 

“Those numbers indicate Wyoming is still moving in the opposite direction from herd rebuilding,” he added.

One of the main reasons — drought. As of Sept. 1, 100% of Wyoming was in moderate drought or worse, with 72% in severe drought or worse and 29% in extreme drought. 

“Forage conditions have followed,” Hewlett said. “In mid-August, Wyoming had 71% of pasture and range rated very poor to poor and only 4% rated good to excellent, among the worst conditions in the country. By the end of August, 86% of topsoil moisture was rated short or very short.”

Heavy pressure

While the USDA forecasts cattle and calf cash receipts up $7.0 billion, or 5.2%, in 2026, total farm production expenses rise $21.2 billion, or 4.5%, to $492.8 billion. This means overall farm profit margins are facing heavy pressure.

“Add to that tightening agricultural credit, expensive replacement females, and animal health concerns such as the 2026 New World screwworm detections, and the picture is one of strong cattle prices and gross returns with no guarantee of strong margins,” Hewlett said.

This can be a struggle for smaller operations that may have less working capital, fewer ways to spread fixed costs and fewer financing alternatives available when a drought or unexpected expense hits.

Smaller operations like Cad’s Farm — typically defined as cow-calf herds with under 100 head — make up the vast majority of U.S. producers. The 2022 Census of Agriculture counted 29.2 million beef cows on 622,000 farms, an average of 47 cows per farm, Hewlett said. Fifty-five percent of U.S. farms with beef cows had fewer than 20 head, although those farms managed about 9% of the national cow inventory.

“Roughly 92% of [Wyoming’s] beef-cow operations run fewer than 500 cows, and together they manage about 57% of Wyoming's beef cows,” Hewlett said. “So in Wyoming, small- and mid-sized cattle operations are not a minor part of the industry. Collectively, operations of these sizes have an important influence on how quickly the cow herd can rebuild because rebuilding ultimately depends on thousands of individual decisions about whether to retain heifers, cull cows or expand.”

Cad’s Farm has had to raise its prices to stay profitable almost every year since it started, but as costs continue to rise Cadwallader and Few have made the decision to transition from a finishing operation to cow/calf. 

“We kept waiting for the historical cattle market to do what it's done forever, which is at about year 10, the prices start to go down,” Few said. “But we're past year 10 now, and the prices are still going up. The starting cost of finishing a cow has tripled and that's just the price of a cow, not any of the other things that have also gone up. So we made a decision to convert our business to a cow/calf operation, which is a significant capital investment.”

It now makes more sense financially to pay for years of feed instead of paying for one expensive animal close to finishing weight. However they’re taking a hit this year as they invest in the cow herd. 

“We'll have less beef to take to market because we're buying cows that we're going to breed, and their calves won't be ready to take to market for almost three years,” Few said.

Farm to table

For larger cattle producers in the area, it makes more financial sense to sell to the "Big Four" beef processors of JBS, Tyson Foods, Cargill and National Beef than to local consumers.

“Everybody I’ve talked to that has a sizable operation, if they’re still doing their farm-to-table or direct to the consumer side of their business it’s only to maintain their customer base for when the market reverses.They're not actually making money on it right now,” Few added.

For Cad’s Farm, one of its biggest challenges is the small population and consumer market. Also because they are in a more remote area, the cost of shipping to larger urban markets is high. 

“When you talk about increases in fuel costs, that translates to increases in farm fuel costs, but also increases shipping costs,” Few said. “It challenges that aspect of our direct to consumer business as well.”

They sell their meat online and at farmers markets in Powell, Cody and Billings.

“As a first-generation farming family, Grant made the decision not to be a row crop farmer because the investment in equipment was just too much as a first-generation producer,” Few said. “He decided to do hay and barley, and in an effort to diversify further we added cattle but the only way it makes sense for a small operation like us was to sell directly to consumers.” 

Challenges continue

Tight supplies mean cattle prices will remain high into 2027, but the USDA has already lowered its cattle price outlook for the second half of 2026.

Hewlett recommends producers calculate a complete annual cost per cow and a break-even calf price rather than guessing. 

“Underestimating cow cost by $300 per head is a $30,000 error on a 100-cow herd,” he added. “That is enough to change the answer to major management questions such as whether it makes more sense to purchase additional feed, lease forage or reduce cow numbers.

“Drought also needs to be treated as a multi-year risk-management problem rather than simply a hay-price problem. With 71% of Wyoming pasture rated very poor to poor in mid-August, the realistic response may involve some combination of crop residues, annual forages, byproduct feeds, leased pasture, early weaning and partial destocking. It is rarely just an all-or-nothing choice between buying hay or selling the entire herd.”

A record calf price cannot solve every problem, Hewlett concludes. But where strong cattle prices produce a healthy margin, using that margin deliberately can leave a ranch in a much better position for whatever comes next.