Professor Brandon Parsons Explains Macroeconomic Shocks Driving Volatile Beef Prices on CNBC

As the agricultural sector closely monitors the arrival of the invasive New World screwworm in Texas, Pepperdine Graziadio Business School faculty member and economist Brandon Parsons spoke with CNBC to analyze the potential impact on consumer food costs. The parasitic outbreak threatens an industry already vulnerable from prolonged regional droughts and a halt on live cattle imports from Mexico, which has left the domestic herd at a 75-year low. Commenting on the basic market forces at play, Parsons observed that the situation mirrors classic financial models. “When supply contracts and demand stays relatively stable, prices increase, and that’s Economics 101 — and it’s exactly what we’re seeing,” Parsons explained.

With the current cattle shortage already driving retail beef prices up nearly 13% year over year, Parsons warned that the parasite introduces an aggressive variable into the market. “The screwworm outbreak is a possible severe supply shock at a time when the beef supply is already historically low,” Parsons noted, adding that “given that this possible screwworm outbreak could lead to a larger supply shock on top of an existing supply shortage, prices could increase further.” He suggested that while groceries will likely face upward pricing pressure, the trajectory will ultimately depend on consumer willingness to absorb the increases.

Parsons pointed out that while buyers have shown remarkable resilience to rising costs so far, grocery shelves will inevitably see a shift if the supply curve moves leftward. “Although there are other meat substitutes, many people prefer beef, which will keep demand relatively stable,” Parsons said. However, he concluded that a ceiling exists for retail hikes before shoppers collectively pivot to more affordable proteins like chicken or pork, stating, “Despite supply-side constraints and record-high retail prices, U.S. consumers have shown some price insensitivity to beef price increases so far — but there is a price point at which substitution increases.”

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