MARKETING BEEF

Beef Promotion and Research Act of

1985
■ Established $1/hd checkoff for every head of beef sold in U.S.
– $0.50 goes to the state beef council where the sale occurs; $0.50 goes to the
Beef Promotion and Research Board at the national level
– Beef Promotion and Research Board: promotes beef as a food, provide
consumer information, provide information to beef industry, promote foreign
marketing, and promote research in beef production and utilization
■ Money collected by auctions, packers, and other markets
■ Late fees applied if money not received by 15th of each month; fee: 2% compounded
monthly, civil penalty of up to $5,00, and a federal penalty of up to $10,000 for
each violation
■ Credited with helping beef maintain higher share of meat market
Market Basics:
Supply and
Demand
■ Supply: amount of a product that
producers will offer for sale at a
given price at a given time
– Prices go up = more product
for sale
■ Demand: amount of a product that
buyers will purchase at a given time
for a given price
– Prices go up = less demand
for a product
■ Supply and demand govern market
prices; producers have little effect
on demand, but can affect supply
Methods of Marketing – Terminal
Markets
■ Also called central markets or public stockyards
■ Facilities owned by stockyard company and charges for use of facilities and feed fed to cattle while
in stockyard
■ Stockyard never possesses ownership of the cattle
■ Have commission firms – cattle are cosigned or given to another party who acts as a selling agent
– Selling agents bargain with representatives of the purchaser to get the best price possible
– Charge a commission fee for their services in marketing cattle
■ Costs include charges for yardage, feed, insurance, and selling fees
– Yardage = fee for use of stockyard facilities and deducted from the selling price of cattle
■ Exist for feeder cattle and slaughter cattle
■ Declining in number due to other methods of marketing
Auction Markets

■ Also called local sale barns or community

auctions
■ Cattle sold by public bidding, with animals going
to highest bidder
■ Convenient for buyers and open provide open
competition for cattle
■ Most value to smaller cattle producers
■ Fees include yardage, feed, insurance, and brand
and health inspection – paid by seller
■ Increasing in popularity for feeder cattle and
staying steady for slaughter cattle
Direct Selling and Country Markets
■ Used by larger cattle producers
■ Typically no commission firms or brokers involved
■ Contract sales used to sell directly from feeder cattle producers to cattle feeders
■ Cattle dealers buy feeder cattle for cattle feeders – dealers paid on a commission basis or buy
cattle outright, then resell at higher price
– May also buy slaughter cattle and they have facilities for handling ; cattle are then shipped to
packing plants
■ Order buyers – buy on order for cattle feeders
– Used because order buyers know where cattle are and familiar with market conditions
– May also buy slaughter cattle for packing plants; bought on the farm, shipped directly to
packing plant, and paid at prevailing prices for the day after being weighed
■ More slaughter cattle are bought on grade and yield basis
– Value of animal is determined after harvest
– Good quality cattle bring higher prices
■ Increasing number of slaughter and feeder cattle being marketed this way
Electronic Marketing

■ New and used in some areas

■ Mainly used for marketing feeder cattle
■ Comparable to auction selling – bids placed online for a lot
■ Accurate descriptions of cattle and terms of sale are provided to bidders
■ Growing in popularity
■ Cattle are videotaped on the ranch or farm; the video is then sent to the station
doing the auction
– Cattle are moved directly from the seller’s facility to the buyer’s facility –
reduces stress and potential health problems
Electronic Marketing
■ https://www.youtube.com/watch?v=VxfaLz5UBPo
Packers and Stockyards
Act 1921
■ Federal law administered by USDA
■ All cattle moved across state lines are regulated
by this act
– Sets rules for fair business practices and
competition
– Applies to stockyards, auction markets,
packers, market agencies, and dealers
engaged in interstate livestock marketing
■ Dealers must be registered with USDA
Purebred Marketing

■ Specialized business
■ Usually sold by private sales or by auction
■ Producers advertise herds through breed association
magazines or other publications
■ Exhibiting at fairs and shows and selling bull that have
been performance tested advertised purebreds
■ Purebred associations sometimes sponsor consignment
sales where cattle are auctioned
– Purebred producer should consign only cattle of best
quality to sales
Selecting a Market

■ Marketplace has two functions:

– Set value of the cattle
– Physically move cattle from producer to consumer
■ Individual producer determines best market based on price, costs of marketing, and
convenience
– Most select mainly on basis of convenience
– Price and costs of marketing are more important to consider
Shrinkage

■ Loss of weight that occurs as cattle are moved to market

■ Loss varies from 1-5% of animal’s weight
■ Affected by following factors:
– Distance cattle are moved; most loss occurs in first few miles
– Amount and kind of feed and water cattle receive just before shipping
– Weather
– Condition of cattle; thin cattle shrink more than fat cattle
– How cattle are handled
– Sex of animal
– Amount of feed, water, and rest cattle received during shipping
– Length of the fillback period (time during which cattle are fed) after reaching market
■ Losses absorbed by seller
Labeling of Meat

■ Agricultural Marketing Act of 1946: amended by

Farm Bills in 2002 and 2008, require retailers to
label covered commodities showing the country
of origin (also known as the COOL program)
■ “United States country of origin label”: product
must come from an animal that was born, raised,
and harvested in the U.S.
■ COOL increases prices at all levels of the
process, but eventually all costs are passed on to
the final consumer
■ Controversial topic
Market Classes and Grades of Beef -
Basics
■ Calves can be classed into veal calves or vealers and slaughter calves
– Divided on basis of kind of carcass produced; main difference – color of lean meat
– Age and kind of feed calf has had generally determines
– Vealers usually have had only a milk diet and are under 3 months of age
– Slaughter calves are usually between 3-8 month old and have had feed other than milk for a
period of time
■ Can be steers, heifers, and bulls and are graded on the same standards:
– Five grades are: 1) Prime, 2) Choice, 3) Good, 4) Standard, 5) Utility
■ Different weight classes
– Vealers: Light – less than 110 lbs; Medium – 110-180 lbs.; Heavy – more than 180 lbs.
– Slaughter Calves: Light – less than 200 lbs.; Medium – 200-300 lbs.; Heavy – more than 300
lbs.
 Slaughter Cattle

■ Feeder or slaughter cattle division is based only on their intended uses; based
on sex definitions and grade is based on apparent carcass merit
■ Five sex classes of beef cattle:
– Steer: male castrated before reaching sexual maturity and not showing
secondary characteristics of a bull
– Bullock: male, usually under 24 months of age, that may be castrated or
uncastrated and does show some characteristics of a bull
– Heifer: immature female that has not had a calf or matured as a cow
This Photo by Unknown Author is licensed under CC BY-SA

– Cow: female that has had one or more calves; older female that has not
had a calf, but has matured is also a cow
– Bull: male, usually over 24 months of age, not castrated; any castrated
male that shows or is beginning to show mature characteristics of an
uncastrated male is considered a bull
Grades for Slaughter Cattle

■ Quality grades of lie cattle are directly related to the grades their carcasses will produce
■ Quality Grades for steers and heifers: Prime, Choice, Select, Standard, Commercial, Utility, Cutter,
and Canner
– Same for cows, except there is no Prime grade
■ Bullock Quality Grades: Prime, Choice, Select, Standard, and Utility
■ Prime, Choice, and Standard are usually used for steers, heifers, and cows less than 42 months of
age
■ Select for steers, heifers, and cows generally limited to animals no more than 30 months of age
■ Commercial grade generally applied only to steers, heifers, and cows more than 42 months of age
■ Utility, Cutter, and Canner grades may be applied to any age of steers, heifers, and cows
■ Quality grades for bullocks only apply to animals no more than 24 months old
Live Quality
Grades
■ Based on amount and
distribution of finish on
animal
■ Firmness and fullness of
muscling and maturity of
animal are other factors
involved in quality grading
Yield Grades

■ Five and numbered Yield Grade 1 – 5.

■ Yield Grade 1 = highest yield of lean meant
■ Yield Grade 5 = lowest yield of lean meat
■ In live cattle, based on muscling in loin, round,
and forearm
– Fatness over back, loin, rump, flank, cod,
twist, and brisket, also used
– Fatness is more important than muscling
in determining Yield Grade
Carcass Beef
■ Quality and Yield Grades are the same
as those for live cattle
■ Amount of marbling affects the quality
grade of a carcass
■ Marbling: presence and distribution of
fat and lean in a cut of meat
– 5 maturity groups and 7
degrees of marbling used in
grading beef carcasses
– Bullock carcasses are limited to
maturity group A
– Select grade of beef is also
restricted to maturity group A
■ Yield grade is influenced by carcass
weight, rib eye area, thickness of fat
over rib eye area, and the amount of
kidney, pelvic, and heart fat (KPH fat)
Yield Grades

■ Preliminary YG for a warm beef carcass determined by thickness of fat over rib eye: each 0.1” of fat
thickness changes YG by 0.25
– Adjustment made for rib eye area and % KPH fat to determine final YG
– Increase in amount of these fasts decreases % of retail cuts from carcass; each change of
1% of carcass weight attributed to these fats causes 0.2 change in YG
■ Preliminary YG adjusted for each % KPH fat is more or less than 3.5; each % more than 3.5, add
0.2 of a grade to the preliminary grade; each % less than 3.5, subtract 0.2 of a grade from the
preliminary grade
■ Example: if thickness of fat over rib eye was 0.2”, preliminary YG = 2.5
– Warm carcass weight it 600 lbs. and rib eye area = 12 square inches; adjustment is then a
minus 0.3
– % KPH fat is 2.5, adjustment to preliminary YG is minus 0.2 of a grade
– Final YG = 2 (2.5 – 0.3 – 0.2 = 2.0)
Grades and Meat Quality

■ Higher grades are usually grain-fed animals that have a high

yield of lean cuts with the right amount of marbling
– Bring higher prices
■ Dark cutting beef: condition in which lean meat is darker than
normal in color
– Usually has a gummy or sticky texture
– Sometimes found when cattle subjected to stress
conditions just before harvest
– Varies from being barely visible to nearly black in color
(dark/black cutter)
– Little evidence that it has any negative effect on taste of
meat, but does impact consumer acceptance and
therefore value of meat
– May reduce a carcass one full grade if listed Prime,
Choice, or Select or one-half a grade if graded Standard
or Commercial; not considered when grading Utility,
Cutter, and Canner
Handling Cattle Prior to and During
Marketing
■ Careful handling just before shipping and during transit to market can save producer money
■ Feed additives and drugs must be removed at proper withdrawal time – follow labels closely
■ Can be conditioned before shipping to reduce shrinkage
– If on ration of green feeds/silage, amount should be reduced and amount of hay increased
– Remove protein from ration 48 hours before shipping
– Reduce grain in ration by 1 ½ day before shipping
– Do not feed grain last 12 hours before shipping; give free access to water up to time of
shipping
■ Move slowly and quietly when loading and handling
– Clubs and whips can damage valuable cuts of meat
– Electric prods overexcite animals
– Overcrowding or underloading increases chances of injury during shipping