Carcasses outside the window steal industry opportunity.
If packers could wave a magic wand to make the cattle they harvest more acceptable to consumers, they'd zap the outliers, but for different reasons than many cattlemen think.
"The first thing that needs to be changed is carcass weight. The range needs to be narrowed," says Dell Allen, vice president of quality and training for Excel. Rather than the 650- to 850-lb. carcasses Excel would like, Allen says his company routinely deals with a 500-lb. range in carcass weights, some barely weighing 400 lbs. to others breaking the scale at over 1,000 lbs.
"It prevents us from being able to automate a lot of things. If we could narrow the weight range, we could be a lot more innovative," says Allen.
As an example, Allen says further automation would make the implementation of at-harvest technologies, like those to enhance tenderness, more cost-effective. Plus, he says increased plant efficiency through automation would allow packers to be more cost-effective.
More than anything, reducing the variation would help packers serve customers with more product consistency.
"How are we going to take cattle that come in weighing 1,300 lbs., and produce a carcass weighing 900 lbs., - with more than 100 lbs. of chuck - and serve customers who want boxes weighing 60 lbs. or 40 lbs.?" asks Allen. As it is, he says only half the cattle Excel harvests fall within an acceptable 200-lb. range on carcass weight and a range of 11-14 sq. in. for ribeye.
Agreement On Outliers Likewise, Gary Mickelson, manager of communications for IBP, says, "If we could magically change the consistency of today's cattle, we'd eliminate the outlying cattle. This includes animals producing carcasses too heavy or too light, Yield Grade 4 and 5 cattle and dark cutters or those of poor quality." He explains IBP prefers USDA Choice and Select carcasses weighing 600-900 lbs.
Actually, most producers already have a firm grasp on the quality and yield grade demanded by the industry (Table 1). Depending on where customers draw the line of acceptability, most cattle coming to market are Select and better for quality grade and at least Yield Grade 3.
"Our preferred cattle herd would not be dramatically different from what is available to us today," says Mickelson. "Overall, U.S. cattle producers are doing an excellent job of producing lean, high quality beef. Less than 20 percent of the cattle produced are outside of our desired specifications."
But this minority is costing big money. At Monfort, another of the nation's Big-Three packers, Tim Schiefelbein, manager of value-based procurement, says, "Today, out-cattle cost us $20/cwt." For perspective, if the mix includes 7% outs, that means non-conformity robs $1.40/cwt. from every head, or about $10 per head. "If we could eliminate the outs, someone would get that $10 per head on the whole mix," says Schiefelbein.
The Payback On Consistency How would eliminating the industry's unwanted cattle impact market dynamics? If packers could get exactly the mix they wanted all of the time, would that make cattle worth more, or just set a new standard for the average?
"What's it worth? I have no idea because we've never had that before," says Allen. While increased efficiency through enhanced consistency could build a higher price floor, he says, "The market will always change, depending on what's not available... Everyone is chasing marbling today."
Ten years from now, Allen says, if 50% of the carcasses are modest marbling (upper two-thirds of Choice), he guarantees the premiums for Certified Angus Beef and Excel Sterling Silver won't exist as they do today. At some point, the market becomes saturated, decreasing premium potential.
Still, producers can reap more rewards by hitting targets more consistently. Aside from avoiding carcass discounts, Schiefelbein says producers who can document the ability of their cattle to fit the window of acceptability are positioned to at least earn all that is possible in a given market.
"Cattle that look like they will bring a discount in the sale ring or on a grid will bring less," says Schiefelbein.
Conversely, genetics that hit the mark may bring more in the future. While technology exists to enhance tenderness, Allen points out mechanical and chemical technologies change product appearance and flavor, and make some consumers skeptical. "For truly premium products, in the future, genetics will play the preeminent role."
In the meantime, Allen says the commercial producer target hasn't changed in 30 years: a Choice, Yield Grade 2 carcass, weighing 700-800 lb. with a 12-14 sq.-in. ribeye. For his money that will continue to be the industry ideal.