One of the key questions that occurred during a panel discussion at this summer’s Beef Improvement Federation (BIF) annual meeting surrounded the change in USDA Yield Grade (YG) within the slaughter mix over time. Specifically, there’s been a marked increase in YG 4s and 5s that began roughly around the year 2000. The trend suggests some questions about the beef industry’s relative efficiency.

Some of the BIF discussion on the topic focused on the economic incentives that currently exist within the marketing system. Most notable is that the discount for YG 4s and 5s remains relatively muted.

That fact, coupled with relatively limited discounts for heavyweight cattle, indirectly incentivize cattle feeders to feed cattle to heavier weights. In an environment of limited supply, that’s a favorable scenario; longer feeding periods mean slower turnover and reduces the pressure to find and purchase replacements.
 

USDA Yield Grade Percentages

Whatever the cause, there’s clearly been an increased percentage of cattle crossing over into the upper threshold of yield grades.

Amidst that discussion, two key questions arise. One, what factors will change the economic incentives that currently exist driving this trend? And, two, what implications does the trend have upon the industry’s competitiveness with pork and poultry; in other words, is the industry chasing weight in lieu of efficiency?

How do you perceive the YG trend within the industry and subsequent implications? Will the trend significantly reverse in the near future or is this a new normal? Leave your thoughts below.

 

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