Packers scale back output as a result of lean, finely textured beef scandal.
U.S. beef packers are losing money because of the sudden drop in demand for lean, finely textured beef (LFTB), according to meat industry news reports, but the biggest packers are keeping their plants open and running.
Margins already were suffering because of expensive cattle, but the recent lack of demand for LFTB and similar products used in ground beef is costing packers as much as $40/head, pushing already negative margins to a loss of nearly $100/head.
John Nalivka, who calculates and publishes the Sterling Beef Profit Tracker, estimated that, on average, beef packers lost $96.48/head in the week ended March 31, compared with a loss of $60.80/head the previous week, a loss of $42.22 a month ago and a profit of almost $49 a year ago.
"This has wreaked havoc on this industry," says Nalivka. "The question I have continued to pose is: How long are packers going to be able to maintain these losses? You've either got to pay less for the cattle or get more for the beef. "
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