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Sorting cuts both ways
“In the packing business, it’s never as much about the market as it is about plant utilization,” Henderson emphasizes. “Plant utilization drives packer profitability.”
Arguably both have been helped and hindered by the manifold increase in packer sorting that began with the latest round of beef branding in the 1980s.
“I can remember when there were three cooler sorts – Prime, Choice and everything else,” Henderson says. Today, he says the largest plants utilize more than 30 sorts, many of those occurring before cattle get to the cooler. Think here of such things as natural beef, different export requirements for beef that can go to Europe or Japan, the eligibility requirements for various breed brands, and all of the rest.
For each pre-cooler sort, Hender-son explains the fabrication area must be cleaned, which costs thousands of dollars each time. Then packers must keep track of around 200 products from each of those sorts. Where packers might have produced and marketed 600 products 25 years ago, they might have more than 6,000 products today.
According to Henderson, this exponential increase in sorting, along with heavier carcass weights, has enabled packers to dilute the impact of dwindling cattle numbers to some degree. At some point, though, he suspects some packing capacity must exit the business.
Paradoxically, taking some of the sorting out of packer hands could grow the economic pie, both for packers and producers.
“As an industry, we decided to let the packers sort the cattle rather than sort them ourselves, and that’s not something they’re necessarily good at,” Henderson says.
Instead, imagine producers further employing technologies like ultrasound and genomics to sort cattle before they ever head to the packing plant. Currently, Henderson reckons all the packer sorting mentioned previously equates to a cost of around $15/head. That cost could be reduced significantly with more pre-harvest sorting.