Ground beef is a critical component of the overall beef market and the value of cattle, according to a white paper sponsored by the Angus Foundation. However, our current beef-production system best allows flexibility for the industry to market ground beef while also addressing demand for high-quality, high-value muscle cuts.
The report, titled “Changes in the Ground Beef Market and What it Means for Cattle Producers,” was authored by Nevil Speer, PhD, Western Kentucky University, Tom Brink, Founder, Top Dollar Angus, Inc. and Mark McCully with Certified Angus Beef, LLC. Their work came in response to a report issued in early 2014 from Rabobank AgriFinance titled “Ground Beef Nation.” That report outlined the growing popularity of ground beef and suggested the U.S. industry could benefit by shifting some production toward a lower-cost system focused primarily on producing ground beef.
The authors of the Angus Foundation say the Rabobank report “prompted much needed dialogue and pushed the industry to ask some of these questions around the current paradigm within the beef complex.”
The white paper authors outline the current production system, in which the grain-finishing system targeting a high level of marbling produces an abundance of 50 percent lean trimmings. Packers and processors combine those trimmings, as a fat source, with lean beef from culled, non-fed cattle, imported cattle and, as needed, with leaner, lower-value sub-primal cuts from finished cattle. This system, they suggest, provides considerable flexibility for processors to offer a wide variety of ground-beef products at varying fat levels and price points, and to adjust production based on market signals and demand, while also producing high-quality middle meats and other whole-muscle cuts.
The authors contend that producing shorter-fed “grinding steers” would sacrifice production efficiencies and economic advantages in our current quality-based finishing systems, and that a focus on high quality has helped build beef demand.
They also note that prices for ground beef remain $2 per pound below overall retail beef prices. And while ground beef represents nearly 60 percent of total volume, it is consistently only about 20 percent of total value at the wholesale level.
They conclude that shifting some finished-beef production toward a ground-beef target would reduce industry revenues, elevate production costs and actually raise consumer beef prices. Read the Angus Foundation white paper online.