Marketing Beef

1. Animal Science 1 Unit 19 Marketing Beef

2. Beef Promotion and Research Act of 1985 • Established in 1985 • $1/hd check off for every head of beef sold in the United States • 50 cents goes to beef council in the state the animal was sold in; if no state council it goes to the national • 50 cents goes to Beef Promotion and Research Board for use at the National Level Beef Check off and Promotion

3. Promotion of beef as a food Provide consumer information Provide information to the beef industry Promote foreign marketing Promote research in beef production and utilization Check Off Monies Are Used For

4. Auctions Packers Other markets Check Off Monies are collected by

5. Supply: the amount of a product that producers will offer for sale at a given price at a given time As price increase producers are willing to offer more product for sale As price decreases less product will be offered for sale. Supply

6. Demand: the amount of a product that buyers will purchase at a given price. As prices go up there is less demand at a given time for a given price. As prices go down there tends to be more demand for a product. Demand

7. Management decisions to raise more or fewer cattle eventually affect the price of cattle on the market. Beef cattle numbers tend to run in 9-13 year cycles See fig.19-1 Management Decisions that Affect Supply and Demand

8. Packers and Stockyards Act

9. Federal law that is administered by the USDA • Regulates all cattle that move across state lines • Act sets the rules for fair business practices and competition • Rules apply to • Stockyards • Auction markets • Packers • Market agencies • Dealers who engage in interstate livestock marketing • Individual farmers and ranchers who buy or sell cattle as a part of their operation are not considered to be dealers under the provisions of the act

10. Set the value of the cattle Physically move the cattle from producer to consumer Functions of the market

11. Determining factors- price, cost of marketing and convenience Most producers select markets based on convenience However, cost of marketing and price should be given higher precedence Finding the Best Market

12. The loss of weight that occurs as cattle are moved to market Amount of loss varies from 1-5% of an animal’s weight Losses due to shrinkage are absorbed by the seller Shrinkage

13. The distance the cattle are moved. • Most loss in weight occurs in the first few miles. • The amount and kind of feed and water the cattle receive just before shipping • Weather • The condition of the cattle • Thin cattle shrink more than fat cattle • How the cattle are handled • Sex of the animal • Amount of feed, water and rest received during shipping • The length of the fillback period after the cattle reach the market • The fillback period is the time during which the cattle are fed. Factors that Affect Shrinkage

14. Available from the newspaper, radio, television and by phone The USDA publishes weekly livestock market news information Outlook information is available from Colleges of Agriculture Price Information

15. Methods of Marketing

16. Also called central markets or public stockyards • Facilities are owned by a stockyard company • The company charges for the use of the facilities and feed fed to the cattle while they are in the stockyard. • Title to the livestock does not pass to the stockyard company. Terminal Markets

17. 2 or more commission firms • Cattle are consigned to a commission firm by the seller • When goods are consigned they are not sold to another party but merely given to another party who acts as a selling agent. Terminal Markets

18. Bargain with representatives of purchaser to get the best price possible for the cattle Charge a commission (fee) for their services in marketing the cattle Function of the Commission Firm

19. Charge for • Yardage • Fee charged for the use of stockyard facilities • Feed • Insurance • Selling fees • These fees are deducted from the selling price • The seller receives the net amount after the charges are taken out Costs of Terminal Markets

20. Exist for both feeder cattle and slaughter cattle • Today there are about 30 • This is compared to the 80 that existed in the 1920’s and 30’s • Most are in western and Midwestern states • Slaughter cattle terminal markets are located near population centers and packing plants Terminal Markets

21. Commission firm sales are made by private sales Both buyers and sellers are represented by professionals Some terminal markets are now using auction sales as a method of selling both feeder and slaughter cattle Terminal Markets

22. Use is decreasing • About 12% of the packer sources of slaughter cattle is from terminal markets • Compared to 90% in 1925 • Larger producers of cattle tend to use other methods of marketing their cattle Terminal Markets

23. Cattle are sold by public bidding Also called local sale barns and community auctions Popular due to their convenience for buyers and open competition for cattle Of the most value to the smaller cattle producers. Auction Markets

24. Yardage • Feed • Insurance • Brand inspection • Health inspection • Check-off dollar • Charges are based on either a percent of the selling price or a fixed fee. • Cost are paid by the seller. Costs

25. Tend to be used by large cattle producers No commission firms or brokers Direct Selling and Country Markets

26. Used to market cattle directly from feeder cattle producers to cattle feeders Sale is made on the range or farm where the feeder cattle are produced Often used by large producers of feeder cattle Contract Sales

27. Buy feeder cattle for cattle feeders Dealers are paid either on a commission basis or they buy cattle outright and then resell them at a higher price Also buy slaughter cattle locally Usually have facilities for handling cattle These cattle are then shipped on to packing plants for slaughter Cattle Dealers

28. Buy feeder cattle on order for cattle feeders • Cattle feeders use order buyers because order buyers know where the cattle are and they are familiar with the market conditions. • Also buy slaughter cattle for packing plants • Buy cattle on the farm and ship them directly to the packing plant • Cattle are weighed at the packing plant and are paid for at prevailing prices for that day. Order Buyers

29. Bought on a grade and yield basis • The animal’s value is determined after it is slaughtered • The carcass is graded • The carcass weight or yield is determined. • Good quality cattle bring a higher price when marketed this way • About 23% of the cattle and 9% of the calves in the United States Buying Slaughter Cattle

30. Cattle are videotaped on the farm or ranch Video is sent to the transmitting station where the auction is located Video is telecast for viewing by prospective buyers Prospective buyers must register with the auction company in advance of the sale Video allows the buyers to see the cattle without moving the cattle to the auction Purchased cattle are moved directly from the seller’s facility to the buyers facility Video Auctions

31. Used mainly for marketing feeder cattle Works as a form of auction selling Each bidder has a computer terminal on-line during the sale Bids are entered on-line during the sale Electronic Marketing

32. Specialized business Cattle are sold by private sales or auction Producers advertise through breed associations and other publications Selling performance tested bulls and exhibiting at fairs also provide advertisement Purebred Marketing

33. The Agricultural Marketing Act of 1946 was amended by the Farm Act of 2002 • It now requires retailers to label covered commodities showing the country of origin • This includes the muscle cuts of beef, lamb and pork and ground beef, lamb and pork • Other products that do not come from the livestock industry are also included-fruit, vegetables • Mandatory COOL went into effect Sept. 30, 2008 Country of Origin Labeling (COOL)

34. A covered commodity is eligible for designation as “Product of the U.S.” only if it is derived “exclusively from an animal that is exclusively born, raised and slaughtered in the United States.” COOL-Product of the USA PRODUCT OF USA

35. A product is deemed to have multiple countries of origin if the animal from which it was derived was born and/or raised in a different country or countries and then slaughtered in the U.S. Covered commodities in this category would have to identify all the relevant countries. COOL-Multiple Countries of Origin

36. Covered commodities from animals raised in another country but slaughtered in the U.S. would fall into this category. COOL-Imported for Immediate Slaughter

37. Meat products imported from another country would be labeled as a product of that country.  COOL-IMPORTED products to be sold at Retail PRODUCT OF CANADA

38. Market Classes and Grades of Beef

39. Beef animals younger than 1 year of age • Further classified as • Veal calves (vealers) • Slaughter calves • Generally divided on the basis of the kind of carcass they will produce • Main difference is the color of the lean Calves

40. Have only had a milk diet Under 3 months of age Light veal calves-less than 110 pounds Medium weight: 110-180 pounds Heavy weight: more than 180 pounds Lean is very pale Veal Calves

41. Usually between 3 and 8 months of age Have been fed a diet other than milk for a period of time Light weight: less than 200 pounds Medium: 200-300 pounds Heavy: More than 300 pounds Slaughter Calves

42. Sex’s are steers, heifers, and bulls • All graded on the same standards • Five grades • (1) Prime • (2) Choice • (3) Good • (4)Standard • (5) Utility Sex and Grades

43. Class is based on sex definitions Grade is based on apparent carcass merit of the animal Slaughter Cattle

44. Steer • A male that was castrated before reaching sexual maturity. • Does not show characteristics of a bull • Bullock • Male, usually under 24 months of age • May or may not be castrated • Does show some characteristics of a bull 5 Sex Classes

45. Heifer • Immature female, that has not had a calf or has not matured as a cow • Cow • Older female that has had one or more calves or a mature female that has not had a calf. • Bull • Male, usually over 24 months of age • Has not be castrated • By official USDA standards any castrated male bovine that shows or is beginning to show the male characteristics of an uncasterated male is considered a bull 5 Sex Classes

46. Prime • Choice • Select • Standard • Commercial • Utility • Cutter • Canner Quality Grades

47. 1-5 • Yield Grade 1 • Indicates the highest yield of lean meat • Yield Grade 5 • Indicates the lowest yield of lean meat • based on the muscling in the loin, round and forearm • Fatness over the back, loin, rump, flank, cod, twist and brisket is also used in determining yield grades YIELD Grades (X)

48. based on the amount and distribution of finish on an animal Firmness and fullness of muscling and maturity of the animal are other factors involved in quality grading. See fig. 19-4 and 19-5 Quality Grades

49. Age and apparent sex designation determines the class of the beef carcass Quality and yield grades are the same as those for live slaughter cattle Carcass Beef

50. Refers to the presences of and distribution of fat and lean in a cut of meat Amount of marbling affects the quality grade of the carcass Marbling, maturity and quality grades all affect each other Marbling