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. REPORT OF THE JUNE-SEPTEMBER 2005 NATIONAL BEEF QUALITY AUDIT; A NEW BENCHMARK FOR THE U.S. BEEF INDUSTRY. G.C. Smith, J.W. Savell, J.B. Morgan and T.E. Lawrence Colorado State University, Texas A&M University, Oklahoma State University and West Texas A&M University

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REPORT OF THE JUNE-SEPTEMBER 2005 NATIONAL BEEF QUALITY AUDIT; A NEW BENCHMARK FOR THE U.S. BEEF INDUSTRY.

G.C. Smith, J.W. Savell, J.B. Morgan and T.E. Lawrence

Colorado State University, Texas A&M University, Oklahoma State University and West Texas A&M University

Funded By: Cattlemen's Beef Promotion and Research Board

Through: The $1 per-head checkoff

Conducted For: National Cattlemen's Beef Association

slide2

"In truth, it is the value of our product to our consumers that determines what beef is worth -- and our profitability.

The NBQA provides valuable information to industry stakeholders regarding the monetary consequences of not truly delivering the quality and value to our consumers."

Terry Stokes (NCBA)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide4

"The forces shaping the beef industry in the 21st century are:

(a) Continued consolidation in all beef sectors.

(b) Loss of export markets.

(c) Greater competition from other countries in the global markets.

(d) Development and implementation of traceability/data-management systems.

(e) Growth of markets for natural and organic food products."

J. Daryl Tatum (Colorado State University)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide5

Concentration In The Food And Beef Industries

Market Share

Cow/calf producers Largest 9% 51%

Feedlot operators Largest 2% 85%

Packing companies Top 5 78%

Supermarket chains Top 10 55%

Food-service distributors Top 10 45%

Restaurant chains Top 10 30%

SOURCE: Cattle•FAX (2005).

slide6

"Beef in the U.S. is now being sold based upon USDA grades, USDA brands, and industry brands; tremendous growth has occurred in the last ten years in USDA certified brands and USDA process verified brands, causing progressively greater emphasis on verifying marketing claims and on authenticity management for processes and products."Cara Gerken (IMI Global)

"Tracking cattle from the ranch to the packer is essential because export markets will require it, Wal•Mart and McDonald's want it, and producers can benefit from it."John Paterson (Montana State University)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide11

"A Partnership For Quality (PFQ) can be formed between a beef finishing/harvesting company and progressive producers who are strongly focused on the production of a consistent, high quality, consumer-driven product, with the strictest standards for food safety, environmental stewardship, economic sustainability and animal welfare."

"A Partnership For Quality (PFQ) makes possible PFQ Program Incentives for genetics, vaccination, weaning, seasonality, natural (hormone/antibiotic constraints) and carcass characteristics."

Mike Smith (Harris Ranch Beef)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide13

"Involvement in alliances allows beef supply-chain focus upon today's and tomorrow's targets:

(a) A safe beef supply.

(b) Electronic IAID with age records.

(c) Balance in production performance and carcass merit.

(d) Management based upon individuals rather than on pen/lot averages.

(e) Avoidance of 'out cattle' (dark cutters, advanced maturity, etc.).

(f) Control of carcass weight (target = 600 to 949 lb).

(g) Production of High Select or better, and Yield Grade 2 or better, carcasses with ribeye areas of 10.0 to 15.9 sq. in.

(h) Adoption of instrument grading.

(i) Tenderness testing to avoid tough beef."

Glen Dolezal (Cargill Meat Solutions)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide15

"Major trends and opportunities in the U.S. beef industry include:

(1) Globalization and, thus, increased competition.

(2) Retail and foodservice consolidation.

(3) Coordinated production systems.

(4) Increased product branding and value differentiation.

(5) Accelerated development of new consumer-friendly and convenience-orientated beef products."

Randy Blach (Cattle•FAX)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide17

"The National Beef Quality Audits provide: (a) A snapshot of the industry's current quality status, (b) A benchmarking tool for the industry's quality improvement strategy, and (c) A driver for the industry's Beef Quality Assurance, Producer Education Programs."

Ran Smith (Chairman, BQA Advisory Board)

"The National Beef Quality Audits of 1991, 1995, 2000 have provided valuable industry benchmarks for use by beef industry stakeholders, and identified areas on which to place emphasis in local, state and national BQA endeavors."

G.C.Smith (Colorado State University)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide21

"Previous NBQAs have identified Strategies, Tactics and Goals as vision directives for those in the production sector who wish to be more competitive and find marketing options -- now or in the future, in domestic and international venues."

Tom Field (Colorado State University)

"A panel of industry professionals assessed beef industry progress in achieving the 12 'Goals' identified by the NBQA -- 2000. Individually, grades as low as D-plus (develop and implement electronic cattle identification) and as high as B-plus (eliminate injection-site lesions; 100% of seedstock producers have genetic data) were assigned. The overall average grade for the beef industry was B-minus."

Clint Peck (Beef Magazine)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide25

Responses To Questionnaires -- Seedstock Generators, Cow/Calf Producers, Stockers/Backgrounders and Cattle Feeders (Combined)

Greatest Quality Challenges Influence Of Past NBQAs On Changes Made Since 1991

(1) Insufficient Marbling

(2) Lack of Uniformity

(3) Inadequate Tenderness

(4) Too High Yield Grades

(5 tie) Low Cutability

(5 tie) Too Heavy Carcasses

(7) Injection-Site Lesions

(8) Inadequate Flavor

(9) Inadequate Muscling

(10) Excess Fat Cover

26.5% Strong Impact

55.4% Moderate Impact

18.1% Weak Impact

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide26

Responses To Questionnaires -- Packers

Greatest Quality Challenges Influence Of Past NBQAs On Changes Made Since 1991

(1) Reduced Quality Grade & Tenderness Due To Use Of Implants

(2) Lack of Uniformity In Live Cattle

(3 tie) Too Heavy Carcasses

(3 tie) Too High Yield Grades

(5 tie) Presence Of Bruises On Carcasses

(5) tie) Hide Damage Due To Hot-Iron Brands

33.0% Strong Impact

67.0% Moderate Impact

0.0% Weak Impact

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide27

Responses To Questionnaires -- Purveyors, Restaurateurs And Supermarket Operators

Greatest Quality Challenges Influence Of Past NBQAs On Changes Made Since 1991

(1) Insufficient Marbling

(2) Too Heavy Cuts

(3) Lack Of Uniformity

(4) Inadequate Tenderness

(5) Excess Fat Cover

(6) Inadequate Juiciness

(7) Inadequate Flavor

(8) Inadequate Overall Palatability

(9) Low Cutability

(10) Too Large Ribeyes

15.0% Strong Impact

85.0% Moderate Impact

0.0% Weak Impact

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide34

Questionnaires Returned By Packers (A, Roeber and B, Scanga, Results)

(A) Purchased harvest-cattle that were individually identified: 31.5%

(A) Average number of branded-beef programs: 5.3Branded-beef programs having specifications for: breed (37%),marbling (62%), hide color (48%), Yield Grade (42%)

(B) Changes from 1995, to 2005, in:Average number of branded-beef programs 1.33, to 6.25Average number of Angus programs 0.67, to 3.00Average number of Natural/Grass-Fed programs 0.50, to 2.25Harvest cattle purchased on a "grid" 15%, to 34%Harvest cattle purchased "in the beef" 20%, to 26%Harvest cattle purchased as "source verified" 0.4%, to 1.5%Harvest cattle purchased as "age verified" 0.0%, to 1.0%

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide38

Use Of Food-Safety Interventions

Based on questionnaires returned by packers, those using specific food- safety interventions were:

Hide-on carcass washing 16.7%

Steam pasteurization of carcasses 16.7%

Hot (>165F) water carcass washing 66.7%

Pre-evisceration carcass washing 83.3%

Steam vacuuming (spot cleaning) of carcasses 100.0%

Organic-acid rinsing/washing of carcasses 100.0%

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide39

Questionnaires Returned By Packers (A, Roeber and B, Scanga, Results)

(A) Carcasses weighing 600 to 1,000 lb.: 92.1%

(A) Carcasses grading Prime or Choice: 66.2%

(A) Carcasses of Yield Grades 1, 2 plus 3: 86.5%

(A) Calloused ribeye (0.3%), dark cutter (1.5%), blood splash (1.7%) occurrences.

(B) Changes from 1995, to 2005, in:

Average hot carcass weight 740, to 749 lbCarcasses grading Prime 1.7%, to 7.3%Carcasses grading Upper Two-Thirds Choice 21.7%, to 27.9%Carcasses yield grading 1 & 2 51.3%, to 47.1%Carcasses yield grading 4 & 5 7.6%, to 11.5%Carcasses of "B" maturity 2.2%, to 13.9%

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide43

Responses To Questionnaires -- Purveyors, Restaurateurs And Supermarket Operators

Special Concerns/Desires Of Customers/Consumers

(1) E.coli O157:H7 (7) Salmonella

(2) Hormone Residues (8) Listeria monocytogenes

(3) Desire For "Natural" Products (9) Desire For "Organic" Products

(4) Antibiotic Residues (10) Price

(5) Desire For Traceback (11) Concerns About The Environment

(6) Concerns About Animal Welfare (12) Bovine Spongiform Encephalopathy

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide45

U.S. Meat Case Benchmark Study

  • 68% of self-service meat case was as "fresh" meat items.
  • Of fresh meat items, beef (29%) ranked first (chicken, 16%; pork, 14%).
  • Of fresh beef items, 43% was steaks, 30% was ground beef, 14% was roasts.
  • Of fresh beef items, 1.5% of packages were "Natural" or "Organic."
  • 82% of steak packages and 93% of roast packages were boneless.
  • Ground beef is most often designated by leanness percentage (62%), then by cut source (21%).
  • 3% of beef packages (vs. 14%, 10% and 7% for chicken, pork and poultry) were "value added."
  • 27% of beef was in case-ready packages (vs. 85%, 83% and 37% for turkey, chicken and pork).
  • 46%, 56% and 20% of steak, roast and ground beef SKUs were "out-of-stock" -- less often so if case-ready than store-wrapped.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide48

Face-To-Face Interviews Of Six Government Agencies (FSIS, AMS, GIPSA, FAS, APHIS, FDA/CVM) And Eight Trade Organizations (AMI, USMEF, FMI, NAMP, NRA, SMA, NMA, NCBA) -- "Quality Defects/Challenges"

(1) Lack of Mandatory Traceability, ID System And NAIS Compliance.

(2 tie) Product Inconsistency.

(2 tie) Food Safety: Pathogens/EHEC/Salmonella/Listeria monocytogenes.

(4 tie) Bovine Spongiform Encephalopathy.

(4 tie) Growing Concern About Humane Handling/Animal Welfare/Enviroment.

(6 tie) Inadequate Tenderness/Palatability/USDA Quality Grade.

(6 tie) Appropriate SRM Removal/Disposal and 4-D Animal Disposal.

(8 tie) Growing Concern About Chemical Residues.

(8 tie) Carcass/Cut Weights Too Heavy And Inconsistent.

(10 tie) Shelf-Life; Lack Of Age/Source Verified Cattle; Growing Concern About Antimicrobial Resistance; Meat Color And pH Variation In Ground Beef; Susceptibility To FADs, Agroterrorism and Bioterrorism.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide52

USDA Data For Beef Carcasses Officially Graded (Not All Of The Total Beef Carcass Population)

Change corrected for Officially Graded Apparent Good/Select marketed1975 2004 change as "No Roll"

Prime 5% 3% -2% -1%

Choice 79% 57.5% -21.5% -6.2%

Good/Select 15% 39% +24% par

Standard 0.7% 0.4% -0.3% -0.3%

YG1 2% 10% +8% (0.4% vs. 10% 1973-1974 )

YG2 31% 42% +11% (26% vs. 42% consist )

YG3 64% 41% -23% (43% vs. 41% vs. 2004 )

YG4 3% 7% +4% (21% vs. 7% officially )

YG5 0.2% 0.3% +0.1% (6% vs. 0.3% graded )

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide55

Preliminary Data -- Assessments Of Cattle On Harvest Floors (N=16)

Brands: none, 49.5%; butt, 39.5%; side, 13.8%; shoulder, 2.6%.

Horns: none, 76%

Hide Color: >51% black, 56%; red, 18%; yellow, 5%; Holstein, 9%; grey, 5%; white, 2%; brown, 4%; brindle, 1%.

Manure: none, 20%; small, 64%; moderate, 16%; large, 3%; extreme, 0.1%

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide59

Preliminary Data -- Identification Methods & Age Approximations

Forms of identification on harvest cattle: none, 11.3%; electronic, 2.5%; barcode, 0.5%; individual visual, 33.5%; lot tag, 62.4%; metal clip, 12.7%; other, 3.3%.

Permanent incisors in harvest cattle: 0, 83.1%; 1, 5.5%; 2, 8.7%; 3, 0.6%; 4, 1.5%; 5, 0.1%; 6, 0.3%; 7, 0.03%; and 8, 0.05%.

Overall maturity score of harvest cattle: A, 97%; B, 2%; C, 1%.

Of A maturity carcasses: Aoo to A40, 14%.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide63

Update: Carcasses Qualifying For Export To Japan

As of January 9, 2006, and for the period December 12, 2005 through January 9, 2006, 1,379,964 carcasses were presented to USDA for grading.

  • 5.7% qualified for BEV-Japan via A40 overall maturity.
  • 14.6% qualified for BEV-Japan via "Age Verification."

SOURCE: Rick Jones (AMS-USDA).

slide64

Preliminary Data -- Assessments Of Carcasses/Offal On Harvest Floors (N=16)

Condemnations: Carcasses, 0%; livers, 25%; lungs, 11%; tripe, 8%; heads, 5%; tongues, 9%.

Contained a fetus: 0.47% of all cattle.

Primary causes for livers, abscess, 54%; lungs, pneumonia, 41%;

condemnation: tripe, other causes, 44%; heads, other causes, 68%; tongues, inflamed lymph nodes, 64%.

Offal condemned due livers, 0.3%; lungs, 0.4%; tripe, 0.8%; heads, 3.2%;

to >30 MOA: tongues, 2.5%.

Bruises per carcass: no, 64%; 1, 25%; 2, 8%; 3, 2%; 4, 0.5%; 5+, 0.01%.

Of bruises, by cut: round, 10%; loin, 36%; rib, 21%; chuck, 24%; flank/plate/brisket, 9%.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide67

Preliminary Data -- Assessments Of Carcasses In Coolers (N=16)

Genetic type: native, 92.0%; dairy, 7.2%; Brahman (>4" hump), 0.8%.

Gender: steer, 62.7%; heifer, 37.3%; bullock, 0.06%.

Marbling: AB, zero; MAB, zero; SAB, 2%; MD, 5%; MT, 14%; SM, 37%; SL, 37%; TR, 2%; PD, zero.

Overall maturity: A, 97%; B, 2%; C, 1%; D, zero; E, zero.

Quality Grade: Prime, 2.9%; U 2/3 C, 17.0%; L 1/3 C, 36.2%; Se, 38.5%; St, 4.2%; Com, 0.7%; Ut, 0.5%.

Hot carcass weight: <601 lb, 2%; 601 to 950 lb, 93%; 950 lb, 5%.

Yield Grade: 1, 15%; 2, 37%; 3, 33%; 4, 13%; 5, 2%.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide69

"Out Cattle" -- Packer Questionnaires (Roeber/Scanga) & Preliminary Cooler Data (N=16)

Carcass weight less than 600 lb: 5.3% ---- 2.0%

Carcass weight more than 1,000 lb.: 3.0% ---- 1.1%

Quality Grade less than Select: 6.3% 4.9% 5.4%

Yield Grade worse than YG 3: 13.5% 11.5% 15.0%

Calloused ribeye: 0.3% ---- ----

Dark cutter: 1.5% ---- 2.6%

Blood splash: 1.7% ---- 0.8%

Yellow fat: ---- ---- 0.5%

>30 MOA ---- ---- 1.1%

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide71

Top Ten Quality Challenges (SW of NBQA -- 2005)

(1) Lack of traceability/IAID/source & age verification/chronological age

(2) Low uniformity of cattle, carcasses & cuts

(3) Need to implement instrument grading

(4) Inappropriate market signals

(5) Segmentation within and among industry sectors

(6) Too heavy carcasses & cuts

(7) Too high Yield Grades (low cutability)

(8) Inappropriate ribeye size

(9) Reduced QG & tenderness due to implants

(10) Insufficient marbling

SOURCE: Deb Roeber (Oklahoma State University) October 2005.

slide72

What Is The Beef Industry Doing Well?

(1) Developing "story" beef.

(2) Reducing E.coli O157:H7.

(3) Merchandising "quick" (to prepare) beef.

(4) Merchandising new beef "value" cuts.

(5) Reducing excess fat cover, at the end-user level.

(6) Developing "brands" of beef.

(7) Increasing beef demand.

(8) Making the industry profitable.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide74

Industry Representatives: Strategies, Tactics & Goals

Cow-calf producers: Jeff Windett (Circle A Ranches)John Edwards (Express Ranches)

Stockers/Backgrounders: Tom Woodward (Broseco Ranches)Charles Nichols (Nichols Ranches)

Cattle feeders: Mike Engler (Cactus Feeders)Tony Bryant (Five Rivers Cattle Feeders)

Beef packers: Bruce Bass (Tyson, Inc.)Rod Bowling (Smithfield Beef Company)

Beef end-users: Paul Heinrich (Sysco, Inc.)Fred Ray (OutWest Meat Company)Molly McAdams (HEB Supermarkets)

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.

slide75

Key Messages From The NBQA -- 2005 Strategy Workshop

(1) Deliver product attributes that meet consumer needs/expectations for safety, taste, color and convenience.

(2) Improve the cattle by implementing instrument grading; reducing numbers of carcasses of YG 4 or 5; controlling weight; increasing marbling; decreasing variation, and; maximizing profitability.

(3) Expand marketing opportunities (in domestic and global markets) by developing traceability systems; verifying source and age; reducing costs and waste in the beef value chain, and; continuing new product development.

(4) Strengthen connections among segments of the beef supply chain via communication and targeted educational programs.

SOURCE: Strategy Workshop of the NBQA -- 2005 (Oklahoma City, OK) October 2005.