Animal Science 1Unit 19

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

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

Auctions Packers Other markets

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.

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.

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

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

Set the value of the cattle Physically move the cattle from

producer to consumer

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

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

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.

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

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.

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.

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

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

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

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

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

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.

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.

Tend to be used by large cattle producers

No commission firms or brokers

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

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

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.

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

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

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

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

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

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.”

PRODUCT

OF USA

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.

Covered commodities from animals raised in another country but slaughtered in the U.S. would fall into this category.

Meat products imported from another country would be labeled as a product of that country. 

PRODUCT

OF

CANADA

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

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

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

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

Class is based on sex definitions Grade is based on apparent carcass

merit of the animal

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

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

Prime Choice Select Standard Commercial Utility Cutter Canner

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

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

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

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

Influenced by carcass weight, rib eye area, thickness of fat over the rib eye area and the amount of kidney, pelvic and heart fat (KPH)

A preliminary yield grade for a warm beef carcass is determined by the thickness of fat over the rib eye Each 0.1 inch of fat thickness changes the yield grade by

0.25 of yield grade An adjustment is then made for rib eye area and percent

KPH to determine the final yield grade An increase in the amount of these fats decreases

the percent of retail cuts from the carcass

Fat thickness over the rib eye 0.2” Prelim Yield Grade—2.5 Warm Carcass Wt.—600 lbs REA—12 sq. in. Adjustment is then -0.3 % KPH– 2.5, adjustment is then a -0.2 of a

grade Final yield grade is then 2

2.5-0.3-0.2= 2.0

Higher grades of slaughter cattle are usually grain fed and have a high yield of lean cuts with the right amount of marbling

These animals bring higher prices in the market

WHY???

Lean is darker in color than normal Usually has a gummy or sticky texture Thought to be a result of a reduced sugar content in

the lean meat at the time of slaughter Condition is sometimes found in cattle that have

been subject to stress conditions before slaughter Condition varies from barley visible to nearly black in

color No negative affect on taste but is considered a

defect because it affects consumer acceptance Condition may result in the deduction of 1 full grade

Supply and demand govern the price of beef Producers have little effect on the demand but

management decisions affect the supply. Prices vary with the seasons Beef cattle are marketed through terminal, auction

and direct selling. Sale of beef cattle that are transported across state

lines is regulated by the Packers and Stockyards Act.

Purebred cattle are sold by private sale and auction.

Reputation and method of advertising are important to these producers.

Marketing method is usually based on convenience but should be based on price and costs of marketing.

Cattle shrink when shipped. Careful handling and management can reduce losses due to shrinkage.

Cattle are divided into classes based on use, age, weight, and sex.

Quality grades are used for both feeder and slaughter cattle.

Yield grades are also used for slaughter cattle Age and amount of marbling also affect the quality Yield grade is determined by the amount of lean

meat that can be cut from the carcass Futures market can be used to reduce price risk.