HUNTIN' DAYLIGHT -- CONSUMER IMPLICATIONS GROW WITH CARCASS SIZE

by: Wes Ishmael

For as much as steaks bolster carcass value and consumer beef demand, their growing size is costing the industry lots of jingle.

“The aggregate welfare (consumer) loss from the increase in carcass weight with respect to ribeye and sirloin steaks is $8.6 billion for the two largest classes. That is significant,” says Jason Lusk head of Purdue University's department of agricultural economics, speaking about research he helped conduct while a faculty member at Oklahoma State University (OSU).

Despite increasing average carcass weights over time—and meat cut into steaks—Lusk and fellow OSU researchers Derrell Peel and Josh Maples explain most restaurants and grocery stores offer relatively fixed steak serving sizes, usually 6 oz., 8 oz., 12 oz. or 16 oz. In other words, achieving the same serving sizes from larger carcasses means cutting steaks thinner.

“That got us to wondering: For a fixed weight, do consumers prefer traditional, thicker steaks that take up a smaller area on one's plate or newer, thinner steaks that take up a larger area?” Lusk says. “Presentation is known to correlate to varying degrees to what consumers want to buy.”

These OSU researchers surveyed more than 1,000 U.S. consumers and presented them with a series of choices that varied the type, thickness, area and price of the steak. Once the thickness and area of a steak is known, the weight is pre-determined.

According to the study conclusion, “the decrease in consumer welfare by moving from a choice set containing small area and thick steaks to a choice set that includes large area and thin steaks implies that the changes in carcass size have led to a decrease in consumer utility from today's steak choices relative to the steak choices of a few decades ago.”

“In essence, our survey implied consumer preference varies relative to steak size but are generally in unison in their dislike for the thinnest cuts of steaks,” Lusk says. “Most people don't want to eat a 32-ounce steak, with the consequence that steaks from today's larger beef cattle are often cut thinner than what was done traditionally.”

Beef Carcass 101

For perspective, the most coveted steaks come from the middle meats—rib and loin—which represent 10-12 percent of carcass weight, according to a Texas A&M University beef carcass and value yields demonstration conducted by Jeff Savell, one of the world's foremost meat scientists. But, these middle meats can account for about a third of total carcass value—upwards of 40 percent for Prime grading carcasses.

In broader terms, consider a 1,200 lb. fed steer with a dressing percentage of 62-64 percent, which equates to a carcass weight of 744-768 lbs. Yep, 1,200 lbs. is light by today's standards, but old habits are hard to break.

“The expected yield of retail cuts from beef carcasses ranges from approximately 55 percent to 75 percent, depending on the fatness and muscling of the animal, and the type of cuts produced,” explained Rosie Nold, in a fact sheet from South Dakota State University (SDSU) a few years back. She is the SDSU animal science assistant department head.

“A typical 750 carcass with 0.50 in. of fat over the rib eye and average muscling of a 12-13 sq. in. rib eye will yield about 65 percent of the carcass weight as retail cuts (roasts and steaks) and lean trim,” Nold said.

Using this example, cutting the carcass into primarily boneless steaks and roasts, Nold breaks out the resulting carcass composition this way: 20-25 percent lean trim that will likely be packaged as ground beef; 10-12 percent boneless Chuck roasts and steaks; 10-12 percent Round roasts and steaks; 10-12 percent steaks from the rib and loin.

“Ground beef increases proportionally as carcass size increases, and so more meat per animal has likely led to increases in consumer value through lower prices or smaller increases in prices resulting from the decrease in number of cattle slaughtered,” Peel says. “However, steaks represent an important portion of the total carcass value and it is possible the increase in size of other cuts also may have created less desirable end products for consumers.”

Carcass Growth Continues

The primary driver of increasing steak size is straightforward. Improved genetics, management, cattle feeding technology and economic incentive all foster more pounds.

U.S. Department of Agriculture data indicate average weights of commercially slaughtered cattle hovered around 1,000 lbs. from the 1950s midway through the 1970s, Peel says.

In his early-December market comments, Peel explains, “Since 1975, there has been a steady increase in the size of beef cattle. Finished cattle weights have increased about nine lbs. per year on average. In 2016, the average weight was 1,363 lbs., which is 366 lbs. more than the average weight in 1975.

“Steer and heifer carcass weights have increased an average of five lbs. per year for the last 50 years. Current production systems, technology, and genetics would suggest that there is no end in sight to just how big cattle can get from a production standpoint. There is no reason to believe that the drop in carcass weights in 2017 is a change in the long run trend of bigger carcasses, though it could represent moderation or a peak in carcass size.”

The decline in carcass weights this year that Peel alludes to stems mainly from economic incentives encouraging aggressive feedlot marketing, which equates to feeding cattle relatively fewer days.

“Steer carcass weights have been lower 44 of 46 weeks this year and the average decrease for the year to date is 14 lbs. below last year,” Peel says. “Heifer carcass weights are currently 13 lbs. below last year and have been lower every week of the year resulting in an average of 12 lbs. lighter year over year for the year to date.”

These lighter carcass weights help support prices by diluting the impact of cyclically increasing cattle numbers.

“The decrease in carcass weights partially offsets increased cattle slaughter and moderates the increase in beef production in 2017,” Peel explains. “Steer slaughter is up 2.1 percent for the year to date; an increase of 310,000 head year over year. Lower steer carcass weights is the equivalent of 234,818 fewer head at last year's carcass weights, meaning that the reduction in carcass weights is equivalent to increasing steer slaughter by 81,154 head or just 0.6 percent this year. Decreased heifer carcass weight is equivalent to a 110,067 head reduction in heifer slaughter, reducing the increase in heifer slaughter from the actual 12.2 percent year-over-year increase to an equivalent level of 10.5 percent year-over-year increase. As a result, year-to-date beef production is up 4.1 percent compared to the 5.3 percent increase in steer and heifer slaughter.”

Back to those steaks, wrought larger by increasing carcass size.

“The industry has been hearing from consumers for at least two decades that they did not want bigger and bigger steaks,” Peel says. “Grocery stores and restaurants both market beef, not just on a price per pound, but on a cost per package or plate. Big steaks are increasingly too big for a meal and are too expensive to purchase.”







Don't forget to BOOKMARK  
Cattle Today Online!