Who has benefited from the shift to heavier cattle?
The move to larger animals began decades ago but was driven by packers, not consumers and ranchers
By Brenda Schoepp, Alberta Farmer Express
August 6, 2019
I had given a century-old Stockmanís Manual to a young rancher as a gift.
As we leafed through the pages, it was pretty evident how cattle, particularly British cattle, have changed over the years. Once mostly horned, short legged, deep in body, wide in loin and very haired up, they look very little like the long-legged, heavier and smooth-haired creatures of today.
Over time, these imported British cattle were crossed with European models that were both of terminal or maternal lines. The stretch in cattle size was also heavily influenced by the packing industry and through that, particularly in the business of beef, there were some assumptions. The popular hypothesis was that bigger was better.
But who, we discussed, drove that bus? And did bigger mean better?
Packers started specialized lines about 50 years ago, encouraging greater numbers delivered per site and larger cattle to make their kill lines more efficient. There was a discount on smaller carcasses or a flat-out refusal to buy them. The hook was the most efficient when running at full weight, particularly once large cattle became the norm and those that tipped the scales could be discounted heavily. Putting more meat into the system also kept economic control with the buyer.
In the 1980s, the move to buy fed cattle live (price per live pound) over rail (price per warm carcass pound) terminated the data that once accompanied rail grade returns. After which came pricing mechanisms through the grid that altered price on weight and on carcass value, with the discounts far outweighing the premiums.
This grid system was not developed by cattle feeders or ranchers.
Heavy cattle were still encouraged as the hook on the kill line was fully weighted. Again the light and the really heavy cattle were discounted, as were those with too little or too much fat; too little marbling or small of a rib-eye; having dark-coloured meat (dark cutters); or because of age.
To make matters worse, Canada did not have a recognized equivalency in the grading system with the U.S., despite our dependency on live and carcass exports. Once this changed, there were at least parameters with similarities.
Packer profits rely heavily on drop credits that become co-product and byproduct of an animal. These are things such as hide and offal, and include a long list such as tallow, non-edible lung tissue, blood and bone meal.
Using an actual 2015 example (in a fed animal yielding 63 per cent), the total value of the credits was about US$21.84 cwt of which the hide was US$11.04 cwt.
Hide values have continued to drop since 2015. In June 2019, the average credit value of the hide was US$3.42 cwt. The total value of the credits was US$13.10 cwt. On a 972-pound carcass (which was the 2017 Canadian average steer carcass weight), that represents a difference from 2015 to 2019 in the credit value of C$121.13 per head.
Although beef was moving well and demand was steady during the slip in beef cattle prices over the past four years, hide inventory increased. The chances of beef cattle prices going up to reflect consumer demand for meat are slim, influenced by the massive drop in credit value, particularly in hides.
This is just a tiny piece of what goes into pricing cattle.
When the buyer has outside factors that cattle persons do not participate in and has the value-adding capacity that the cattle owner does not, it is never really a sellerís market ó regardless of the price.
When bigger is better was introduced it was based on economics of scale.
This held true ó until it didnít.
Consumers asked for less but were not heard...