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The industry needs more hamburger cattle

DANIEL LOOKER 03/11/2014 @ 4:52pm Business Editor

A comeback trail for beef

Don Close knew he was risking trouble when he went to Nashville last month. The livestock economist for Rabobank went to the National Cattle Convention on a mission: Change the beef industry.

“I could’ve brought a safe report on exports or something like that,” he told the assembled cattle producers. “But I decided to tackle this topic, because I think it is so important.”

This “topic” is the structure of the cattle industry itself and the way it rewards high-end, well-fed, choice- and prime-grade cattle. “Under the existing business model, the U.S. cattle industry manages all fed beef as if it were destined for the center of the plate at a white tablecloth restaurant,” notes Close. “The industry is, essentially, producing an extra-ordinarily high-grade product for consumers who desire to purchase a commodity.”

The consumer reality of which he speaks is that 62% of all beef consumed in the U.S. today is not high end. It’s ground beef – hamburger. Close says it’s not completely a function of the growth in fast-food burgers. Numerous grocery store meat managers have told him the top-selling item in the beef case today is the 93% lean ground beef. “Consumers want a quality ground beef,” he says.

That flies in the tradition-bound face of the stodgy old beef industry, which prides itself on being the premium meat. Fed animals that grade USDA choice or prime often garner cattle feeders $8- to $10-per-hundredweight premiums. Only about 18% of the carcass ends up in the grinding tub; the other 82% goes for steaks and roasts and ribs. 

Close wouldn’t change that for the upper end of the beef cattle gene pool. “That’s definitely a good market,” he says. 

“In the lower half of the gene pool, let’s change how we target those animals for the ground beef market,” he says. “We could leave them longer on lower-quality forage diets before the feed yard, then have shorter feeding periods. They might finish at a slightly lighter end weight. Rather than choice, they’ll grade select.”

About 27% of that select carcass – ribs and loins – could still go to a low steak market. The rest – shoulders, rounds, flanks, and briskets – would go straight to grind to fulfill the dominant market for hamburger. It would cost less to produce and would compete better with chicken and pork.

Close thinks changes to the feedlots would be small, as all cattle would still spend some time there. It could enhance the roll of backgrounders who specialize in longer grass gains. Cow-calf producers would have to determine their target end market and then produce for it.

In the end, it would reverse a trend of shrinking beef consumption. His message drew nods of agreement from a few traditional cowboys.

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