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Agricultural News

Survey Shows How Much Packers Pay for High-Quality Cattle

Tue, 25 Mar 2014 11:16:30 CDT

Survey Shows How Much Packers Pay for High-Quality Cattle
High-quality beef costs more at retail and in restaurants, but do cattlemen get paid more to produce it? A 2014 survey of licensed, Certified Angus Beef brand packers says “yes,” and it’s more than double what they paid in 2010.

John Stika, president of Certified Angus Beef, said, “In the last two years combined, packers have paid just under $100-million in Certified Angus Beef-specific premiums back to the production sector, clearly responding to the pull-through demand that consumers are showing us in paying more for product at retail and food service and really sending a strong economic signal back to producers that we need more of those kind of cattle that can hit Certified Angus Beef brand standards.”

That demand is build over time. Total CAB grid premiums paid exceed $450-million and nearly 30 percent of that has been in just the last three years.

Missouri cattleman Ben Eggers remembers when that column showed up on the first grid settlement sheets.

“Once that got started, then other packers were soon to follow suit to try and draw those premium cattle. It’s been a process that has evolved over the years.”

The way that economic signal grew has changed feeder calf values over time, too.

“The first step to get a Certified Angus Beef carcass is to get a black-hided animal. So, it has transpired back into the feeder calf industry just simply through black-hided cattle. And, of course, if a feeder has purchased a set of calves from a particular breeder before then he knows to go back if those cattle performed well and he got a lot of grid premiums, and then he’ll go back and pay a premium to that producer in order to get the calves.”

For many, genetic selection has moved from a focus on choice to the higher quality target.

“This choice-select spread is part of our history, it’s not part of our future,” said Dick Beck of Three Trees Ranch in Georgia. “IAngus breeders who are really using the tools available, the genetics available on our breed are producing choice cattle at a minimum. So premium choice cattle and the prime-choice spread are the tools of the future that I think we as Angus breeders need to focus on and educate our customers about.

Beck said there could be a $200-per-head difference in prime versus choice carcasses.

“You start to put a $200 a head on 100 calves on the lifetime of a bull and we get to talking about quite a bit of money in a real hurry. And I think teaching our customers to earn that premium on a consistent basis and helping them achieve that is the future for Angus breeders.”

Stika said that, overall, this survey data helps answer the common question, “Where’s the premium?”

“I think it’s exciting to see, from a producer’s perspective, that the packers and the system we have for rewarding quality truly is stepping up to the plate and is starting to reward those producers who truly have the kind of cattle the consumer demand is expecting our industry to provide.”



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