Greg Henderson, Drovers, December 6 2018
Extending the decline of Select grade beef into the future, the authors of a new report says Select may be reduced to 5% of beef supplies by 2025.
Select grade beef will soon become a small niche product. That’s the conclusion of a new White Paper “Phasing Out Select Grade Beef,” published by the Red Angus Association of America with sponsorship from Anipro/Xtraformance Feeds.
The authors noted that as recently as 2006-2007, Select grade beef accounted for 40% of carcasses, but was reduced to 17% to 18% by 2018. Extending the current downward trend into the future, the authors suggest Select beef tonnage would be reduced to 10% by 2022, and to 5% by 2025.
“Select grade beef,” the authors said, “is being intentionally phased out for the right reasons: (1) It is consistently worth less than Choice beef, (2) consumers find it less appealing and less satisfying and (3) Select beef costs essentially the same to produce as Choice.”
Ranchers are actively selecting for genetics that will make their cattle grade better, and marbling EPDs have proven useful as all major breeds have experienced a positive genetic trend for marbling over the past two decades, the report says. That’s led to feedyards targeting and managing cattle to produce more Choice and Prime carcasses, and the authors note that about 70% to 75% of all finished cattle sell today on carcass-merit incentive to capture the price premiums associated with higher quality grades.”
The phase out of Select represents a “positive milestone,” and the authors said there are at least five major implications associated with the decline in Select.
- Greater consumer satisfaction with U.S. beef. Less Select and more Choice beef has already – and will continue – to support beef demand growth, leading to higher average cattle prices and creating opportunity for improved profits throughout the beef supply chain.
- Quality leadership around the world. To continue being successful in the world beef market, the U.S. must remain distinct as the quality leader among beef exporting nations. Reducing Select output, along with the increased production of Choice and Prime beef, should further solidify this position for decades to come.
- Select exits the mainstream beef market. With continued shrinkage, Select beef will eventually fall to “rail out” status, being handled by the larger packers as a lower value by-product that is sold off separately to niche beef processors at a sizable discount. Select beef carcasses would then be handled in the same manner Standards, dark cutters and Yield Grade 4s and 5s are dealt with today.
- Continued emphasis on high-marbling genetic inputs. Strong demand for high-marbling breeds, and high-ranking marbling EPDs within all major breeds, will remain at the forefront of commercial cattle producers’ selection decisions. Producers, perhaps in a greater way in the past, will seek to avoid the discounts associated with the low end of the marbling spectrum, while pursuing premiums at the top end. To accomplish that goal, they will eschew low-marbling genetic inputs, favoring instead those breeds and individual animals within various breeds that improve marbling potential in their herds.
- Larger price premiums for high-marbling potential feeder calves. Because marbling is an important value determinant for wholesale beef and fed cattle, and because the industry is actively working to eliminate Select beef, cattle feeders can be expected to increasingly emphasize marbling genetics in the feeder cattle they purchase. Marketability and price premiums for verified, high-marbling potential feeder cattle and calves will tend to increase in the years ahead, while discounts on those with low or unknown marbling potential become more severe. Growth and feed efficiency will, of course, remain very important.
Authors of the report include: Tom Brink, CEO, Red Angus Association of America and founder, Top Dollar Angus, Gary Fike, director of commercial marketing, Red Angus Association of America, Fallon Flick, DNA programs coordinator, Red Angus Association of America, and Brandi Buzzard Frobose, director of communications, Red Angus Association of America, served as editor.