Tools to Establish Prices for Selling Grain-fed Beef Carcases26 September 2013
As feed prices fluctuate, cattle producers should know what the breakeven price is for finishing beef and use it to determine what to charge for freezer beef.
The price of beef at a retail level is near record high, according to a report from the University of Michigan.
The average retail price of Choice beef as of June 2013 was $5.29 per pound. Consumers can save around 20 per cent of that cost by purchasing beef in larger quantities of quarters, halves or whole beef carcases.
A Grain Fed Freezer Beef Pricing Worksheet is available from Michigan State University Extension to assist producers in pricing their beef on a carcase weight. Ultimately the carcase price is determined by the buyer and the seller, but the worksheet goes through an example using current average prices.
A hanging weight of $2.42 per pound compares to $1.52 per pound live weight for a beef type steer.
Producers selling freezer beef need to remember to charge above current sale barn prices to cover marketing efforts such as phone calls, money collection, etc. associated with selling an animal direct the consumer compared to the sale barn.
The $2.42 per pound carcass weight equates to an average of $4.21 per pound final packaged price when cutting loss (bone, fat, etc.) and processing/packaging costs are included.
Eleven different meat processors, both USDA inspected (seven plants) and custom exempt (four plants) facilities were polled for their current charges (July 2013) for slaughter, processing and packaging, and total price of beef if they source and sell the beef.
Only ten of the processors slaughter beef and three of them charge disposal fees ($10 to $12) in addition to the slaughter fee ($30 to $75 range).
The average slaughter fee including the three disposal fees is $50.22 per head.
The average processing fee is $0.46 per pound of hanging beef carcase weight.
This ranged from $0.36 to $0.55 among the processors and some of them were using cold carcass weights instead of hot carcass weights.
Cold carcase weights can be three to five per cent less than hot carcase weights and account for the cooler shrink.
In general, processors at the higher end of the processing range are the ones using cold carcass weights.
The average price of hanging beef was $2.83 per pound included processing and $2.42 per pound without processing.
Three of the processors surveyed charge $0.03 per pound more for processing if the carcass is split into quarters. Four of the processors indicated that the price they charge for processing included vacuum packaged product.
If vacuum packaging is used, it improves product visibility and storage time with reduced freezer burn compared to traditional freezer wrap butcher paper.
Freezer wrap butcher paper is still an acceptable packaging method if the beef will be stored frozen and used within one year.