Inclusion of Lean Finely Textured Beef (LFTB) in certain ground meat products has raised concern among some consumers partly as a result of the negative connotation associated with “pink slime” associated with the products. LFTB is an inexpensive, FDA-approved lean beef product made from low-valued fatty trim (50-percent lean). LFTB is first treated with an antibacterial agent (ammonia) to make it virtually pathogen free, and then combined with 90-percent lean beef and other fatty trim to produce ground beef and beef-based processed meats. The conversion rate of extra fat trim to LFTB is 3 to 1, or 3 pounds of fat trim to produce 1 pound of LFTB. Demand for LFTB recently declined following media reports portraying it as a seemingly unappealing additive to ground beef products.
These events followed former United States Department of Agriculture (USDA) scientist Gerald Zirnstein’s March 2012 comment that 70 percent of the ground beef sold in supermarkets contained LFTB. In addition, ABC News’ report about the use of LFTB in retail beef products led to media coverage publicizing LFTB as pink slime, a term originally coined by Zirnstein in 2002. On March 21, 2012, Safeway, SuperValu, and Food Lion announced they would stop buying ground beef with LFTB (Avila, 2012). Soon after, Kroger, BI-LO/Winn Dixie, Giant, and Hy-Vee announced that they would discontinue stocking ground beef that contained LFTB. Costco and Whole Foods reported that they did not carry ground beef with LFTB, and Walmart stated that consumers would have the option to purchase ground beef with or without LFTB.
Some manufacturers of lean beef products have been affected by the actions of these retailers. Beef Products Inc. (BPI) manufactures LFTB, and Cargill produces finely texturized beef (FTB), a similar product. BPI announced in late March 2012 that it would shut down three of its four plants (Garden City, Kansas; Amarillo, Texas; and Waterloo, Iowa) and lay off 650 workers due to reduced demand from supermarkets for ground beef containing LFTB (Keefe, 2012). It was estimated at that time that BPI’s average daily LFTB production capacity would drop from 1.5 million pounds per day to 700,000 pounds (Kay, 2012).
Fifty-percent lean beef trimmings, which come from fed cattle (steers and heifers), are blended with leaner processing beef and used to produce LFTB. Leaner processing beef comes mostly from cows, bulls, and imported processing beef, but a small portion does come from fed cattle. Since some lean processing beef and 50-percent lean beef trimmings are derived from fed cattle, supply effects on fed cattle prices are unclear.
Although LFTB is a lean product, it is made from fat trimmings that otherwise have less value and typically sell at a discount to a rendering plant. Fifty-percent lean beef trimmings account for about 10 percent of total carcass weight (Steiner Consulting Group, 2012). In addition, beef packers generate more value to fed cattle from an additional 5-10 percent of total carcass weight as extra fat trim, and those components are used jointly to produce LFTB. Decreased demand for ground beef containing LFTB implies that packers now have to sell a larger portion of fat trimmings at lower prices, reducing fed cattle values (CME Group, 2012).
Several effects of the lost use of LFTB are evident. LFTB adds value to a carcass by utilizing a few more pounds of beef that would otherwise be used in rendering. According to Steiner Consulting Group (2012), an additional 900 million pounds of extra fat trimmings would be available each year in the absence of a market for LFTB. The cut in the demand for LFTB has reduced the market for excess fatty trim. The value of 50-percent trim has declined and as trim comprises a small share of the value of each primal cut that contributes to the calculated carcass value, the decline impacted the value of a fed carcass. The price of fresh 50-percent lean beef trimmings has declined from $1.01 in February 2012 to $0.59 in April 2012, due at least partially to the lost use of 50-percent trim in the production of LFTB.
Reduced use of LFTB also has increased the price of 90-percent lean beef. To use the extra fatty trim, more lean beef is needed for blending. The American Meat Institute estimated that an additional 1.5 million head of cattle would be needed to supply the amount of beef necessary to replace the lost use of LFTB. The relatively tight supplies of lean beef provided support for a price increase of 90-percent lean beef and the cull cattle from which it comes. The price of fresh 90-percent lean beef trimmings increased steadily from $1.72 per pound in October 2011 to $2.22 per pound in April 2012. Beef analysts expect the price of 90-percent lean beef to continue to rise as more lean beef trimmings are needed to replace LFTB in ground beef (Greene, 2012). The average annual retail price of all fresh beef increased, on average, from $4.44 per pound in 2011 to $4.63 per pound in February 2012, and, except for April, has continued to set successive monthly records. This means that the potentially reduced supply of beef from the loss of LFTB would further augment beef prices.
Consumer response to the media portrayal of LFTB as pink slime significantly affected markets for beef trim, especially fattier trim. LFTB production has slowed and LFTB-producing plants have shut down, costing jobs. As a result, beef producers have seen a reduction in 50-percent lean beef prices and its effect on the carcass value of fed cattle. The lost use of 50-percent trim to produce LFTB provides support for 90-percent lean beef prices and, consequently, prices for cull cows, bulls, and imported processing beef. While prices for ground products continue to increase due to the reduced supply of lean beef from the loss of LFTB, the offsetting effects lead to an ambiguous net outcome for the cattle industry. In addition, historically low cattle inventories and year-over-year lower beef supplies due to factors outside the LFTB debate have supported beef prices at high levels. The beef cattle industry’s current focus is on mitigating the effects of media portrayals of LFTB. Continuing consumer resistance to LFTB will provide support for lean processing beef prices.
American Meat Institute, 2012, Questions and Answers About Lean Finely Textured Beef, http://www.meatami.com/ht/a/GetDocumentAction/i/76184
Avila, Jim. “Safeway, SUPERVALU and Food Lion to Stop Selling ‘Pink Slime’ Beef,” ABC News, March 21, 2012, http://abcnews.go.com/US/safeway-supervalufood-lion-stop-selling-pink-sl....
CME Group. Daily Livestock Report, Vol. 10, No. 97, May 18, 2012, http://www.dailylivestockreport.com/documents/dlr%2005-18-12.pdf.
CME Group. Daily Livestock Report, Vol. 10, No. 67, Apr 5, 2012, http://www.dailylivestockreport.com/documents/dlr%204-5-2012.pdf.
Cooper, David. “BPI Shares Lessons from LFTB Backlash,” Progressive Cattlemen, June 22, 2012, http://www.progressivecattle.com/index.php?option=com_content&view=artic....
Greene, Joel L. Lean Finely Textured Beef: The “Pink Slime” Controversy, Congressional Research Service Report for Congress, April 2012. Kay, Steve. “Consumers Will Ultimately Pay,” Cattle Buyers Weekly, April 2, 2012.
Keefe, Lisa M. “BPI Suspends Operations at Three Plants,” Meatingplace, March 26, 2012, http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=31707. Steiner Consulting Group. US Imported Beef Market, A Weekly Update, Volume XII, Issue 13, March 29, 2012.