Source-verified worth more to consumers, feeders

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Age and source-verified cattle can earn premiums in the marketplace, and consumers are willing to pay more for beef from age and source-verified animals. That’s according to two recent studies that examined sale results and consumer preferences.

Research at Kansas State University evaluated the genetic, management and marketing characteristics of calves sold on the Superior Livestock Auction video auction market from 2004 to 2010. The study suggests small details in management and marketing can influence the premiums calves receive at sale time, including age and source-verification.

The research, which was the subject of a Master’s thesis by Lance Zimmerman, now with Cattle-Fax, revealed that age-and-source verification has been featured in Superior Livestock Auction lot descriptions since 2005 and has consistently generated premiums for steers and heifers throughout that time.

And source-verified beef can also earn premiums at retail, according to research conducted by the University of Nebraska and Nebraska Department of Agriculture. The research included online surveys and in-restaurant taste tests of consumers in Connecticut and Arizona.

The research found about two-thirds of participants in the in-restaurant taste testing ordered steak with either the state or farm-of-origin description. Compared to a non-source verified steak, those consumers were willing to pay $4.74 more for the steak with a state-of-origin description, and $8.75 more for a steak with a farm-of-origin description.

The online survey of consumers found:

  • Besides the cut of beef, other attributes that participants used to make a decision when ordering steak in a restaurant included price, USDA Quality Grade and if there was a guarantee of tenderness.
  • Attributes that participants considered less important were the breed of cow or the brand of the product.
  • When the price of steak from an unspecified source was listed as $20.95, 63 percent of participants indicated they would be willing to pay more for a steak that was source-verified. About 26 percent indicated they would only pay the same amount for the source-verified steak.

Additional information about the University of Nebraska and Nebraska Department of Agriculture study on the value of source verification can be found here.

 The Kansas State study of Superior Livestock Auction sales found a premium of $1.50 to $2 per hundredweight for age- and source-verified cattle. Those premiums have continued to hold – reaching a high in 2008 – as participation in age-and-source verification has grown to nearly 50 percent of all calves sold by Superior in 2010.

A complete summary of the Kansas State research on Superior Livestock Auction premiums is published in the August, 2011, issue of Drovers/CattleNetwork magazine. More details about this research can be found here.



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