Just when it looked like the beef industry had truly defined its market and an ever-increasing number of cattle were being bred and marketed desirably, things are being questioned in a very disturbing way. It is being noticed that the percentage of carcasses grading YG 4 is rising at a rapid rate — from 1.3 percent in 1997 to 6.2 percent in 2004, according to USDA records.
This situation has many analysts scratching their heads. Some say the increase in YG 4s is caused by the high emphasis placed on breeding for marbling in recent times. External fat and marbling are correlated traits, they say (incorrectly), so the industry must now be paying the piper for breeding too much marbling. This assessment may be a truth or just a lip shot.
Fat, of course, is an important element in the yield grade equation. But fat is also an impotant element in calculating the percent of retail product yielded by a carcass. Sooner or later this fat must be trimmed, either by the packer, the retailer or both. Breed associations calculate an EPD for retail yield. If this EPD moves up, yield grade moves down. The American Angus Association says its EPD for retail yield has moved higher every year since 1998, and not at the expense of marbling or maternal traits.
Carcass fat is also tracked by the National Beef Quality Audit, which is financed by the checkoff. This audit, which produces different percentages than USDA method because it is based on a different sample, was conducted in 1991, 1995 and 2000. NBQA, too, showed a decline of YG 4 carcasses of almost 50 percent between 1991 (13.6) and 1995 (7.1). But whereas there was no growth in USDA’s YG 4 carcasses from 1996 to 2000 NBQA showed an increase nearly 50 percent (to 10.4 percent).
It remains to be seen whether NBQA data will show the threefold increase in USDA’s YG 4 percentage since 2000. And if it does, analysts will continue to ask their questions. It could be that the questioners will find part of their answer in the Angus association’s data — fat isn’t being added genetically at the seedstock level.
The other part of the answer for questioners may lie in the attitudes of feedyard operators. My experience with feedyard operators has been that most of them have never fully embraced value-based marketing. My discussions with them when value-based marketing was conceived in the 1980s inevitably ended with them saying they would generally add extra feeding days as long as it was profitable. That’s another way of saying it’s OK to add excess fat if it will make a buck.
We’re seeing this attitude playing out in spades in the current market. Cattle prices are high. Corn prices are low. It’s as if the end gate of a Brinks truck has opened. Dollars of every denomination are flying in the wind and guys in industry hats and dogger heels are chasing them gleefully. It has become common to read in the press of feedyard operators saying, “To heck with it. I can make more money selling fat on the hoof.”
The reality here for breeders, seedstock and commercial, is that the money flying in today’s wind is funny money. It is windfall money that is being reaped by feedyard operators who know it is wrong to produce and market excess fat. It is money that is being paid for fat that will be trimmed from carcasses, a cost that must be reclaimed by packers through higher prices to retailers and consumers.
My advice is don’t be fooled by the funny money. This windfall will pass, and when it does, more cattle will be priced on the grid and the good genetics you have produced will pay off for everyone.
To contact Fred Knop, write Drovers or send e-mail to email@example.com