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Direct-to-consumer meat sales require producers to evaluate livestock’s harvest readiness and set profitable meat prices.

Melissa Hemken

April 5, 2021

8 Min Read
WFP-ARS-market-readiness-050121-web.jpg
Animal scientist Jim Neel uses ultrasound on finishing steers to estimate back fat, rib eye area, and intramuscular marbling, all indicators of meat quality.USDA ARS

Direct-to-consumer meat sales boomed in 2020 during the height of the COVID-19 pandemic. It is expected for them to remain higher than pre-COVID levels. With these expanded market opportunities for beef and lamb, many producers now finish meat livestock to sell directly to consumers.

When finishing livestock there are certain evaluation criteria that mark when the meat animals are ready for harvest. Once you select which livestock to harvest, the marketing to sell your beef and lamb meat begins.

Evaluate harvest readiness

Several factors determine when livestock are ready for harvest and the dressing percentage of meat available on their carcasses. Properly evaluating live animals establishes when to process them, and the amount meat they will yield. Live animal harvest evaluations are based on fatness and muscling.

“Fat is partitioned into different depots based on the biological needs of the animal,” explains Nathan Parker, Clark Meat Science Center Manager at Oregon State University. “The subcutaneous fat depot, the back fat, is the second to last one to develop in maturity. The last depot is intramuscular fat, which we call marbling in processed meat. A lot of subcutaneous fat isn’t wanted on an animal, because it will be trimmed off and isn’t saleable weight. There’s a very happy medium between subcutaneous fat and intramuscular fat to create the desired marbling.”

The quality and length of feed affects the development of fat depots. Parker says to ask in the evaluation if the animal has been fed long enough to realize intramuscular fat, which develops after the subcutaneous fat. And, does the feed input provide the growth benefit of intramuscular fat?

On beef cattle, there are several areas to observe fat depots. The tail head – the rump over the tail – should be plump. When a hand is run over the side of animals’ barrel should be relatively smooth with fat filled in the intercostal area between the ribs. When viewing animals from the rear, the legs should be more spread apart from the fat deposited between the legs. An animal is ready for harvest when its brisket appears filled out as if a basketball were carried inside of it, which causes it to hang low.

“When the brisket is full,” Parker explains, “there’s quite a bit of fat on the animal. Through finishing rations, producers fatten the animal, ideally through intramuscular fat, but also to a point where maximum muscling is also achieved. The order of growth for carcass tissues is: 1) bone, 2) muscle, and then 3) fat. The producer should be sure that the animal’s maximum potential for muscling has been achieved, and then evaluate the overall fatness of the animal.”

Evaluating lambs for harvest is easiest when they’re sheared. Age is also a consideration. In the US, lamb meat is preferred from animals harvested at 6 months to a year in chronological age. Meat harvested from an animal that is a year or older is considered mutton.

When sheared, lambs’ back fat can be evaluated over the spine’s lumbar region by running fingers along both sides of the spine. If the hide doesn’t “slip” – it holds relatively smooth – there’s a sufficient fat deposition. “When processors measure back fat for our preliminary yield grades of lamb, and beef, we do it between the twelfth and thirteenth rib interfaces,” Parker explains. “The more fat in that area, the worse the yield grade. On the yield grade scale of one to five, ideally you want a yield grade of one or two because that means there’s more muscle than fat.”

Parker often encounters producers’ misconception regarding how much meat their live animal will yield. The meat industry averages for dressing percentage – the weight of the carcass after removal of the head, hide and offal – is 50% for lamb, 60% for beef, and 70% for hogs. Added to this standard are gender differences. For instance, a steer will be more heavily muscled than a heifer, which naturally carries more fat.

“I encourage people to witness a slaughter, if a meat packer allows it,” Parker says. “Also, look at carcasses after they’ve aged. It’s good to observe carcass fabrication to see everything that is trimmed and removed prior to the final retail cut and packaging. In this way, a producer can evaluate the live animal and project its yield, and then see the carcass yield and quality after its harvest.”

Calculate profitable meat prices

When producers select livestock for harvesting, at that point they end production and start marketing. Most producers underprice their meat products in direct-to-consumer marketing channels, such as farmers’ markets, subscription boxes, and local grocers.

Matt LeRoux, of Cornell University, substantiated this through researching meat prices for meats sold both through direct-to-consumer and large-scale commercial markets in New York state.

“I discovered the direct-to-consumer prices, especially at farmers’ markets, were lower than grocery store meats,” LeRoux explains. “That brought more questions up for me, ‘How can a small farm bring processed, packaged meat to market more efficiently than the main system?’ How could we sell ground beef at the farmers’ market for lower prices than the grocery stores?’”

Meat pricing goes beyond the monetary amount that customers’ pay for a meat product. It must account for the cost of production for the meat animals, costs of processing and marketing, profit margin, and marketing labor. To simplify the processing of developing meat prices for direct-to-consumer sales, LeRoux developed an online pricing tool, the Cornell Meat Price & Yield Calculator Suite.

The first section of the meat calculator addresses all of the costs associated with a meat animal. Cost of production can be approached multiple ways. LeRoux recommends beginning at an easy point and, each year, to improve recordkeeping.

“One approach is to segment an ag operation to aid in delineating costs,” LeRoux says. “For instance, the cow/calf business sells calves to the finishing business. The hay and grain business sells feed to the cow/calf business and the finishing business. To assess the value of each transaction between businesses use opportunity costs. For instance, ‘If this hay was sold today, what is it worth? If this calf was sold at the sale barn today, what would it bring?’ In this way, it’s easier to track the cost of production per finished meat animal.”

Another way to track expenses per head is through snapshot recordkeeping. For this, select an average animal — like your average performing cow and her calf — and maintain detailed records of associated costs for the cow until the calf is weaned and for the calf until it’s finished, harvested, and its meat sold. Then, base pricing on its cost of production.

Production costs inform the next step of the meat calculator, which is the desired profit goal for a meat animal. This should cover all associated costs until the processed, packaged meat is handed to the customer. Additionally, producers should consider the profit margin they would like to obtain for their financial sustainability and for their meat products’ value-added elements, such as all-natural, organic, grass-finished, etc.

Next, the meat calculator asks what prices are currently set for meat products. LeRoux says that if you don’t have any current prices, simply enter $1.00 into each field. “Market research will help inform your prices as you begin direct-to-consumer sales,” LeRoux says. “Farmers’ markets provide great customer feedback. I would use grocery stores only as a distant frame of reference. Your prices should never be lower than the grocer, because your individual farm cannot surpass the cost-saving efficiencies of the commodity market.”

Lastly the meat calculator will notify how entered meat prices relate to the farm’s costs and targeted profit per head. If prices must be raised to match production costs, increase prices on the most popular meat cuts. This, coupled with lower prices on the least popular cuts, assists with inventory management.

“Distributing cost across the different cuts allows those cuts to sell at a speed that more closely matches their yield in the carcass,” LeRoux explains. “You know how it happens, a fresh batch of meat is picked up from the processor. At the farmers’ market the bacon, if it’s a pig, immediately sells out. The other cuts are stockpiled in the freezer and rarely sell. In a few weeks, another animal is harvested and the process repeats. Pricing is a tool to level that out.”

Raising prices on cuts with high customer demand, like rib-eye steaks, may cause revenue to exceed profit goal. Then, it’s possible to lower the prices of slow moving cuts, such as chuck roast, to increase the speed of sales. “If you’re nervous about increasing prices, know that you won’t necessarily disappoint your customer,” LeRoux says. “Let’s say your customer arrives at the farmers’ market and wants to purchase rib-eye steaks and then your prices are higher than they expected. That’s your opportunity to sell them on something else, like sirloin steaks or a cut that comes out of the chuck.”

To receive prices necessary for profit, it is essential to implement a strategic marketing plan based on knowing the target customers, the messaging that resonates with them, and their most common purchasing channels (online, farmers’ market, subscription boxes, etc.). The meat calculator helps show how to price meat for profitable direct-to-consumer sales. Marketing supports the prices.

[Melissa Hemken writes from Lander, Wyo.]

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