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Watch each Friday for Doug Ferguson's Market Intel blog on Beef Producer.

A marketing lesson courtesy of Burger King

Once again, we see the contemporary food industry asking for unprofitable production practices from the agricultural sector.

The Burger King advertisements this week about feeding lemon grass to cattle to reduce their emissions got me very curious, so I began studying the situation.

First, I was wondering what lemon grass is. It sounds like an ingredient in a mystery box challenge on Master Chef. Second and more important, how will feeding lemon grass affect the cost of gain?

I did some research on lemon grass and here’s a quick summary of what I learned. It grows in the tropic/sub-tropic regions and seems to be labor intensive to grow. Multiple cuttings can be harvested (every three months) and it will yield around 12 tons per acre. It has many different uses in the food and beauty industries.

After some internet searches, it doesn’t appear to me there is that much of it being grown in the world, just enough to meet demand. So, if this is to really become a feed additive a bigger crop will have to be grown. Now this brings me to a different point. Burger King claims to have discovered this, but in several quick internet searches I found research from almost 20 years where feeding lemon grass was already done, along with garlic and seaweed. Clearly it didn’t catch on. Is that because it doesn’t work or is it a supply issue? If it’s a supply issue then we know it going to be expensive to feed.

Cost versus returns

Finding a price for lemon grass in bulk was a challenge. I found a person could buy barrels of its oil. To put it simply, the barrel of oil was worth more than the weight we feed on to finish cattle. I did finally find a price, but it was from December of 2019. It’s not cheap, and what it boils down to is feeding it for 100 days, at 100 grams per head per day will raise the cost of gain (COG) five cents! And that does not include freight to the feed yard.

On this blog the definition of value-added marketing means it is value added only if you capture the added value. Is Burger King committed enough to this to pay a premium for it? Gordon Ramsey may be able to sell these burgers for $35, but can or will Burger King pay up for the additional cost? If so then we may have a niche market open up. In that case I’m sure some cattle feeders will get their cattle farting just as proper as Burger King wants. If not, it’s my opinion Burger King should just use their lemon grass to garnish their veggie burgers, instead of cattle feeders garnishing feed rations with it.

I am all for protecting and preserving the planet. The thing is, a nine-weight steer and a fat are almost the same number of dollars per head. So it makes no sense to drive the COG up even more. This is why I write every week about the value of gain (VOG). Part of making money is knowing when not to put weight on cattle. Is as simple as this: COG has to be less than VOG.

Basketball markets

Yesterday I took my daughter into basketball camp. They had to do dribbling drills with two balls at the same time. Needless to say, these 9-year-old girls had balls going in opposite directions. That’s what the feeder markets did this week. In the plains states it was firmly established that it was a weight gain business. In the south that was not the case.

This is the second time we’ve seen this recently, where the lightweight cattle soften a bit and the heavier feeders go up a little in price, setting up a solid VOG up to 900 pounds.

The geographical spreads widened their gap even further. That has set the stage to make some three figure profits, after delivery.

This week unweaned cattle were $7-10 back and feeder bulls were $20 back. Keep in mind the roll back between steers and heifers. In some places that rollback makes heifers the better buy.

The female sales this week were not as wild as they’ve been in the recent past. There was $100 depreciation per year of age on cows over 4 years old. No. 1 pairs didn’t really bring much more than No. 1 breds. However, No. 2 pairs were $370 more than a No. 2 bred.

Bred heifers captured some nice appreciation value over open replacement heifers, but they had to be in third trimester and weigh 1,000 pounds. The short-solid and broken-mouth cows are bringing just a bit over the scale.

The opinions of the author are not necessarily those of Beef Producer or Farm Progress.

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