Sunday, October 3, 2010

Why Grass Fed Beef Has to Cost More

(nutmeg)

Short answer: to allow local farmers continue to stay in business against the cut-throat competition of multi-national corporations and their lobbyists.

And this is the simple reason people choose local farmers and their beef over the “mystery” beef they can get in the big-box grocery stores. You know (or can find out) exactly where it was raised, how it was raised, and exactly what went into the meat you’re eating. You always pay more for real quality. And what is your health worth, after all…?

Ask a hot dog or sausage producer (or your local supermarket frozen-food stock-person) those questions and you’ll either get a blank stare, or some politically-correct mumbo-jumbo about how they can assure your quality and compassionate standards, etc. etc. But they can’t tell you the farmer’s name or what town his farm is outside – because they don’t know.

Now, prices are kept low for the corporate “mystery” product, because they buy in bulk from farmers (who are kept poor), and then run then through massive operations where scale and volume make up for half the cost of what you buy. You can bet there’s at least a 20% profit margin before the chain-store adds theirs on. So about 1/4 (maybe) of that goes to the farmer if that beef wasn’t corporate-owned originally (but that is a very generous allotment – the jury is still out researching this…)

When you buy direct, the majority of that money goes back to the actual farmer. But out of a $4 pound of hamburger here’s why it costs that much:

Start off with a 1,000 pound animal

Buy it from the farmer at about $900. (.90 per pound, which is 5 or 10 cents premium – it’s easier to take it to auction and get .80 or .85 per pound - and it's turned into mystery beef.)
= $900

Out of this, you get about 650 lbs. of hanging meat – this is the whole carcass minus head, hooves, skin, and entrails (guts).

Take it to a USDA-inspected facility (where Big Brother watched everything) and get charged .55 per pound for inspected hamburger which can be sold by the pound.
= $357.50

Now, they cut it down to your various parts (or grind the whole thing) and you wind up with about 60% of that carcass, or 390 lbs. You don’t want the big bones and most of that fat. And the processor sells that, anyway (yes, here’s your dog & cat food and hotdogs…)

Total cost so far:
$1257.50

Total pounds of beef you can actually use:
390 lbs.

Cost per pound for locally-produced, USDA-inspected hamburger:
$3.22 /lb.

Add on the costs of that farmer keeping it frozen and bringing it to your farmer’s market and you’ll see why rounding it up to $4.00 or higher makes sense.

And this is the problem of getting it to larger cities from the country where it was raised. If I’m going to have someone market it for me, then they have to make enough to keep it worth their while. Sure, you can sell $18.00 / lb grass-fed, location-verified sirloin steak and this is where the total carcass jumps to a total value of $3,000 - $3,500 per animal when you part it out.

But let’s go the other way and say we want to save people money and let them get the best quality.

First, take that same 1,000 pound animal – price doesn’t change wherever it goes (unless it comes from South America, where it’s much, much cheaper…)

$900 (however, you have to own the animal outright before to drop it off.)

Take it to a “custom-exempt” plant where it’s inspected for cleanliness by the state once a month.  Now the cost is .45 per pound for the hanging weight -
$292.50

So we are still at $1192.50

But that’s where it stops. You are buying all the cuts of the beef, you just can’t sell it to anyone else.

You just paid a little over $3.05 for your hamburger, but you also got $3 ribs, $3 steak, $3 roast, etc.

At $3500 for 390 lbs of usable beef, you are paying around $8.97 a pound for all the cuts.
And this is the margin that the farmer’s marketer is working with. If you buy direct from the farmer, you simply pay him for the beef and he drops it off at the processor. Of course, you need to know that farmer personally and know when he has a beef ready.

If you know someone who knows that farmer, then that person will keep you in mind when the farmer next has a beef ready (it takes two years to raise one and they always have some on the way).

You may only want to buy a quarter-beef. And your marketer/buyer can arrange this so you buy 1/4 of the animal (along with 3 others). So you get about 97 lbs. of beef – which will fit into a small freezer. And that’s a budget of about $297 for a years’ worth of beef – figuring you are just serving your small family and the occasional party. Those $3 steaks can come in handy…

Of course, if you like to buy it in pieces, that same amount of beef will cost you $875 through the year if you buy it by the piece through a supermarket chain. And if its shipped in as hamburger from South America, you have no way of knowing…

So save yourself $578 and know what’s in that beef you bought.

Have you priced any peace of mind lately?