CALF_News_August_September_2020

20 CALF News • August | September 2020 • www.calfnews.net meats and blood will be around $1.53 per pound. The remaining hanging car- cass weight will be around 904 pounds. The cutting yield loss of a USDA Yield Grade 3 carcass utilizing 62.7 per- cent yield and accounting for the loss of about 37.3 percent in bone and external fat, causes the breakeven to be $2.44 per pound and leaves 567 pounds of sub- primals remaining. The next step to consider is retail yield loss, which can be influenced by cutter skill and the streamline of the fabrication process. Generally, there is approximately 10 percent retail cut loss, leaving the breakeven value at about $2.71 per pound. Understand that these estimates are ballpark figures and will be augmented among processors and producers as there are many factors like animal type, age, sex and management influences that affect yield performance. Additionally, the associated costs of overhead, labor, packaging, sales/dis- tribution and insurance have not been factored in. If you plan to have cattle harvested and need an inspected facility, you can evaluate the meat inspection directory https://www.fsis.usda.gov/wps/portal/ BANDWAGON BEEF Continued from page 17 fsis/topics/inspection/mpi-directory to find a location. It is important to note when selling directly from your farm, no product that is custom exempt can be sold or donated. All labeling must be approved by the establishment and can only be used when finally approved and an establishment number is referenced on the label as a mechanism of trace- ability. There are many animal product claims such as animal welfare claims, organic claims, food safety claims and nutritional claims where guidance, https://www.fsis.usda.gov/wps/portal/ fsis/topics/regulatory-compliance/label- ing/Claims-Guidance will need to be followed. When determining what is reasonable to charge customers and help ensure repeatable purchases, considering your margin is important. Often packer mar- gins are between 5 and 20 percent, so in the above example, including the value of $2.71 per pound for total yield loss and factoring in a 20 percent margin, the packers would need about $3.25 per pound on average from the retailer. The National Daily Boxed Beef Cutout and Boxed Beef Cuts, https://www.ams.usda. gov/mnreports/ams_2452.pdf report showcases the value packers are paid. The segment that adds the most margin is the retailer – between 30 and “We’ve grown so accustomed to using distiller’s at 15 to 35 percent of the feedlot diet that now we have to fill that hole with some other product to provide supplemental protein for these cattle,” Rusche says. “The price of distiller’s grains locally has stabilized, and it’s not as big an issue as it was, but will be something to keep an eye on in the future. Gasoline demand might not come roaring back. Many people who were commuting to work now realize they can be just as produc- tive working from home.” Feed in general has gotten cheaper, with carryover stocks of corn. Rusche predicts that could continue into next year. 'MARKET FLU' Continued from page 19 60 percent. Higher end retailers would be on the upper side as they charge more for the added service. A purchaser at the retail case in this example could pay $5.20 per pound, on average. When selling locally, something to keep in mind is that not every family can afford protein purchases of whole sides or halves of beef in a single transaction. In this example, a side of beef from a packer at a minimum would be about $768, factoring in only yield loss and margin value. If the goal is to foster sustainable meat sales locally, establish avenues for all products to mitigate price pressure and ensure consumer purchas- ing power for beef, not a cheaper protein source like pork or chicken. If you desire to sell locally, take steps, not strides, and keep sustainability in mind. Consider your operation’s strengths and weaknesses, assess your business model and weigh the options for partnership, further development of beef programs with your packer, potential to become vertically integrated, or adding sales opportunity out the farm gate. As Theodore Roosevelt stated,“Do what you can, with what you have, where you are.”  “Given crop conditions for 2020, we’re looking at an even bigger carryover next year,” he says.“We’ll have lots of corn unless something dramatic happens weather-wise.” The one positive for feedlots is that cost of gain should stay fairly attractive, maybe better than it has been. “This will help support feeder cattle markets because they are sensitive to cost of gain,” Peel says.“Overall, however, feeder markets will be a little depressed because of the backlog of cattle; feedlots have to adjust placements until they get caught up.” The past several months have been tough on feedlots.“I don’t expect to see a lot of bankruptcies, but some feedlots haven’t sold any cattle for more than a month. It’s a challenge to continue to feed all those cattle and take in place- ments,” Peel says. “We are dealing with this on a day-to-day basis now. Unless there’s a dramatic resurgence of the virus, we will continue to make progress,” Peel says. It was a learning curve, finding ways to get through some of these things. “I don’t think the virus will go away, but I think we’ll deal with it in a less disruptive way from this point,” he says. “The U.S. economy is still a question mark in terms of demand, but it’s sum- mertime and there’s more optimism. “The latest jobs report showed employment coming back up. We may be bouncing back a little quicker. If people get back to work and have money, beef will be in more demand again.” 