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Its All About the Grade with the U.S. Beef Industry

By Chris Clayton, Omaha World-Herald, Neb.
Knight Ridder/Tribune Business News

Aug. 1, 2005 - GREELEY, Colo. -- Nebraska cattle can end up feeding people just about anywhere, as a flatiron steak at a national restaurant chain, as an Angus burger at a fast-food place and as a ribeye dinner in a Las Vegas casino.

Followed from birth as he grazed near the Kansas border, through fall weaning and fattening at the feedlot, steer No. 432 now had to make the grade -- as in USDA grade.

In a mere 90 minutes, a side of beef at the Swift & Co. plant here is graded by federal inspectors, sliced, trimmed, carved into separate sections, vacuum-packed, boxed and labeled.

An inventory computer, which generates shipping orders, can track a box of ribeyes from a Nebraska steer born and weaned near Stratton; fattened outside Chappell, Neb.; slaughtered in Greeley, Colo.; and trucked to a supplier in Las Vegas catering to hotels and casinos.

Sometime in the next week, those ribeyes will be on dinner plates at the Treasure Island Hotel and Casino.

The Omaha World-Herald has tracked steer No. 432 since its birth in order to explore changes in the livestock industry since the discovery in December 2003 of the first case of mad cow disease in North America.

The steer's 16-month life was uneventful, but in that time, the U.S. beef industry was forced to adapt to the loss of major export markets and confront regulatory changes. Market forces have focused on tracking cattle from "gate to plate" and on how to draw better beef value from each animal.

Steer No. 432 was part of a spring calf crop USDA officials initially believed would mark the resumption of U.S. beef exports to countries such as Japan. Key Asian markets barred imports after the United States discovered its first case of mad cow disease in December 2003. The border remains closed.

On a separate front, a group of U.S. ranchers has waged a legal war with government officials and meatpackers over the safety of Canadian cattle and beef. Canadian cattle had been banned from the United States since May 2003 when Canada found its first case of mad cow disease, or bovine spongiform encephalopathy.

U.S. cattlemen and feeders benefited by getting higher prices, but U.S. meatpackers lost jobs while Canada built more meatpacking facilities.

On July 14 -- the same day steer No. 432 received its USDA grade and became boxed beef -- the 9th Circuit Court of Appeals overturned a lower-court injunction barring Canadian cattle imports.

Such national industry issues translate into jobs on the Swift fabrication floor, where workers carve steaks and roasts from about 1,500 cattle during each eight-hour shift.

Because of beef demand, value-added cuts are a major push in the meatpacking industry. Parts of the animal that once may been hamburger or a low-end roast now are being converted into steaks, simply by cutting and trimming the meat in a different way. For example, cutting the muscle off a chuck roast yields flatiron steaks.

While a restaurant may charge $15 for a ribeye steak, a flatiron steak might cost only $9. That has increased demand at restaurants and created new processing lines at meatpacking plants. Demand from restaurant chains is so high, in fact, that supermarkets have difficulty getting those cuts.

"Food service is just soaking it up right now," said David Peterson, vice president of value-added products for Swift.

Swift had cut jobs after mad cow disease fears eliminated export markets and demand for certain cuts. The new value-added processing lines allowed the company to rehire those workers, said Doug Kayl, operations manager at the Swift plant.

"We're adding jobs to this facility we didn't have prior to December," Kayl said.

While meatpackers and university researchers seek more value in beef, the simple, basic hamburger remains the industry's true value anchor. From an average, 800-pound carcass, about 260 pounds end up as ground beef. Beef trimmings are blended into 8,000-pound grinders that produce hamburger chubs with varying degrees of fat.

But value, and price, is not determined solely by fat content. "Angus" is a buzzword in the food industry, and any animal given Angus status can supply the many food-service promotions heralding Angus products.

"Almost everybody is chasing that Angus label for a branded program of some type," said Chris Calkins, a meat specialist at the University of Nebraska-Lincoln. "It has such a recognition of quality with consumers."

Swift Angus beef, for example, supplies Quizno's Sub, which is promoting an Angus sub this summer.

"If you eat one of those Quizno's Angus subs, it comes from here," Kayl said.

Nebraska steer No. 432 graded out as Swift Angus Select. The ribeye showed limited fat marbling. The carcass graded select despite an ultrasound last March showing good marbling and a 99.3 percent chance of grading choice.

That doesn't necessarily diminish the value of an ultrasound, which is meant to provide a projection for an entire group of cattle rather than an individual animal, said Jim Gosey, a UNL beef specialist. Genetics, feeding schedules and undetected illness can all affect final USDA grading.

"There are a lot subtleties that impact marbling," Gosey said.

Dan Ladenburger of Stratton owned No. 432 and 77 other cattle that were fattened at the Chappell Feedlot and sold on a graded program. Collectively, Ladenburger's cattle beat industry averages, with 60 percent of his cattle sold this spring and summer grading high enough for the Certified Angus Beef program.

From carcass data supplied by Swift, Ladenburger learned that of his cattle delivered last spring, 30 of 32 head achieved at least choice grade. Those cattle that were delivered as late as July, including No. 432, did not perform as well, with 14 of 32 grading select. Two even fell to the standard grade.

"That last group really fell," he said. "I was disappointed in them."

So Ladenburger plans to adjust management of his herd. Evidence exists that weaning cattle earlier will advance marbling and lead to higher grades.

"We're going to change our strategy a little bit to try to wean earlier this year," Ladenburger said.

Despite all the data returned to Ladenburger and provided to the buyers about the quality of beef from steer No. 432, one piece of information is absent -- a label designating it a "product of the U.S." Even though major meatpacking companies push source verification and branded product lines, the industry is united in its opposition to country-of-origin labeling.

Advocates claim such labeling will distinguish U.S. products and possibly add a premium price, but packers maintain there is no added value in such labels.

"We've never seen any consumer data saying people will pay more," said Jim Herlihy, a Swift spokesman. "It does nothing but add cost."

Herlihy's comments are reiterated by Gary Mickelson, spokesman for Tyson Foods Inc., the country's largest meatpacker, who claims country-of-origin labeling increases costs because beef from different countries would have to be segregated during slaughter, storage and fabrication.

"It would add to your costs, so where's the payback?" Mickelson said. "Where's your return? If it added value, our company would have been doing it a long time ago."


--Workers cut open a carcass between the 12th and 13th rib, exposing the crucial ribeye that inspectors from the Agricultural Marketing Service at the U.S. Department of Agriculture will examine.

--The USDA has four quality grades for cattle under 30 months of age, but three grades really define U.S. beef -- prime, choice and select.

--Grading is based on the abundance of flecks of fat, or marbling, blended into the red meat. The greater the marbling, the higher the grade, because greater marbling means juicer, more flavorful meat.

--Packers and beef marketing programs typically break down the quality grades beyond the USDA stamp. Predominately black cattle that reach into the upper two-thirds of the choice grade can become part of the Certified Angus Beef label. Swift has an all-choice program called Swift Premium Angus. High-end select cattle fall into the Swift Angus Select program. Such branded programs are becoming more common throughout the industry.


--Nationally, only about 3 percent of all beef carcasses make the high grade of prime, and that meat is reserved almost exclusively for high-end restaurants.

--About 57 percent of beef reaches the next grade, choice, denoted by good, but not great, marbling within the ribeye.

--The next level is select-grade, which accounts for about 39 percent of all beef.

--Below that is a small portion of beef called "no-roll" grade or standard, which accounts for less than one-half of 1 percent of cattle.


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Copyright (c) 2005, Omaha World-Herald, Neb.

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