By
David R. Hawkins
Michigan State University

• In colonial America, cattle were used for milk & work and were not harvested for beef until they were several years old.
• The first meat packing plant was established in 1636 by William & John Pynchon in
Springfield, Massachusetts.
• Beef and pork were “packed” in barrels with salt as a preservative.

• In 1756, the Brighton market, near Boston, became the first recorded public auction market.
• In the early 1800’s, excess grain produced in the Ohio River Valley was fed to livestock. The cattle were driven on foot to the eastern cities to be slaughtered.

• During the U.S. Civil War in the 1860’s, cattle from Texas & Oklahoma were driven to railroad towns in Kansas & Missouri for shipment to the eastern cities.
• In the late 1800’s, stockyards and packing plants were built in midwestern cities.
– Chicago (1865)
- Kansas City (1871)
– St. Louis (1873) - Omaha (1884)

• In 1875, refrigerated rail cars made it possible for cattle to be slaughtered near the production site and the beef to be shipped to consumers.
• In 1906, the Meat Inspection Act was passed.
• The Packer and Stockyards Act, passed in
1921, provided market regulations.

• The USDA Federal Meat Grading Service was set up in 1926.
• By 1942, large commercial feedlots emerged. Large numbers of semi-trailer trucks hauled both grain and cattle.
• The Humane Slaughter Act was passed in
1958, which regulated packing plant procedures.

• By 1960, the large commercial feedlots in the high plains were well established.
• New packing plants were built near the feedlots and the large terminal markets began to close. Boxed beef began to influence the industry.
• Beef carcass grading standards were revised in 1950, 1965, 1976, 1987, 1989 & 1997.

• In 1990’s beef industry focus shifted to the consumer and the product.
• National Beef Quality Audits were conducted in 1991, 1994, 1995 & 2000.
• Food safety concerns have resulted in the development and implementation of
HAACP procedures.

• About 70% of the cattle harvested in the
U.S. have been fed grain in a confined feedlot for at least 100 days prior to harvest.
• The remaining cattle are classified as “non fed” cattle. Included are cull dairy cows, beef cows and bulls plus grass or forage fed steers and heifers that have not received supplemental grain.

• About 80% of the beef is sold as “boxed” beef, primal and subprimal cuts from which most of the bone and excess fat have been removed.
• Boxed beef has increased the efficiency of the industry by reducing transportation costs on lower value byproducts (bone and fat).
Shelf life in the retail store is also improved.

1. IBP Inc. - $9.3 Bil.
2. Excel Corp. - $7.0 Bil.
3. ConAgra Beef - $ 6.0
Bil.
4. Farmland National -
$ 2.8 Bil.
5. Packerland - $ 1.3 Bil.
6. Nebraska Beef - $750
Mil.
7. Greater Omaha - $620
Mil.
8. American Foods -
$581 Mil.
9. Moyer Pack.-$561Mil.
10. Rosen Packing-
$460Mil.
11. Taylor – $ 375 Mil.

• IBP Inc. - Joslin, IL
• Packerland - Plainwell,MI & Green Bay,WI
• Taylor - Wyalusing, PA
• Moyer - Souderton, PA
• Corn Belt - Detroit, MI

• IBP was purchased by Tyson Foods in early
2001.
• Smithfield Foods acquired Moyer Packing in June, 2001 and Packerland in October,
2001. They tried to acquire American Foods and then later withdrew the offer.
• Excel purchased Emmpack Foods in August and Taylor Packing in December, 2001.

• Future Beef Operations opened in Kansas in
August.
• Brawley Beef was scheduled to begin operation in California in December.
• No new plants are being proposed for our region.

• IBP, Excel, ConAgra, Smithfield &
Farmland harvest 80% of the cattle processed in the U.S.
• These same five firms also harvest 65% of all the hogs processed in the U.S.
• IBP had sales of $ 16.95 Bil. for 2000.
• In 1996, 15 % of IBP income was from value added products vs. 40% in 1999.

• The sale of IBP to Tyson Foods was completed in 2001.
• The new company will control
– 28% of beef market share
– 18% of pork market share
– 25% of chicken market share
• The contending bidder was Smithfield
Foods, the largest U.S. pork processor.

• IBP – 10,000 hd/day
• Excel – 6,400 hd/day
• ConAgra – 6,200 hd/ day
• Farmland – 2,700 hd/ day
• Smithfield – 2,085 hd/ day
• Choice Fed Cattle
• Choice Fed Cattle
• Ch. British & Cross
92% Fed, 8% Non Fed
• Black Angus Fed
• Holstein – 75% Fed,
25% Non Fed +
Choice Fed Cattle

• Food safety
– E. coli 0157:H7
• Consistency and quality of product
– Branded products
• Labor shortage to staff plants
• Captive Supply
• Marketing Alliances

• Cattle owned or controlled by packers at least 2 weeks prior to slaughter.
• Forms of captive supplies
– Forward contracted cattle
– Packer owned cattle in custom feedlots
– Marketing agreement cattle
• Major concern is reduced market information

• Secure cattle supply for efficient plant operation
• Input into or control of animal quality
• Risk management
• Market power in price discovery

• Assured of buyer for cattle
• Risk management
• Access to carcass data on cattle
• Value based marketing
• May receive favorable financing
• Increase feedlot utilization
• Develop positive relationship with packer

• Determined by marbling and maturity
• Prime, Choice, Select and Standard are grades for younger cattle (A or B maturity)
• Commercial, Utility, Cutter & Canner are grades for older cattle. Most of this beef is used for grinding and further processing.

Quality Grade
Prime
Upper 2/3 Choice
Low Choice
Select
Standard & Lower
Actual % Ideal %
1% 7%
11%
36%
21%
34%
47%
5%
38%
0%

• Numerical score: 1 (lean), 2, 3, 4 & 5 (fat) that equates to the % boneless, closely trimmed retail cuts (BCTRC).
• A 700 lb. carcass with a yield grade of 3.0
(50% BCTRC) would yield 350 lbs. of
BCTRC of beef.

Yield Grade
1
2
3
4
5
Actual %
17.9%
50.6%
26.5%
4.6%
0.4%

• More Prime and Choice carcasses – 51% in
2000 vs. 48% in 1995.
• Fewer “B” maturity carcasses in 2000.
• No major shifts in excess fat production.
• Fewer cattle with horns = less bruising
• Major improvement in frequency of injection site lesions. (>3% in 2000 vs. 22% in earlier audits)

• There is still a need to improve uniformity and consistency of cattle, carcasses and cuts.
• Tenderness is still a concern.
• Goals for the 2005 NBQA are to eliminate
Standard quality grade cattle as well as yield grade 4 & 5 cattle.