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Good And Not So Good

Written by Dennis Sun

     We’ve talked in previous issues touching on the impacts of beef exports and how important those imports are to the beef industry. While there may have been a parcel of “ocean front property” advertised here in Wyoming, we are a land-locked state. Until one views the numbers on exports, we have trouble grasping the importance. I think it’s quite a feat just getting chilled or frozen meat from Colorado up to Casper, never mind getting meat to Japan or eastern Europe.

While I wasn’t able to attend the recent National Cattlemen’s Beef Association’s Winter Convention in San Antonio, Texas, I’ve read reports of some of the speakers there. One speaker at the Cattlemen’s College, Paul Clayton, senior vice president of Export Services of the U.S. Meat Export Federation, was part of a panel of experts who are knowledgeable of the impacts of the global demand on the U.S. beef market. I didn’t realize just how huge those impacts were and how it affects even us in land-locked Wyoming. 

To start off, Clayton said that the U.S. brings in around $7 billion in exports of meat and close to $5 billion in the meat byproduct business. Those are huge numbers, but more important is that those exports add around $300 per head in the bank accounts of producers here at home. Those numbers, in my mind, are exactly why we need to support not only our beef checkoffs but also our beef associations. 

We all know about the traditional cuts of beef and their importance, but just as important is the byproduct market that, according to Clayton, “has been a key player in the increasing carcass value, this is referred to as drop credit.” When we butcher a beef, I think of these byproducts as the “gut pile” where you would find the heart and liver. I never dreamed there was so much value in that pile that the dogs chewed on and rolled in.

Clayton describes the drop credit, or byproducts, as hides, organs, tails, heads and also rendered products such as tallow, gel bone, blood meal and other pet food and pharmaceutical components. He went on to say hides account for 48 percent of the market. Variety meats – including tongues, liver, etc., were at 33 percent, and 19 percent comes from the rendered products. 

 Something I wasn’t aware of is that Paul Clayton said is, because of U.S. environmental laws, there is no leather tanning in the U.S. All of those products have to be sent to other countries such as Mexico, Italy or Asian countries. With a total byproduct sale value of $5 billion, hides bring in around $2.6 billion. 

Clayton said that since 2011, the drop credit value has increased from 27 cents to $21.86 in 2013. That is a big jump. Sometime when you are on the computer, look up the USDA By-Product Value of slaughtered fat steers. It is kind of amazing what all has a value. In the beef markets, we have always seen the hide and offal price. Earlier this last week, it was at $14.87 per hundredweight live, down 15 cents from the week before.

And don’t forget the impact of the big longshoreman and dock strike on the West Coast. It really hurts beef exports, and if it gets solved, they say it will take 45 days to clear out the backlog. But despite all of this, there is money in those piles.