New USDA Cutout Value Report Should Benefit Cattle Producers

A new report from the U.S. Department of Agriculture should provide cattlemen a clearer picture of the total value of boxed beef, according to the National Cattlemen’s Beef Association (NCBA). Release of the new data, encouraged by NCBA, began last week and will reflect a more accurate producer-to-retail price spread than was previously reported.

According to Eric Davis, chairman of the NCBA Profitability Think Tank, which pushed for quick release of this data, the National Comprehensive Boxed Beef Cutout report could provide an alternative pricing point that would serve as the basis for pricing formulas and grids.  Davis, who also serves as NCBA president-elect, said the report will provide a weighted average boxed beef price in addition to the Choice and Select cutout values.

The Agricultural Marketing Service (AMS) report covers almost all of the fed steer and heifer beef sales activity of the major packers, and will be in addition to the daily and weekly Choice and Select boxed beef cutout reports.  The report resulted from information available through 1999 mandatory price reporting initiatives, also pushed by NCBA. 

 “We’re pleased that USDA moved so quickly in making these numbers available,” said Wythe Willey, NCBA president.  “They’re part of the total picture we producers need as we make production and marketing decisions day-to-day.” 

According to USDA, these new data should cover approximately 60-65 percent of total boxed beef.  Not included will be information from smaller plants not covered by mandatory price reporting, some frozen exported product, beef from dairy steers and heifers, older product nearing sell-by date, inter-company transfers and boxes from cow and bull plants. 

Retail Prices Coming Soon

Davis, a beef producer from Bruneau, Idaho, said additional data requested by NCBA and identified as important by Think Tank members included a Retail Price Report that would provide accurate, volume weighted retail price information.  The information would include as-sold, weighted-average monthly retail prices captured by actual supermarket store scanners.  This USDA Economic Research Service (ERS) report, a result of voluntary industry and government cooperation, will be launched in the fall.

“For some time we’ve needed a better idea of how beef is selling through retail, as well as what retailers are charging for beef products,” said Davis.  “This extensive report will really go a long way toward rounding out our industry’s database of useful information.”  Data in the report will be taken from 25 geographically diverse grocery retailers and capture more than 20 percent of U.S. supermarket sales.

 “Both of the reports are critical to the producer’s ability to adjust to changes currently going on in the market,” said Willey, a beef producer from Cedar Rapids, Iowa.  “While there are factors that we have absolutely no control over – the weather and our cost of inputs, for instance – there are ways we can adjust our efforts to gain competitive advantages in our businesses.  Availability and use of this information is part of that process.”