Producer Share Dips, But Remains Higher Than a Year Ago

During the second quarter of 2003, the producer’s share of beef’s estimated retail value averaged about 47.4 percent, about 2 percent less than in the first quarter of the year. On a monthly basis, producer’s share improved in May but dropped off in June due to slightly lower fed cattle prices and skyrocketing wholesale (cutout) beef prices. Nonetheless, compared to the second quarter a year ago, producers have captured about 4 percent more of the beef retail value. In the second quarter of 2003, the producer’s share of the retail value remained slightly below the previous 5-year-average of 48.6 percent.

The estimated packer share of retail value for the second quarter was above a year earlier at 11.3 percent, which was the highest for any quarter since 1987. Packers increased their share of beef’s retail value by about 3.9 percent from the first quarter of 2003. Compared to the previous 5-year average, the packer share was about 1.7 percent larger in the second quarter. However, given the recent upswing in fed cattle prices, the packer margin will more than likely narrow in the third quarter. In recent years, the packer share has peaked in the second quarter and then declined modestly for the balance of the year.

At about 41 percent, the estimated retailer’s share of beef’s retail value continued to remain below a year ago levels in the second quarter. On a quarterly basis, the retailer share has been on the decline since the third quarter of 2002. Retailer share of beef’s estimated value has fluctuated each month during the second quarter, despite higher retail beef prices (calculated by the Department of Agriculture using data from the Bureau of Labor Statistics). The retailer’s share was well below the prior year, about 4.5 percent lower in the second quarter and was slightly below the second-quarter 5-year average.

Source:   Erica Rosa and James Robb - Livestock Marketing Information Center