July 9, 2010
I continue to field a few questions and read of interest in producing “natural” and in some cases grass-fed beef. In fact, some recent data indicates that the market for natural beef has increased about 19 percent over the last four years. That is an impressive growth percentage. However even though the number is increasing it still accounts for about 2 percent of all the beef that is sold. Grass-fed beef accounts for a very small percentage, perhaps less than 0.1 percent. It does indicate there are more consumers buying natural beef. From a producer’s standpoint, the question must be asked: “How much performance is given up?” or “How much will production costs increase and how much of this increased cost will the consumer be willing to share?”
The term “natural beef” is different for various programs and is dependent upon how the company defines natural. Some accept some feed additives such as Rumensin, while others do not. Some do not allow implants at any time in the calves’ life while at least one company says no implants 120 days before harvest. In this case, even though the beef may be labeled “natural” it is no different than beef produced in many conventional feedlots. Generally, at the market places “natural beef” is interpreted as no growth promoting implants or feed additives and no feed grade antibiotics and in some cases no antibiotics at all, even for disease treatments. Even though USDA is “supposedly” revising the definition of natural beef, currently it defines natural beef as beef that has had no additives, such as seasoning, added to processed meats (like sausages) which is different than what most producers and consumers think when they hear “natural beef.” It is my understanding that naturally-grown beef is or will be defined as cattle raised without any antibiotics, growth promotants or animal by-products. Organic beef, in contrast, has much greater restrictions and rigorous rules that are clearly defined. Interest in grass-fed beef has also increased and usually the grass-fed beef is associated with “all natural,” although today it is a very small part of the beef industry and only in niche markets.
It is interesting to note a recent extensive research project by Dr. Steve Smith at Texas AgriLife Research showed that contrary to popular perception, ground beef from pasture-fed cattle had no beneficial effects on plasma lipid in people consuming pasture versus grain-fed beef. Even though the grain-fed beef was higher in mono-saturated fat, which is often assumed to have a bad effect on humans cholesterol and LDL, in fact when fed to humans in a controlled research trial they found just the opposite. Dr. Smith stated, “What I’m showing is that the longer cattle are fed a corn or grain based diet the healthier the product will be.” As would be expected, the proponents of grass-fed beef hollered “foul!” However, to my knowledge, this is the only good study that actually conducted controlled studies on humans. All other claims have been based on assumptions and associations.
Even though there is no question that the perception about natural or organic being healthy, we must acknowledge that beef produced with approved products have been proven totally safe. Thankfully we have the USDA to assure consumers in the U.S. the safest food supply in the world.
The questions arise as to how much more will it cost to produce natural or organic beef. Some have argued that there is no decrease in production, but research shows differently. If a producer chooses to enter into a natural beef contract or alliance it is important to calculate the added costs and make sure they are adequately compensated. I recently made some calculations to estimate added cost for producing cattle from birth to harvest with no implants, ionophores (Rumensin), antibiotics, insecticides or Optaflexx or Zilmax. Even though my assumptions could be argued, I assumed that implants would increase gain 9 percent and feed efficiency 5 percent, parasite control 2 percent for gain and efficiency, ionophores 8 percent for feed efficiency and Optaflexx or Zilmax an increase of 14-20 pounds carcass weight. The benefits for the additional performance would be equivalent to $132 per head. When the added cost for the products were considered, which I estimated to be $24.80, then the cattle raised with available technology yielded an additional $108. This would mean an additional $9 per hundredweight live would need to be paid for the natural cattle. At times producers have produced “all natural” cattle and then ask how they can find a market that pays a premium for them. In most cases these markets must be sought out early and follow the exact requirements of the “natural” company. This cost must be passed on to the consumer in higher prices for beef or the producers will have to assume the cost which will lower profits or increase losses. This does not include added costs for bloats or other additional health problems when ionophores and parasite control is not utilized. Similar calculations for grass-fed cattle involved considerable more assumptions, but I roughly calculated that grass-finished cattle may need to sell for over $1 per pound live to justify all costs. This is why the cost of ribeye steaks that I recently ordered off the Internet from a grass-fed beef company was $27 a pound.
A recent research trial conducted at Kansas State University compared cattle that were implanted and fed Rumensin and finished in the feedlot to those with no implants or Rumensin. In their study the cattle that were not implanted or fed Rumensin cost approximately $4 more per hundredweight or approximately $24 per head just when they were in the feedlot. This doesn’t account for differences in cost up to weaning or the use of insecticides.
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In summary, niche markets for grass-fed beef raised without added hormones or other feed additives exist, however cost of production is considerably higher than cattle fed in feedlots. Producers will need to calculate the added cost as they consider producing cattle without growth promoting products. Hopefully, economics rather than government regulations will determine how much beef will be produced with or without current technology.