The nuts and bolts of the red meat industry can be overwhelming to the uninitiated livestock farmer. To help deepen your understanding of the broader market, we’ve compiled a list of terms commonly used to describe the state of the market.
Farmers looking for insight into the pricing of their meat products need to have an understanding of the terminology used in reports like the latest Red Meat Organisation (RPO) beef market trend report. The pricing fluctuations of various meat items have many elements and descriptors.
Dr Frikkie Mare, a specialist in agricultural economics from the University of Free State, explains the meaning of some of the more commonly used reporting terms.
Carcass conformation is linked to carcass quality. This study explains that carcasses with short legs that are plump and blocky contain more high-priced cuts, more meat, and less bone than carcasses that are longer in the leg.
South Africa’s carcass conformation classification runs from one to five, with one being very flat and five being very round.
Carcass grading system
In the latest Red Meat Organisation (RPO) beef market trend report, animals classified as “A2/3” are listed as having a 5.7% higher price than in the previous month. This is called the carcass classification system, which is used to identify the animal’s age and the amount of fat it has, Mare says.
“The letter is the age of the animal, and it can be A, AB, B, or C. A means [the animal has] no permanent teeth, AB [means] one to two permanent teeth, B grades [have] three to six permanent teeth, and then C grades are animals with more than six permanent teeth.”
The number next to the grade, says Mare, can range from zero to six, with zero indicating no fat on the carcass, and six indicating an excessively overfed carcass.
For most consumers, the best fat grades are two, which means no fat, and three which is a medium amount of fat.
The carcass price is a per kilogram price for the cold carcass of the animal. Mare explains it is the “total price that the producers will receive for the carcass without taking travelling expenses or commission into account. In other words, it is as if the animal was slaughtered at the farm gate.”
Farm gate pricing
Farm gate pricing refers to the amount the producer will be paid when the animal leaves their farm. Mare explains that defining the factors that influence the farm gate price is difficult.
“Prices on all levels are usually determined by supply and demand, and supply and demand will then also influence the farm gate price or the price that a farmer receives for his cattle or sheep, or other small stock.
“So, what can influence the farm gate price versus the market price is usually excessive transport where you have to transport animals over a long distance. That cost must be subtracted from the market price that you get, or where the commission of auctions is quite high. So, it’s factors that increase the price after the animal has left the farm gate.”
Mare explains that the key to calculating the cost of your live slaughter animals is to determine the dressing percentage of the animal, which is the percentage of the carcass weight divided by the weight of the live animal.
“It basically shows you the yield in carcass which a live animal will deliver. So, if you say the dressing percentage of a calf that was slaughter ready is, for example 58%, it means that the cold carcass weight was 58% of the live weight of the same animal.”
Animal hides are a relatively lucrative aspect of animal production, especially for feedlots. Hides are defined as the skin of the animals, and are taken to equal 12% of cold carcass mass. This guide states that hides are graded, and that they are “taken as equivalent to 12% of cold carcass mass. Hides are graded and the value of a hide is obtained by multiplying the quoted price for the relevant hide-grade by the mass of the hide.”
Weaners, which are defined as are weaned cattle that are either under 12 months old which have been either, or are now over 12 months old and no longer classify as a calf. In South Africa, the price of weaners are important as the weaner system is one of the primary beef production systems in the country.
According to this guide by the agriculture department in Kwazulu-Natal, the weaner system is when “the cow herd runs on one farm and the progeny are moved elsewhere for further processing.”
Mare explains that about 70% of weaned calves in South Africa’s formal sector are sold to feedlots, where they are finished.
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