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Backlash Against LFTB Changes Market Dynamics

Article-Backlash Against LFTB Changes Market Dynamics

Backlash Against LFTB Changes Market Dynamics
So far, the furor surrounding lean finely textured beef has cost $10/cwt. in the 50% lean trimmings market. Slaughter has slowed and the drop credit has declined the equivalent of about $6-$7 per head as packers figure out how to handle the situation.

Beef Products, Inc. (BPI) announced last Monday that it’s temporarily suspending operations at three of the company’s four plants that process lean finely textured beef (LFTB). For the record, the plants are located in Garden City, KS; Amarillo, TX; and Waterloo, IA. Those plants represent more than 650 jobs.

As you likely know, BPI was forced to suspend operations by consumer backlash, based on false information presented in an ABC News report March 7. At least that was the trigger.

LFTB is beef. It’s safe. It’s USDA-approved. It’s been in use for decades, in billions of meals. But, consumers clamored so loudly against it that major grocers decided to quit offering ground beef containing LFTB.

LFTB has been the primary source of 100% lean beef protein used in high-demand products such as 90% lean ground beef, according to the National Meat Association.

If you’re unfamiliar, think of it in these inexact terms. Grain-fed beef carcasses produce lean trim that’s approximately 50% fat and 50% lean. Mixing the lean grinds of hamburger consumers want requires adding more lean meat to the 50-50 mix. That’s where LFTB has been such a boon. Mechanically, lean is removed from fat in 50-50 lean trim, leaving basically 100% lean. That 100% lean can then be mixed with fattier mixes to arrive at the 84% lean, 90% lean and so on that you see in the meat counter.

Before the advent of LFTB, coming up with lean ground beef meant using higher value cuts of lean muscle or importing lean trim from other countries where the cattle are, well, leaner. If consumers continue turning their noses up at LFTB, that’s the way it will be again. That means less value for the carcasses produced in this country and higher ground beef prices for consumers.

No one knows for sure how this will play out, but there is already economic fallout.

“So far, the impact of the misrepresentation of LFTB has cost the 50% ground beef market about $10/cwt.,” market analysts with the Texas Cattle Feeders Association (TCFA) said Friday.

During the past week, the drop credit – in part tied to the LFTB mess – had plunged 55¢/cwt. or roughly $6-$7/fed slaughter animal.

According to a statement from Tyson Foods last week, “…The reduction of BPI's operations means less lean meat will be recovered and more of the beef trimmings will be converted into lower-value products…we believe the decrease in BPI's production will result in less lean beef available in the market and may result in higher consumer prices. Alternatively, we believe there may be an increase in the supply of some of the raw materials used to produce ground beef, and this may result in lower values that could ultimately affect livestock prices.”

Some retailers are sticking with LFTB. For instance, Hy-Vee, with 235 retail stores in eight Midwestern states, explained in a statement last week: “Following our recent decision to stop purchasing ground beef containing LFTB, we heard from many customers who asked us to continue carrying this product. They’ve sent us a clear message: They want a choice when it comes to ground beef, and they want to support companies that provide thousands of jobs in our Midwest trade area. In response to this feedback, Hy-Vee has made a decision to offer both kinds of ground beef – both with and without LFTB. Both products will be identified so customers can determine for themselves which type of ground beef they want to buy.”

TAGS: Prices
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