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Economic Fallout From LFTB Continues

Article-Economic Fallout From LFTB Continues

Economic Fallout From LFTB Continues
Repercussions intensified last week from consumers demanding that retailers do away with ground beef containing lean finely textured beef.

Repercussions intensified last week from consumers demanding that retailers do away with ground beef containing lean finely textured beef (LFTB).

AFA Foods, one of the nation’s largest beef grinders, filed for bankruptcy last week, citing LFTB fallout as one of the reasons. That followed the previous week’s idling of three LFTB processing plants by Beef Products, Inc.—one of the nation’s leading LFTB processors.

“…What is important about these closures and bankruptcies?”  Len Steiner and Steve Meyer ask in Thursday’s CME Group Daily Livestock Report. “They are backing up a lot of 50% lean beef trimmings and beef fat trimmings! Regardless of what you think about LFTB, the market impacts of this situation are apparent…the weekly average price of 50% CL (chemical lean) beef trimmings has dropped from roughly $1/lb. at the end of February to just $0.83/lb. last week. And, prices have plunged even further this week, with yesterday’s published quote at $0.59/lb. and some reports that product was being offered at $0.48 to $0.52/lb.”

Moreover, Meyer and Steiner point out the economic fallout extends beyond the beef complex.  They explain, “Lower grinding beef values have likely played a role in lower pork trimmings prices since some of these products are ready substitutes in processed meats…”

Rather than increasing seasonally as usual, Steiner and Meyer say pork trim prices have declined steadily since March 1.

Apparently, labeling ground beef with or without LFTB is the next immediate battleground.

Rep. Pingree (D-ME) introduced the Requiring Easy and Accurate Labeling of Beef Act that would require any beef containing LFTB to have a label at the final point of sale.

As well, at least two of the nation’s primary beef packers are reported to have submitted a request to USDA that would enable them to label ground beef accordingly.

 “Rejecting lean finely textured beef will have consequences that many consumers will not like,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “First and foremost ground beef, and especially lean ground beef, will increase significantly in price as it will require more pounds of the more expensive 90s (90% lean beef trimmings) to produce ground beef.  This may well contribute to the demise of the dollar menu at your favorite fast food hamburger chain…whether they use LFTB or not.  This will also result in increased imports of lean beef, which may be a concern, or a consequence, that consumers do not like.” 

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