Can we “Meat” in the Middle?

Sustainability and Profitability in the Beef Industry

The term sustainability has evolved into a general reference to environmental metrics. We might not all have the same exact ruler, but we know when that word surfaces we’ve begun a discussion circling around carbon emissions, ecology, and the long term impact of supply chains on the environment. And, let’s be honest, even some of those words need pages of explanation depending on the table you happen to be sitting at. 

A productive conversation around sustainability will identify a single point in a supply chain and analyze it both for value added and inputs required. If there is a way to maintain value and minimize or streamline inputs, then there is a path that heads in the direction of sustainability. In the beef industry, one of the most challenging points of the supply chain is processing. Because the processing phase has so many fixed expenses it wields a strong influence over other points on the chain. 

Beef Processing Plants are Plagued With Fixed Expenses

Labor, waste management, compliance fees, and regular monthly operational costs like utilities and mortgages are fixed expenses that, no matter how many animals come through, must be paid.  In fact, these expenses can amount to 50%-70% of yearly totals that only serve to ensure the doors of the facility stay open.  Add to these fixed expenses, the fluctuating costs of purchasing, transporting and feeding cows and the upfront expenses incurred dictate how processors interact with both suppliers and consumers. It feels risky to implement any sweeping changes that could cut into profits.

Do We Need a Different Value Metric for Beef?

Value in the beef industry has traditionally revolved around fat and marbling. Cows are raised and assessed based on this quality and cuts of meat are packaged and priced according to this  value structure. Even if ranchers are willing to test new feeding methods for the sake of using less inputs, building better nutrition or shortening the time from farm to market, processing plants might not be willing to buy the “more efficient” animals. The final value delivered in the form of the price tag still dictates buying trends. Foregoing profit for the sake of efficiency isn’t a practical means of increasing sustainability. 

Similarly, feeding methods that can reduce environmental impact on the ranching side often cause inefficiencies at the point of processing. Part of building practical sustainable solutions is understanding the cost per unit of production. Feeding methods, genetics and in some cases, the regional requirements for an animal to survive can play a part in the size of a cow.  

The average weight for a cow going to market falls between 700 and 1,000 pounds, yet the ideal processing size for maximizing profit is much narrower. For every cow that is too big and doesn’t match machine calibrations or amounts to access waste, profit is lost. For every cow that is too small, that uses more energy that it can be sold for, profit is lost.  As a general rule, the bigger cows generate more profit. A 900 pound cow is an ideal weight for a processing facility.  

Is There a Sustainable and Profitable Option?

Can we grow cows that are easy on the environment without changing the age of slaughter and elongating their time on feed or negatively impacting processing and packaging?  It’s here that the conversation turns towards predictability.  Since the processing point of production profits off of predictability,  ensuring the cuttability, or knowing how a cow will price out when packaged, is important. While sustainability may be redefining the term quality in the beef industry, it doesn’t have to eliminate economic efficiency.

If ranchers pursue sustainability by shifting grazing strategies, changing feed mixes and assessing genetics, then perhaps processing facilities will lean into technology to maintain predictability. In fact, panelists at the American Simmental Association's Fall Focus which included researchers, geneticists, ranchers and processing experts agreed that technology will likely chart the next stages of sustainability shifts. From grazing, to processing, to genetic breeding, precision technology and artificial intelligence are presenting solutions to obstacles faced by the beef industry. 

Labor shortages and costs are a combined obstacle. Not only does labor represent a significant portion of processing costs, it’s also been in short supply in recent years. Artificial intelligence is starting to fill in the gaps while also offering sustainable practices. Vision technology has made robots just as effective if not  more equipped at butchering and deboning livestock than humans. The precision technology can assess bone structure and reduce waste while improving yield with precision cuts.

When it comes to genetics, artificial intelligence technology is able to compile and assess information faster. The benefit to the beef industry is that research is being done at a faster pace. While there is no perfect cow, AI is helping us understand how to leverage genetics to benefit both our food sources and the environment.

There’s a lot to be proud of in the beef industry where many points of the supply chain are collaborating to decrease inefficiencies in relation to sustainability; and also protect a very valuable piece of our food supply and profitable part of our economy.