by Courtney Llewellyn
Recently, the Red Angus Association of America published a report on its website titled “Phasing Out Select Grade Beef.” As one of the three major grades of beef sold to the public – the higher two being Prime and Choice – Select being phased out of the mass market could have an impact on farmers who voluntarily grade their beef through USDA.
A quality grade is a composite evaluation of factors that affect palatability of meat (tenderness, juiciness and flavor). These factors include carcass maturity, firmness, texture and color of lean, and the amount and distribution of marbling within the lean. Beef carcass quality grading is based on degree of marbling and degree of maturity.
Marbling is the intermingling or dispersion of fat within the lean, and the degree of marbling is the primary determination of quality grade. Maturity refers to the physiological age of the animal rather than the chronological age. The marbling is the key to what could be the eventual downfall of Select grade beef, which is leaner than its grade competitors.
A January 1988 article from the Chicago Tribune noted the name change from Good grade to Select grade, implying “a change in attitude by consumers toward leaner, more healthful beef.” But consumer tastes often change, and those who still eat beef want something that has flavor, even if it means it’s a little more fatty and may cost a little more.
The Red Angus Association report stated “Select grade beef has an important past in the cattle and beef business. However, its tonnage is shrinking and will continue to trend lower in the coming decade, based on collaborative research conducted across all beef industry segments.”
The report went on to say “a product that was once a major portion of domestic beef production, accounting for 40 percent of all graded product a mere 10 years ago, Select grade beef is now fading into the background as producers and feeders respond appropriately to market signals encouraging increased levels of marbling. Genetic improvements, grid marketing, changes in feeding practices and the growth of quality-based branded beef programs have drastically reduced the need for this once staple beef product in grocery stores and restaurants.”
Wal-mart may have been a major catalyst for this market shift, as they started stocking their stores with higher quality Choice beef, rather than just Select, starting in 2011, according to Market Watch. “Select beef is tougher and sold mostly in grocers catering to middle- and low-income customers,” the Market Watch November 2011 report reads. “The interest by Wal-Mart in higher quality meat is being welcomed by cattlemen who raise Choice animals. They haven’t always been rewarded for the higher feed costs and better animal genetics it takes to produce choice beef.”
Daniel Mushrush, a third-generation partner in Mushrush Ranches in Strong City, KS, cited in the article, said, “[Wal-mart is] the biggest beef retailer in the world. When they upgrade their product, it’s going to ripple through the market.”
Phasing Out of Select Grade Beef
The first line of the November 2018 report from the Red Angus Association, based in Denver, CO, reads “Select grade beef is on its way out. By 2025, Select beef will likely be a small niche product playing a minor role in the weekly beef trade, and representing just a shadow of its past position in the industry.” It is being intentionally phased out because it is consistently worth less than Choice beef and consumers find it less appealing, even though it costs about the same to produce as Choice. Producers are looking for more valuable levels of marbling. The association wrote it believes Select could become “strictly a residual supply product within five years.”
“The trend is well established with Select beef output being more than cut in half from 2007 to 2017,” said Tom Brink, CEO of the Red Angus Association. “And there is no reason to expect anything but continued shrinkage going forward. Through the Choice-Select price spread, the market continues to communicate that it wants more highly marbled beef. Producers in all segments are paying close attention to this economic signal and are on a path toward the practical elimination of Select beef in the coming decade.”
This conclusion comes from the association looking at key trends in Select grade production and consumption over the past 25 years supported by objective observations and data from industry stakeholders, meat science academics and beef packing representatives. The association said its report can offer valuable perspective concerning how seedstock producers, commercial cow-calf operators, cattle feeders and food service companies should plan their business practices in the coming years.
Because the U.S. beef industry is broad – from giant feedlots to small family-run operations – a large change like phasing out Select beef over the next decade could be interesting, but the move is good for both consumers and producers, based on economic signals.
Dr. Travis O’Quinn, assistant professor of meat science at Kansas State University, believes consumers have been clearly communicating that Choice beef is preferred over Select. “There is sound evidence that Select beef will fail to meet consumer eating expectations about 25 percent of the time,” O’Quinn said. “This percentage decreases significantly at higher quality grades. Thus, we have hard data supporting the fact that [with the increase in Choice beef production and the reduction of Select] the overall eating quality of U.S. beef is improving. This trend represents a positive change made by the industry.”
Prime collects the most dollars, followed by Choice and then Select. Demand for Select has been cut in half over the past 10 years. From 2007 to 2017, the value of Choice increased from $17.1 billion to $31.2 billion; Select went from $11 billion to $7.5 billion. In 2007, the value of Choice beef was 55 percent greater than Select; in 2017 it was 314 percent greater.
Mark McCully, vice president of production with Certified Angus Beef, headquartered in Wooster, Ohio, concurs. “We’ve been observing this beef industry quality shift for some time. While USDA Select graded beef previously represented over 30 percent of the fed cattle, today it represents about half of that,” he told Country Folks. “At the same time, cattle qualifying for the Certified Angus Beef brand have grown significantly and for the last few years have actually represented a bigger portion of the fed cattle than USDA Select.”
McCully added it’s important to note that while the industry has produced much more quality, the marketplace has been a willing buyer of this product and the spreads between Choice and Select, and CAB and Choice, have stayed wide and significant. “These spreads are a true indication of a demand shift, and the number of buyers seeking Select beef is dwindling,” he said, confirming the Red Angus Association’s opinion.
However, while the percentage of cattle grading Choice and higher is definitely on the rise, there is still a place for Select grade, according to Beef Cattle Extension Specialist Michael J. Baker at Cornell University. “Lower end steak houses and supermarkets utilize large quantities of this beef grade. If Select is dropped, then the next grade is Standard, which takes in a lot of B maturity (older) cattle. According to research by Guiroy, et al. (2001), the unacceptable eating experiences went from 13 to 40 percent as quality grade dropped from Select to Standard,” Baker said.
Grades Going Forward
“The beef market today is essentially directing producers to create as many 1,049-pound carcasses (about 1,600-pound fed cattle and the heaviest a carcass can be before being discounted) that grade Prime and upper two-thirds Choice as possible,” the Red Angus Association report stated.
Cattle producers are generally looking for genetics that grade better across all major beef breeds (Angus, Red Angus, Hereford, Simmental, Gelbvieh, Charolais and Limousin). Angus and Red Angus the two highest marbling beef breeds of size.
During the past two decades, there has been a consistent movement toward harvesting cattle at heavier weights with more days on feed. Heavier, longer-fed cattle are more likely to grade Choice or Prime (other factors equal), which is another contributor to the continued decline in Select beef tonnage.
There are 90 main branded beef programs currently listed by the USDA and among the 10 biggest beef brands, nine require Choice or higher marbling.
“Marbling is highly heritable,” McCully said. “The quality grade improvement has been largely through increased use of Angus genetics bred for superior marbling and not significant changes in management or days on feed. Cattlemen can effectively select for marbling and at the same time know that marbling is not adversely impacting other economically important traits. High grading cattle can also be good mothers, fast growers and efficient gainers.”
McCully gave a presentation on this topic this summer at the Beef Improvement Federation, available at www.BIFconference.com/bif2018/summaries/BIF2018GS1MarkMcCully.htm .
“Cattle with the right genetics will marble at lower levels of backfat. Therefore, efficiency in cattle with marbling genetics should not be that less efficient,” Baker explained. “In fact, they may end up being more efficient as feeders take them off feed at lower backfat, which results in lower overall fatness – leading to less feed required.”
What does this shift ultimately mean? The phasing out of Select beef could represent a positive milestone for the U.S. beef industry, as per the Red Angus Association report. Reducing the production of a lower-value product that is less desired by consumers is expected behavior in any business environment. It also implies greater consumer satisfaction with U.S. beef, Select exiting the mainstream beef market, continued emphasis on high-marbling genetic inputs and larger price premiums for high-marbling potential feeder calves.
To read the full report, see www.redangus.org.