The Cost of a Cow: Part 6 - Commercial Beef and Profit
Part 5 left us with two scenarios: the first is that you are butchering a steer that the farmer raised from a calf, the second is that the farmer bought the steer after it was weaned from another grower and then got it to finishing weight. The cost per pound of meat in your freezer for those two scenarios is $4.42/lb and $4.85/lb, respectively.
Let's now address the following questions: 1). Why is beef so much cheaper than this at the store or 2). Why am I paying a local farmer $7/lb of meat?
The first question is answered easily. The ground beef at the grocery store is likely from a salvage cow. Basically, it was an older cow that had no value for steak, it was processed at a meat packing plant (which is far more reasonable than a local butcher), and it was part of a large group of animals that was slaughtered at the same time. All parties involved in the chain associated with your grocery store have a lower profit margin but get away with it due to the amount of animals they process. We aren't talking like 10 cows per day, we're talking like over 100, and sometimes several hundred head per day are processed at these facilities.
The second part of the grocery store beef is that they were likely raised in a feedlot if they are steak-quality animals. Feedlots can "finish" or fatten out a young animal much cheaper in feed costs and much faster than our small farmer can. Often times these feedlots will use additives (which might be something as simple as baking soda) that allow them to feed far more grain and carbohydrates to the animals than their stomachs would normally be able to handle.
You can also find grass-finished animals that were brought to butchering weight in a feedlot as well. These were probably not pushed as hard as the ones that are fed grain, but again, finishing a large number of animals will almost always be cheaper than the few animals that our small farmer produces. Keep in mind that "grass" can be anything from dry hay to pasture as long as mature or "hard" grains aren't in the feed. I think you could even get away with potato skins and call it grass finished (we don't). So, the first question is answered by economies of scale. Costs per head are lower for the grocery store meat. If the small farmer tried to compete with them, he would almost immediately start losing money and have to quit farming eventually. Make sense?
Why am I paying a local farmer $7/lb for beef? Well, you're basically covering the cost of raising your beef and some profit for the farmer to keep his lights on. If you look at what you're getting: burger, steaks, roasts, etc. and what you'd pay for them at the grocery store, you end up with more expensive burger, but really cheap T-bones and about the same price on the roasts. So, you're really not paying that much more or maybe even a little less than you would at the grocery store, it's just that you're buying it all at the same time and the total price might be a bit of a shock.
You have to consider your normal beef buying habits: would your normally spend $100 on T-bones in a given buying period? Maybe not. But if you part out what each cut of meat you're getting would cost, the numbers look pretty good even at $7/lb. Even better if you are buying a quality grass finished animal. How much does grass fed tenderloin go for at the store? T-bones? Ribeyes? Broth bones?
All that said, I would make the point that the biggest benefit of buying from a local farmer is that you know what kind of animal you are getting, you know what it was fed, how it was treated, and you are helping ensure, even in a small way, that next time you are looking for local beef, you have a better chance of finding it.
How much is that worth to you? Let me know in the comments below!
Part 7 will actually summarize everything and talk about cost reduction efforts going on here at KD Farms.
Be Blessed. - Kenny
PS. Please feel free to share my blog and/or website with your friends. I'd love to hear what folks would like to learn or hear more about related to farm life!
Cows like to play in the water, too!