Howdy folks! Oh how things have changed in 2024! Butchering costs have gone up, locally. Demand has gone up, and my cow herd is shrinking! It’s a good place to be in as far as getting beef sold, but it’s a bad place to be in if you want to grow your herd! Particularly so if you want to buy steers, pairs, or mother cows.
I just hauled some yearling heifers to the auction, and despite them being the wrong color, averaged $1550 apiece for them, AFTER hauling, commission and fees. They only weighed 680ish lbs, too! I had a little one that was 487 lb go for 2.57/lb live weight! Steers are going for even more money! It’s nuts what a national drought and sell off can do to cattle prices!
That said, I see a lot of producers/ranchers/farmers asking about how to price their animals they want to sell for beef. Grain fed guys are in fairly good shape, usually, but it’s the grass fed producers who seem to undershoot their market more often than not. Let’s take a look at the April 2024 USDA report for grass fed beef. The link to it is here.
If you scroll down and look at the bottom, you’ll see “Small and Very Small Producer Carcass Price”. That is a hanging weight price of grass fed beef. The folks who have contributed to this number are in the Grass Fed SVS Producer Program, so the USDA has a fairly accurate view of what they’re getting for their animals.
You can see that a dressed carcass (meaning hanging weight) is going for anywhere from $3.15-$5.45/lb. The average is $4.31/lb hanging weight. A dressed carcass does not include packaging fees. That price is JUST for the animal, after being slaughtered and is at hanging weight.
Now, as I’ve discussed in previous blogs, “hanging weight” is not the same as a finished weight, or a cut and wrapped weight. Hanging weight is what you get when you take a live animal, kill it, let it bleed out, remove the hide, stomach, organs, head, tail, and fetlocks (basically the hoof up to the first joint of the legs) and hang it up on the rail for aging (thus, hanging weight, also sometimes called “rail weight” or “on the rail”). The big guys differentiate between hot hanging weight and cold hanging weight and split hairs on it, but every butcher I’ve used weighs the animals immediately after slaughtering, and that’s what I have to pay based on. Yes, the animals dehydrate and lose weight as they age, meaning their hanging weight decreases, but on a small scale, you typically get charged based on hot hanging weight, and I charge my customers based on hot hanging weight as well. The carcasses typically don’t get weighed again in the process, anyways.
So, national average for grass fed beef is $4.31/lb hanging weight for dressed carcasses, and the average packaging fees are somewhere between $1/lb hanging weight and $1.50/lb hanging weight, depending on where you are in the country. As a point of reference, we’ll use an estimate of $1.25/lb hanging weight for packaging.
So, your average grass fed beef is going to cost you your carcass fee plus your processing fee, or in this example, $5.56/lb hanging weight. Now, to estimate what your actual take-home meat is going to be, you can do some math and get fairly close, in most cases. Grass finished animals typically do not have a large amount of intramuscular fat, nor do they typically have a huge fat cap as you’ll see in grain finished animals that are shooting for prime grade. This means that the cut out ratio, or finished weight to hanging weight ratio is typically higher for grass fed animals (if finished properly and not butchered too early).
Mine are typically around 0.6 or 0.55 for cut out ratio, so if you pick a ratio of 0.55, you can estimate your finished weight cost by dividing your total hanging weight price by the cut out ratio. In this case, you take $5.56 and divide it by 0.55. That gives you a finished weight price of $10.10/lb. Now, that ratio can change quite a bit depending on if you get all boneless cuts (ratio goes down), all burger (ratio goes further down) and, as an example, lean cuts and lean burger (ratio goes down). If you get bone in steaks, bone in roasts, and include meaty soup bones in your cut order, your cut out ratio goes up! As an aside, soup bones and offal are typically not included in the cut out ratio.
I check my cut out percentages by doing bone in steaks, roasts, and short ribs, and I pull out the soup bones and weigh the packaged product. That typically gets me closer to the 0.6 range for cut out ratio. If you do boneless roasts and steaks, you can drop up to 10-15 lb of finished weight PER QUARTER on a 900 lb carcass. If you’re charging based on finished weight (which I do for quarters), you can lose a lot of money very quickly if you’re not accounting for doing all boneless cuts in your pricing. Something to think about.
So, there you have it. For grass fed and finished beef animals, average hanging weight price is $4.31 per pound, hanging weight. With an average processing cost and cut out ratio, your finished weight beef price is right at $10/lb. More expensive labor markets will have higher processing. More expensive feed markets will have higher beef carcass costs.
Farmers gotta make a living, too, so please be kind if you encounter a farmer with prices that seem out of place to you. You don’t know their situation, investment, nor if they had to drastically raise their prices because they realized they weren’t making any money. Personally, our costs have gone up significantly on our own farm, besides the butchering increases. Our profit margins also had to increase because our profit margin is now worth 30% less than it used to be.
I hate losing customers from having to raise my prices, but I also hate selling a product I put my heart and soul into knowing that I’m not making enough money to continue selling it for the long term. I try to work with my return customers to make things work for them, financially, and that has been helpful to both parties: I get my beef sold, they get a good product, and they don’t have to come up with a huge chunk of change in one shot. I’ll probably try to automate a payment process in the future.
If this was helpful, please give us a like and a follow at KD Farms, or at my new endeavor to try to help farmers get their animals and animal products (banned on FB) sold at TheFarmDirectory.com. Please comment here what your prices and butchering is in your area and what challenges you’ve found finding beef or finding customers for your beef. I’d love to help or provide suggestions.
Be blessed.
-Kenny