, ._ , .. ~‘.'“..w-~. ,fl-‘vtwv—V... an ..- «goon—“C“ ‘ . . ‘ V ' . . v . _ ~ _ -. ms ESSENTRALS or MEATPRODUCTDN -. L ' _ 1- ' AND DISTRIBUTION-A GUIDE-TO A . -_A GROCERY sroae pansonun' ' ’ -. -. ' . . ; ' Thais-fiat tho Doom of; M A. . - - ' 5 MICHEGAN STATE UNIVERSITY I - -. ‘ . -- "— - Robeer. Mageé -- f ' ' ‘ ~ ' 1-955 .r—LQIQ“. _ .A— n s.- 0‘ I l _l This is to certify that the thesis entitled The Essentials of Meat Production and Distribution- A Guide to Grocery Store Personnel presented by Robert H. Magee has been accepted towards fulfillment of the requirements for Master of Arts degree in Food Distribution D/j 23 @{jor professor Date W— NJ. Ill Illa. I i l THE ESSENTIALS OF EEAT PRODUCTION AND DISTRIBUTION - A GUIDE TO GROCERY STORE PERSONNEL BY ROBERT E. RAOEE AN ABSTRACT Submitted to the School of Graduate Studies of Michigan State University of Agriculture and Applied Science in partial fulfillment of the requirements for the degree of MASTER OF ARTS Department of General Business Curriculum in Food Distribution 1955 we”? 0’ Z; A r v d t, , K pp 0 e C:;7&\\ ll llll. III III.- I'll This thesis has been written for the benefit of grocery store personnel interested in acquiring a knowledge of the methods used in the production and distribution of meat. It is the opinion of the writer that such information is often found lacking in grocery gtggg personnel and consequently in young executives moving up from store level positions. It is felt that an understanding of the fundamental methods em- ployed in producing and distributing meat is important to anyone seeking executive status in the grocery chain store field, not only because of the significance of meat in the food industry, but also due to the need for developing men with "well-rounded“ backgrounds who will one day be better qualified to assume the responsibilities of management. With this purpose in mind, the foremost components of the meat marketing system are outlined. Only that informa- tion which would be of value or interest to grocery store personnel is included. The information contained has been gathered from numerous printed publications, bulletins and booklets, and from first hand interviews with prominent men in the meat industry. The following paragraphs contain the findings that have been made in establishing the factors most pertinent to grocery store personnel. The importance of meat cannot be over-emphasized. Its nutritid tealth a: ceive 22‘: VEFS thr: Ciflb‘ntj »-J_ no '.C E k. . “Ls-195$ nutritional value alone is instrumental in assuring the health and vitality of human beings everywhere. Farmers re- ceive much of their revenue from meat and almost half the land in this country is utilized by livestock converting grass and similar forage into foods suitable for human consumption. Livestock is raised in certain areas of the country in order to take advantage of the available feed and climate and because the topography of the land prohibits commercial culti- vation. Producers can market their cattle in many different ways through such agencies as the public markets, local buyers, cooperative associations, auctions and concentration yards. Livestock marketings not only vary widely from month to month but from week to week and day to day. This situation brings about a seasonal influence on the price of meat as does the duration of beef, hog and lamb cycles. Supply and demand conditions which result from these factors have a definite effect throughout the industry. To meet the demand for fresh meat, the meat packing business is geared to slaughter, process, and distribute meat on a high-speed time-table. Approximately ten days after the livestock has been slaughtered, the meat has been purchased by retailers thrcughout the nation for their customers. From this point on, it is the responsibility of retail meat merchandisers to sell the product to the consumer. This is accomplished through the establishment of competent buying and merchandising departments, efficient distribution systems, proper store ordering, effective inventory control and similar I m! sip—:1 methods of management. Meat cutting tests are performed to provide a standard procedure and pricing guides used to help establish retail prices. The consumer must then be told about the advantages of meat and subjected to an appealing display in retail meat cases. 5:: :i_ if y VG. i "W ,l ’L a- l .te T "I ‘V St ributicn Program (2‘ .L vb Di H S -« l '(TCT‘ A- l ‘- 1 k is Chai TIE ESSEKTIRLS OE NEAT PRODUCTIOK AID amt) . .~ . ‘7 r. -""T"~""l r DIolI.-jffIOh - Iienoe is seemingly inherent in the corporate chain. There sure exceptions, to be sure, but they are usually few and far between. The chain stores started out as grocery stores with grocery men as their leaders. Today they are highly depart- Inenntalized with some self-service meat departments contributing trnirty-five per cent of the business. The chains have not kept Pace in training men to combat this significant emergence of departmentalization. At this point one thing should be made perfectly clear. The :1mplication is not that meat department personnel are inade- QUate. As a general rule, they are top-notch; specialists in their field. The point is that such departmentalized special- iZEUS-ion is confining. It limits the man and the company. Milldard C. Faught, President of the Faught Company, Incorporated, 2- Ifloore, F. G. Manufacturing Management. Homewood, Illinois: Richard D. Irwin, Incorporated, 1954, p. 59 observes that: "We have begun to conclude that while specialization may still be an ideal way to increase the efficiency of machines, there are now certain obvious limits to how narrowly we should confine a man within this mechanized and automized process ---- it is important to note that business enterprise is struggling with ways to get the whole man back in management. In its search for new executive material it is beginning to look fo what is often referred to as 'the well-rounded man'." Mr. Faught explains his statement and the contention of the writer with this comment: "The American economy in all its business ramifica- tions now produces a billion dollars worth of goods and services for every day in the year. It is hardly sur- prising, therefore, that it urgently needs more well- rounded men who have broad vision as well as special skills and talents ---- this does not mean that future business executives or industrial technicians, whether they are financiers, foundry superintendents, metal- lurgists, or merchants, will be less well-schooled in their specialities. They may well have even more precise training than in the past, because the technological re- finement and economic complexity of enterprise continues space. But these future experts will henceforth - if it is humanly possible - also have their special talents counter-balanced by a broader undefistanding of the 'whole show and where they fit into it'." . The crux of the matter is that executive talent springing 11;) from store and supervisory levels is not equipped with a ccnnprehensive knowledge of the food industry. Familiarity 'wjtth meat department operations is very often found lacking. It; is this factor more than any other that constitutes a Strunbling block to many individuals, and it is for this reason thert any search for the "well—rounded man" will very often PPOVe fruitless. Since the executive positions of tomorrow will eventually be Ifilled by the supervisors and managers of today, this thesis ET“** IFaught, M. C. The Need For Executive Versatility. an's Rov1ew and Modern Industry. (October 195%), p. be 4- Ibid. p. 76 is especially directed irward that it may be of some aid in them with the expressed desire fulfilling their objectives in (“’3 ’U the food industry. An effort has been ma ado to prov a clear, 0.. concise analysis of the nu rketing system rhnlcvcl in the is- tribution of meat. so doing, references are made to vari- ous bulletin: and p: ations that will furnish, if necessary, 1has J- U a more elaborate consideration of any one particular e. As further evidence of the necessity of such information on the part of chain store personnel, the following are some of the activities being conducted or considered by several large companies. At the recent Meat Clinic conducted by the ifational Association of Food Chains in Chicago (April l8— -l9, 15955), a topic of considerable concern proved to be the broad- managers.5 Several i no capacity and outlook of meat ening of t cnompanics have already adopted projects calling for the meat a nuinager to play more active role. They feel that he should lianre a Comprehensive knowledge of the entire meat program, repetitious View of his own operation. Their n C‘. no t merely otnjective is to broaden the present scope of the manager and eruable him to acquire an insight into the various aspects of the 1 me At the same time, it would provi theazmeat industry. marnager with an excellent foundation for a possible executive sometime in the future. Every chain at the clinic DOS 2L1 on expzée god a desire to continue working toward this end. Another point: nontio nec at the heat Clinic established trrrt .nornal procedure Neat iorchaudlsinc Departm ht is to p193? ”sales programs” appro>:ima atcly four \-:eeks before th.e actl3.22.1."sale date". Such ter tative programs are generally N ) ‘Discussion with Dr. E. bution Curriculum, (55- H A. Brand, Director of Food Dis tri— Michigan State University, April 2’0, confirmed three weeks before the "sale date" so that meat buyers can have some leeway in preparjng their orders. In both cases, "sales planning" and "meat buying", the individ- uals responsible should have an accurate and complete picture of market conditions if maximum results are to be achieved. He must know what the farmer intends to do with his cattle or hogs, what types of livestock are arriving at the markets, what seasonal variations may effect the price he must pay, and many other items that constitute effective ”sales planning" and "buying”. The executive who is familiar with this pro- cedure is already one step ahead of the next man when the time comes for advancement. There is one final supposition that merits consideration. (Sentralized prepackaging, a possibility discussed in some de- ‘tail in the concluding chapter of this thesis, could very well Jrevolutionize the entire meat department organization. Such as) operation.wculd undoubtedly be performed by the meat packer, 311 event which would eliminate to a great degree any meat- Clltting at store level. Experienced meat cutters would prob- atlly gain employment in the packing plants and thus create a vacuum directly below the position of meat manager. How then CCHlld a company fill its managerial ranks if there were no meat men to move up the chain of command? One possibility, Siruze the operation would no longer require as much technical Skiill, would be a horizontal movement of managers from one depzalrtment to another. Once again the individual with the best ails-around background would have the best chance for advance- ment , \§ This last point should be emphasized for it is almost universally true. The individual with the most comprehensive knowledge of his job - whether it be at store level, supervisory level or executive level - is more likely to be promoted than a less ambitious fellow employee. And comprehensive knowledge in the food industry includes the study of meats and the in— dustries associated with it. Sources of Material The information contained in this thesis has not been derived from any one main source. It is rather a combination of material gathered from numerous printed publications and from first hand interviews with prominent men in the meat in— dustry. The outline is presented along the line of most of the books published on the subject of marketing livestock. A num- ber of these books have been read along with several pertinent chapters contained in books on related subjects. These read- ings have contributed notably to the overall picture, but due to their relative antiquity, their usefulness has been limited. The main portion of this thesis has been obtained from up-to-date publications and bulletins published by the United States Department of Agriculture, the American Meat Institute, the National Livestock and Meat Board, the National Association of Retail Grocers, Swift and Company, and Armour and Company. Each of these organizations was visited and their public re- lations and agricultural research men interviewed in order to ubstantiate the validity of the subject matter. Interviews 10 and correspondence were also carried on with top meat executives of the Kroger Company, Detroit Branch, the Grand Union Company, American Stores, Wriglcy's Markets and the National Tea Company to complete the marketing picture. First-hand information has also been secured from conver- sations with various men immediately connected with the dis- tribution of meat. This was accomplished on visits to the farms, livestock auctions, terminal markets in Chicago and Detroit, local slaughtering establishments, major meat packing plants, and their branch houses. Scope of Study The substance of this thesis is concerned mainly with the economics of livestock and meat, that is their importance in the production and distribution of wealth. It is concerned with the system of marketing employed in the satisfaction of human needs and desires. The main body of the report is com- posed of information pertaining to the dynamic business that brings American farm animals to their ultimate consumers. The material has been assembled as nearly as possible to meet the requirements of grocery store personnel in order that they may obtain a broader View of the structure of this large sector of our economy. The chapters have been organized in a manner that should best give a general view of the components of the marketing system and their importance. It is believed that an extensive treatise on the subject is not necessary for the type of ll personnel that this thesis is written. With this thought in mind, these components are made as clear and as meaningful as possible and their positions in the marketing system are def- initely established. The importance of the meat industry and the problems it faces are offered as a prelude to the three main components. The latter are categorized as farmer, meat-packer and retailer. The central markets, direct markets, etc., which might well be considered a prominent component of the marketing system, are linked with the farmer in order to better describe the marketing operation. A chapter on the factors influencing the price of meat is included in order to tie in the relationship between the various components. The next to last chapter concerns a "look to the future", and includes a discussion of current trends and future problems that the meat industry may have to meet. This is offered to give as complete a picture as possible of the meat marketing system as it is viewed today. CHAPTER II THE SIGNIFICANCE OF MEAT An Important Source of Revenue The wealth and eminent stature of the United States is dependent to a large extent upon the fertility of its land and the efficiency of its agricultural force. This great country of ours is the best fed nation in the world. Its populace have access to foods of every variety, whether they be in a fresh, canned or frozen state. Large supermarkets have opened a new avenue of availability to potential con- sumers. The imagination and merchandising techniques of the chain stores, voluntary and cooperative groups, etc. have whetted the appetites of customers to such an extent that the percentage of disposable income Spent for food has risen from 22 per cent in 1940 to a remarkable 20 per cent in l953.‘L Nowadays it is a simple and even enjoyable task for the customer to do her shopping. The modernistic markets of today are replete with a preponderance of high quality products. Highly processed items have provided a convenience to the housewife unheard of ten short years ago. Behind these scenes presented in the store, however, are millions of processing, 1:; The Fabulous Market for Food. Fortune. (October 1953), p. 135 distribution and transportation workers whose efforts contri- bute to the successful marketing of foods grown hundreds or thousands of miles from the place where they are ultimately consumed. The most interesting and complex division of the food industry is the livestock and meat business which takes the meat animals raised on six million American farms and ranches and converts them into the equivalent of 155 pounds of meat consumed per capita in the United States.2 This consumption of 25 billion pounds of meat by the American people in 1954 indicates the vastness of one of the largest industries in the world - the meat industry.3 Tet livestock have always been important to the farmer. Meat animals moved westward with the early settlers in the pioneer and frontier days, aLd cattle, hogs and sheep have continued to be a mainstay of modern agriculture. Livestock provide most farmers with their largest income. The largest single source of farm income in 1952 was from the sale of cattle for meat (19 per cent). Other sources included dairy products (14 per cent), hog (11 per cent), poultry (11 per cent), and sheep (2 per cent).u For this reason, livestock are raised in every state and on practically every farm. Utilization of Pasturelands From neatly fenced pastures in the limited farming sec- my . Neat for'the Millions. American Meat Institute. Department of Public Relations, Chicago, 1955, p. l (.U Loc. cit. r . Cattle and Calves. Swift and Company. Agricultural Research Department, Chicago, Bull. 15, 195%, p. 7 -L ' "“2"! fr tgion of the East to the vast open ranges of the West and :3cynthwest, cattle alaZc on nature's bounty of srass. Through- (Dtit the nation's breadbasket - the sloping, fertile farms of -tt1e Midwest - hearty, fat hogs feed on corn and carefully Iairepared supplements. On desolate mountain slopes, herds of stieep search for lush green grass and similar forage. These pasturelands are the backbone of the livestock in- cnisytry and the primary reason for its importance. For meat allilnals, in their growing and fattening process, consume grass- egg, grains, mill feeds, and protein feeds. These feeds are rich in nourishment but, except for cereal grains, the general pulalic cannot eat them. Thus, we are dependent on the millions of laead of cattle, lambs, and hogs to transform these grasses anti other feeds which human beings cannot eat, into highly digestible meat products which are suitable for human con- sumption. Were it not for these grazing animalS, 779 million acres of time farmlands and uncultivated range land in the United States would give little, if any, food for human consumption. In.crther words, almost half of all the land of our nation is 0nly’grassland and cannot be used for growing other foods. Thus, the product of this vast area can be marketed only through liveertock. Over three fourths of the food that beef cattle eat pl. 3 quiss, hay, and foods of this nature. A large proportion of otur lambs eat practically nothing else.5 J- c cry of Meat Animals. Swift and Company. Agricultural Research Depertnext, Booklet C, p. 9 't. 2‘. 3.; .7_-:—_.q 15 Besides converting grass and forage crops into meat, :Livestock put to use many other crops that are consumed only in part by humans. An estimated 85 per cent of America's corn czrop is turned into meat, Eo per cent of the cats and 46 per czent of the barley. Although wheat is grown primarily for truman consumption, livestock, by utilizing undergrade wheat aund the material left after milling, account for about so per cent of this cereal.6 Buckwheat, rice and rye are also fed to jljsvestock, and in addition, the by—products of many other crops raise utilized. Cottonseed and soybeans, for example, are fed tc> livestock after the oil has been pressed out of them; the plllp from sugar beets and some citrus fruits is likewise used for this purpose. The significance of this essential conversion from feed into meat cannot be overemphasized. Its full impact may be betrter realized in the decades to come as our pepulation in- creases steadily from year to year. This point, however, will be (iiscussed in the seventh chapter of this thesis. It is suihficient to conclude here that without the resourcefulness 0f Slivestock, much of the nourishment contained in inedible fOI’ms and so necessary for good health, would never find its way :into human consumption. Nutritional value of Meat Still another reason for the importance of meat is that ‘€T-E§conomics of Livestock and Meat. Armour and Company. Public Relations Department, Chicago, 1954, p. 2 g ———‘——‘——_1 ‘1. 16 ii: contains food values of the highest quality for all of us. Ebctensive research has proved that meat is rich in food nutri- .¢rrts, and as such, it is recognized as a basic foou require- ment. To begin with, meat is an important source of high Qual- jmhsr protein, which is necessary for the growth and repair of locuiy tissues and for building resistance to disease. And ‘wfnile meat is classified as a protein food, it does furnish eruergy. Its caloric value varies with the amount of fat it (norrtains. This fat not only supplies heat and energy, but also carries certain fat soluble vitamins. Meat also provides minerals. It is the richest source of phosphorous which is needed to combine with calcium in tulifilding bones and teeth, and with protein and fat in building many body tissues. The iron of meat is present not only in Ilaxuge amounts but also in a highly available form. Further nutritive value of meat may be found in its valu- able contribution of vitamins - thiamine, riboflavin and niacin. In addition to its food value, meat has many characteris- ticswhich recommend it for the diet. Its tempting aroma and distxinctive flavor give it universal appetite appeal. Meat makes the meal more satisfying; the housewife forms her meal arotuad it. Finally, it is almost completely digestible - pro- teitns 97 per cent and fat 96 per cent.7 Its easy, almost total digesrtibility is so widely recognized that it is given in x o v 7- Tule Food Value of Meat. National Livestock and heat Board. Department of Nutrition, Chicago, p. 3 F—-~ may Specially prepared form with outstanding: benefits to babies as early as the second month of life. Good health and adequate nutrition go hand in hand. without adequate nutrition, health cannot be achieved or main- tained. Meat plays an important role in the balanced diet required for adequate nutrition and. has done much to make the United States the vigorous and healthy nation that it is. The Problem of Marketing Livestock Marketing, as we know it today, constitutes a distri- but ion of wealth. In the case of meat, it is the way in which a product is moveo from the farmer to the consumer and involves services relating to the transfer of ownership of goods and payments between sellers and buyers. It embraces functions relating both to the geographical distribution of goods and to their distribution through time. Until the start of the eighteenth century, the problem of marketing livestock was hardly noticeable. The majority of Peeple were devoted to the land or else they had easy access to someone who was. For the most part, meat animals were slaughtered on the farm, and the carcasses were exchanged for the goods and services supplied by the various tradesmen. There were no railroads, no refrigerator cars, and no large Central markets. As the population of *ihe country increased and became more widely distributed, it became increasingly more difficult to Satisfy the needs and wants of the people. The farmer had beCOme more specialized in his methods of production and he .found hiVCCIf with a surplus that or ld not be disposed of :in his customary "direct to the consumer” manner. The prob- lfmifkd'him then was to bridge the Esp between himself and thc (sonsrmer. As a result, specialization of labor was applied 'to the marketing function as well as to other phases of Igrodnction. ‘hc methods employed at that time have been zilterod at various intervals due to the introduction of numer- cnss time-saving and labor-saving devices, but the struggle for snare efficient distribution methods still goes on. ’n January 1, 1955 there were 95,433,000 cattle and cualves on the farms of the United States. In addition, there 00 sheep.8 The number of 0 overs 55,002,000 hogs and 30,931, czattlc and calves constitutes the greatest total ever record- eCI in this CCNntry. Only the exertion of tremendous techno- lxjgical advances and scientific research, res ltin: in a .1 seizing of crop and feeds, 1ave enabled the farmer to accomplish thjLs feat. Even greater strides must be made in too future if he :is to cope with the fabulous population increases predicted for' the decades to come. (See Chapter VII). During 1954 there were OVer 25 million head of cattle, l? nuillion calves, 75 million hogs, and 16 million sheep and lonfias sfllugitered in the United States.9 From six million arnus and ranches in every state, Feoerally inspected meat PflCkxars in 195% bought approximately 106,300,000 cattle, calves, hoES, and sheep to make into steaks, roasts, stews, sausage 8. lune Livestock and Feat Situation. United States Department of Agriculture, Agricultural Marketing SerV1ce, (March 1955), p. 5 9. Ibid. p. 21 1 items, and canned meat. They supplied pharmaceutical, sport- :ing ECOdS manufacturers and many others with by-products for Irindreds of lifesaving drugs and other items necessary for cuir national economy. Estimated total meat production for 21954 was 25,575,UO0,000 pounds while civilian per capita (zonsumption was estimated at 155 pounds.10 As a result of the continuous presence of a flourishing Ineat industry from generation to generation, the American Iaeople have come to take an ample supply of meat for granted. W‘ lint such is not the case. From the time they are raised until 1 tdie time they are consumed, meat animals are involved in one A (If the more complex systems of marketing in the United States. 2 line situation can be better understood when the areas of Ixroduction and consumption are explored. States west of the Nfixssissippi account for 62 per cent of our livestock production wknile those east of the Mississippi only 38 per cent. Moreover 6§ijer cent of America's meat production is eaten in the hesvvily populated region east of the Mississippi, while only 31 gaer cent is consumed in the states west of the Mississippi.11 From these figures, it can be seen that the important livwastock—producing areas and the heavily populated, large meath-consuming areas just do not match up. It is the problem of tlie meat industry to reconcile these differences and thus fulffiill the needs of each individual in the United States. 10. least for the Millions. American Meat Institute. Department k». of Public Relations, Chicago, 1955, p. l 11. Facts and Figures about the Meat Packing Industry and Its Products. American Meat Institute, Chicago, 195M, p. 7 CHAPTER III THE POSITION OF THE FARMER Reasons for the Geographical Location of Livestock It was pointed out in the preceding chapter that ap- Iaroximately three-fifths of the livestock in the United estates is produced west of the Mississippi, whereas about tndo-thirds of the meat is consumed east of this area. The nuain reason for this is that livestock need plenty of space 1:: which to feed and grow. The section west of the Mississippi is; ideally suited for production purposes. The areas in which the various types of animals have settled differs greatly among the species. In general, there lmus'been a tendency for each species to be produced in the region or regions in which it enjoys the greatest comparative advaxrtage or the least comparative disadvantage. This does not Imecessarily mean that a single species is produced exclu- sively in a given region. There are many farms suitable for the Iwiising of any combination of animals and very often this is done in order to obtain the maximum potentialities of the land. In the corn belt, for example, hogs and beef cattle are commonly produced on the same farms. Also, there are many hogs kept on dairy farms. Iowever, there are certain regions that are continually dry and consequently inappropriate for 21 both beef cattle and sheep production. ’he reason for this is t.118t only these two species can utilize the natural feeds of such areas so that the presence of both on the same range would create a decided strain on these feeds. The location of the crop-producing areas is probably the most important factor to be considered in the situating of livestock. The Corn Belt is a prime example of the natural attraction that such areas contain. The majority of hogs and a great many cattle are raised and fattened on the golden prod- fr uot of this fabulous region. The dairy animal has a natural advantage in those areas where grass and other forage crops are plentiful and where the topography of the land or the fertility of the soil are such that it is unsuitable for commercial purposes. The grazing lands of the West supply the necessary grass for cattle and sheep, and the tepography and limited rainfall exclude competition from cultivated crops. Cattle and sheep moving from this region may either be marketed for slaughter or transferred to another area for fattening pur- poses. In the latter case, such animals would be referred to as "stockers" or "feeders". Farmers buy these animals for the express purpose of feeding them corn and other grains in addi- tion to hay or grass in order to fatten them. Two or three months later they are returned to market for slaughter and sold at a better price. Areas of livestock. production are also influenced by the location of consumers and the availability of markets. This 13 especially important in the case of dairying. Dairy cows provide a considerable amount of beef for consumption. Also 22 veal, to a large extent, is a product of these dairy farms. Consequently the necessity for locating dairy farms close to the consumer actually determines the sources of meat supplies produced from dairy herds. The geographical location of livestock supply areas has had an important influence upon the location of markets, meth- od of marketing, and place of slaughter. Under existing condi- tions, either livestock or meats, or both, have to be moved from the surplus-producing areas of the West to the deficit— producing regions of the East. From a practical standpoint, it has been found to be more economical to slaughter animals in plants located in close proximity to the western regions, to save the by-products, and then to transport the meat in refrigerator cars to the consuming eastern sections than to ship the live animals. Also, there is an acute danger of sustaining a high loss from deaths, injuries, bruises, shrink- age, and freight costs when the animal is shipped live. Follow—- ing this procedure, a pound of meat will travel on the average about one thousand miles from where it is produced to where it is con31.uned.l Areas of Production Beef Cattle Cattle are generally broken down into two classifications - those raised for beef and. those raised for dairy purposes. 1° Cattle and Calves. Swift and Company, Agricultural Research Department, Chicago, Bull. 15, 1954, p. 12 23 Although beef cattle are raised in every state, the most extensive production takes place in the West and Southwest. Cattle in this area are raised largely on grass and generally are sold as stockers and feeders or as grass-fat cattle. The latter are cattle produced on grass that have sufficient fin- ish. to be suitable for immediate Slaughter. Range cattle usu- ally spend their first summer grazing and at times are held over for a second summer. When the farmer feels they are ready for market, they leave the range area. Most cattle from 1' this region come to market in about three months of the year, , September, October, and November. This is natural inasmuch as N grass is the main feed of range animals, and while there is plenty of grass in the summer months, it dies off in the fall. The Corn Belt is also a heavy cattle production area. Many of the livestock shipped out from the range area are bought by farmers located in the Corn Belt. While feeding Operations are carried on in all sections, most of it is done in this area where a surplus of feed grain is produced. These feeders and stockers are fattened and along with the original high grade herds of the Midwest reach the markets for slaughter during the spring and early summer months. Texas furnishes the largest number of high-quality feeder cattle to the Corn Belt, With Kansas, Nebraska, and other Great Plains states following. Some of the cheaper grades of feeder cattle come from the Missouri, Arkansas, Tennessee, Kentucky, Mississippi, Alabama, . 2 and LouiSlana. The principal beef-producing areas in the United States m'homsedfr. L. and R. J. Foote. Agricultural Prices. New York, Toronto, London: McGraw-Hill Book Company, Inc., 1952, p. 3>3 mm< .3 zomgam wcmoeuu 95 52.2900 “.525“. dePmmz mo b.3223 rzmmuma 2.3: KOEQ< £h1§93$m< .«o «$95538 a 6.: ho xmwyysouV .9393 Rance 93 5. mauxm sonpqspoba vauvmusummm .: .H muzmah a \ a n a 4 L. not com com oo— o «3.2 no m4axoCcum :53 ne’flBOm van \ VM as $9.59 .6 m .3 r: Qua—Spam .. . , . 323 533: 2.3 £3 a. g . . SL3»! mo WWHOCcLou & :5 09:2 sncuvuhh a 33:29» 095» a 0 RH oaohn mcfivooMInalhu 920303.85 50 803.2. «a! 62¢ luuzm .poulsuh. . a.” carom States. Vast areas of \U resin? land make it particularly suitable for their g‘cwth. Also the quality of lambs pro- duced in large portions of this area is much above the aver- age for the country as a whole. 3. Feeding lambs. Since about one-half of the range lambs when marketed are not in suitable condition for slaugh- ter, they are finished by feeders in the Corn Belt ano other areas. About one third of the lambs are fed in western Nebraska and Colorado, where an extensive feeding industry . has been developed. The remainder are shipped mainly to the Corn Belt, where they are fattened in the corn fields and feed lots. Outlets Available to the Farmer Every farmer has the opportunity to make his own decision about when to sell and how he should market his livestock. He is the sole judge in determining when he will sell his animals. He also has the choice of a large number of locations and types of markets at which to sell his stock. In addition to the large and small public markets,he can sell to or through local buyers, cooperative associations, livestock auctions and packer concentration yards and plants. Where he sells at any given time depends upon custom, relative prices, convenience, comparable market charges, and his own personal likes and beliefs. The outlet selected often varies with the different species of livestock and among sections of the country. There is also a difference in the methods of market- ing slaughter and feeder animals. (A) R) A study made in the 1% Corn Belt states reveals that producers in LhOSG states sell their livestock to or through 12,000 dealers and truckers, 2,900 local meat dealers who do some slaughtering, 1,000 auction markets, 1,000 cooperative associations, 600 direct buying packing plants, 300 concen- tration yards, as well as 550 commission firms operating on 26 large public markets.ll Similar marketing opportunities exist in other sections of the country, although there are not as many outlets in areas where livestock supplies are lighter. Figure M shows the channels of livestock movement from farms in the Corn Belt region to packing plants, other farmers and other users in 19h0. The trend since that time has shown a steady increase in direct marketings with a corresponding decrease in public market receipts. There has been considerable discussio about the merits of this movement on the part of the farmer. Ad- vocates of the terminal markets insist that these direct mar- ketings do not provide the service and the convenience so prevalent in terminal marketing. They say further that the farmer does not obtain the best price when he deals for him- self - that the commission firms and cooperative commiSsion agencies more than make up for any additional marketing costs sustained in shipping to the terminal markets through more eXperienced and efficient handling of their livestock. What- ever the case may be, the uninformed should not underestimate 11, Economics of Livestock and Meat. Armour and Company. Public Relations Department, Chicago, 195%, p. 5 a .v- 0.39.... “gum 4§3P43UEO< no Doz x00kmw>3 no mnmzzfiio 31+ the value of central markets. They are the firm foundation of the entire marketing system and provide a needed regulating and stabilizing influence. In the present trend toward more decentralization, this fact should be reeeSnized for there is a limit to how small a central market may be and yet remain sufficiently strong to exert this regulating and stabilizing influence. The various outlets available to the farmer are listed below. Local Buyers These men usually purchase livestock directly from farmers and then ship them on to the central market. It is a highly speculative venture ard requires keen judgment and knowledge of market conditions. They make their profit from the dif- ference between the price given the farmer and the price received at the central market. With the increase in the number of improved highways and motor trucks, in addition to the growth of cooperative marketing and direct buying, this type of transaction has diminished. Cooperative Marketing Cooperative marketing includes cooperative shipping as- sociations and cooperative commission associations. Local cooperative shipping associations were organized by producers primarily to increase returns from livestock. The early livestock shipping associations were organized at a time when practically all livestock moved to market by rail. The movement was really prompted as a means of circumventing the local buyers who, the producers thought, were either taking advantage of the farmer's lack of knowledge of mar- ket conditions or were not paying full value. In cooperative marketing, the producers in a given locality pool their live- stock and ship cooperatively so that it is possible for farmers with small lots of livestock to ship at carlcad rates to some convenient market. There has also been a steady decline in the number of shipping associations. Many economic changes have been re- sponsible for this, including innovations in methods of trans- porting livestock to market, the increase in the number of available outlets, and improvements in the collection and dissemination of market news. Such declines in cooperative shipping associations and local buyers indicate that large numbers of producers have assumed the responsibility of mar- keting their own livestock. This implies further that many producers have reached the conclusion that they no longer need the services of the local associations. Here again, there arises the question of whether they are in a position to market their livestock to the best possible advantage or whether they would benefit from the services of a marketing agency. A cooperative commission association is an agency estab- lished by livestock producers for the purpose of selling live- stock at a public market. They are similar to commission firms (page 39), differing mainly in the fact that cooperative com- mission agencies are owned and operated by producers instead of by private individuals. They came about with the expansion of the cooperative movement and because the producers believed that they were not getting satisfactory service from the established commission firms on the central markets. These commission associations have served .he producer well and do much to create a competitive spirit on the public markets. In 1952, about 25 per cent of all commercial livestock sold A. annually in the United States was marketed cooperatively.l Community;;ivestock Auctions The community livestock auction system is a method of selling in which the animals are sold to the highest bidder, either on a per head or a weight basis. Both bidding and selling are open to the public. The sales take place either outdoors or in large sales barns built specifically for the purpose of selling livestock at auctions. At most of these auctions, all kinds of livestock are handled, including ani- mals bought for slaughter as well as immature and unfinished animals bought for feeding and grazing purposes. At most of these auctions, sales are made of individual animals or of small lots of animals of uniform quality and weight. Most of the community auctions are owned and operated by an individual or partnership. Some are incorporated and a few are cooperatively owned. There has been a marked growth in livestock auctions since 1932.13 The main reason for this has been the growing need for satisfactory outlets for the small producers. Also, there has been a lack of shipping associations in some areas. Finally, it can be traced to / 12 . En sming er , I». . . Animal Science. Darville, Illinois: The Inters E tate Printers and Publishers, 1952, p. 255 13, loo. cit. the genuine appeal that the auction methods hold for pro- ducers. The latter can now sell near home, observe compet- itive bidding, recognize comparative market values and visit with their neighbors. In addition, auctions thrive when prices are low because producers are anxious to market near home and at a minimum of out-of-pocket costs. As in all types of business, there are some practices existing on certain community livestock auctions that are undesirable and serve to create unfavorable impressions. Some auction operators buy producer's livestock before the sale and sell in competition with livestock confined by the farmers. Also, unless due care is exercised, auction yards may be a major factor in the spread of disease and parasites. Public regulation and supervision has been set up in many instances primarily to control these abuses. ,Qirect Marketing In direct marketing, slaughter animals are sold direct to meat packers. This does not mean that direct marketing is confined to sales made by farmers and feeders to slaughterers. It also includes livestock bought by packers from such local :marketing agencies as local buyers, cooperative shipping associations, concentration yards and assembly points and auctions. The main point is that central markets and com- :mission firms are by-passed by the farmer in his dealings imith packer representatives. With stockers and feeders, di- rect marketing also applies to transfer of ownership through sale other than at central markets. Increasing numbers of 3&3 stockers and feeders have been moving direct from the range to feed lots in the Corn Belt States and elsewhere during recent years. This type of marketing was accelerated by the large nation—wide packers in an effort to combat the influx of small interior packers. The latter constituted strong buy- ing competition for the large packers since they were situated close to the livestock production and livestock feeding areas and purchased practically all of their hogs and large proportions of cattle and sheep by direct marketing. Thus, the large packers resorted to direct buying as a method of striving to regain some of the animals, especially hogs, which were going to the independent plants. As mentioned previously, direct marketing has increased over the years with arguments pro and con marking its route. Swift and Company in 1951 had direct shipments of cattle amounting to 26.5 per cent, calves 43.6 per cent, hogs 58 per cent, and sheep and lambs #8.2 per cent. This showed an increase from 1939 figures totaling 24.2 per cent cattle, 36.1 per cent calves, 51.8 per cent hogs and 34.1 per cent 1% sheep and lamb. These figures are fairly representative of the overall trend. Central Markets A modern central or terminal market is a very complex lH.IflScussion with Roy Green, head of Agricultural Research Department, Swift and Company, Chicago. organization, and the larger it is the more complex it be- comes. Therc are many distinct factions operating on a mar- ket, all of which perform a separate function in making up the entire operation. These functions will be described briefly to show how livestock is moved through the market.lr The stockyards company owns the land, yards, and equip- ment necessary for unloading, weighing, and handling of livestock while they are being marketed. Employees of this company unload, count, yard and feed and water the stock as directed by the commission company to whom they are assigned. The stockyards company neither buys nor sells livestock. It derives its income solely from a yardage fee, the sale of ! feed and bedding, and rental of office space. Commission firms have already been mentioned briefly. Their principal function is to sell livestock assigned to them by farmers, shipping associations and local buyers. They receive a commission on a per-head or a per-carload basis for rendering this service. The stockyards company allots blocks of pens to each commission company based on their volume of business. Commission men who act as the owners agent invite buyers one at a time into the pen to bid on the livestock. Any bid or offer made in the pen is usually cancelled when the buyer leaves if a sale has not been agreed upon. When a buyer and a commission man reach an agreement, the sale is completed, the animals are weighed and payment is made on the basis cf weight and the agreed price. Following the sale, the commission company promptly remits to the farmer, or some '1 . Ensminger, M. E. Animal Science. Danville, Illinois; The Interstate Printers and Publishers, 1952, p. 201 40 other marketing agency, the amount received for the animals, minus the cost of transportation and other marketing fees. There are usually many buyers at the terminal markets. Beside buyers for the local packers, there are order buyers for packers in other cities and speculators who buy with the idea of reselling locally or at some other market. The livestock exchange, which exists on most of the larger markets, insures fair dealings and integrity on the part of its members. It is chiefly an organization of the commission companies operating on a public market. Special services rendered members and shippers include the collection of claims against carriers for losses in transit and for excess charges. Most livestock exchanges also require satis- factory bcnds from members as a guarantee of financial re— sponsibility. At the larger markets one or more conveniently located banks facilitate prompt payment by the buyer. They also in- sure the earliest possible remittance to the consignor by the commission companies. There are various market news services in operation at these central markets. These include the Federal Market News Service, the Corn Belt dailies, and market information supplied by commission men which keep both buyers and sellers well in- formed regarding supplies and prices. Federal meat inspectors, functioning under the Meat In— spection Act of 1906, make ante and post-mortem inspections of all slaughter animals. They also enforce sanitary regu- lations covering both the yards and the packing plants. 41 Federal officials, Operating under the provisions of the Packers and Stockyards Act, ascertain that fair and competitive practices are observed by the packers and com- mission companies. They also make sure that reasonable charges are made for marketing services rendered. All of the functions listed above are important phases of the market terminal operation. Each is diligently attend- ed and the entire combination results in a high form of ef— ficiency. The central markets have rendered and are render- ing valuable services to large numbers of producers, shippers and purchasers of livestock. Their relative importance in the future may be expected to depend upon the services offered and charges made for these services compared with other types of markets and market outlets. Transportation of Livestock An important step in the marketing of livestock involves the physical movement of the live animals and their products. Transportation is not a very large item of expense in the marketing of livestock that is slaughtered and consumed near the farms where it is produced. However, where livestock is produced in one area and fed or slaughtered in another area, the problem of transportation is extremely important. The method employed in transporting livestock to market .necessarily depends upon the type or types of transportation that are at hand. When alternative methods are available, the choice will depend on relative costs and convenience. (hosts include the actual money outlay for the transportation 42 service and expenses enroute, together with losses from death, crippling, bruising and shrink. This discussion will be limited to the two chief methods utilized by the producer - railroads and motor trucking. Transportation by truck is the most recent development in the livestock field. Improvements in both highways and trucks served to increase this method of transportation. By 1935, trucks were used in transporting more than half of the 16 livestock delivered at the central markets. In market receipts, truck shipments are referred to as "drive-in" re- ceipts in order to distinguish them from rail shipments. There are wide variations in the proportion of livestock arriving by motor truck at different markets. In general, a : higher proportion of hogs and calves than cattle and sheep arrive by motor truck. In a study involving more than sixty leading central markets, it was reported that 71 per cent of the cattle, 7% per cent of the calves, 76 per cent of the hogs, and #4 per cent of the sheep and lambs, were delivered by 7 motor truck in 19H9.1 Rail shipments predominate when long movements are involved, whereas truck shipments are favored for short hauls. The latter point probably explains why a lower percentage of sheep and cattle are transported by truck, for longer shipments are involved for these animals, especially with western range consignments. Table I shows the percentage of total livestock receipts 16. Ibid. p. 239 17. Ibid. p. 2uo at several leading central markets received by rail versus truck. TMEEI PERCENTAGE OF TOTAL LIVESTOCK RECEIPTS F EVERAL CENTRAL MARKETS AND OF 66 U. s. MARKETE RECEIVED BY RAIL VERSUS TRUCK, 1948 8 (in per cent) Truck Kansas St. Sioux Total of 66 or rail Chicago Omaha City Louis City U.S. markets Rail 37.5 31.9 54.7 21.5 l7-'+ 35-9 Truck 62.5 66.1 #5.3 78.5 82.6 6%.1 Accordingly, Sioux City receives most of its shipments by truck, whereas Kansas City is primarily on a rail-shipment basis. The preponderance of rail receipts at Kansas City is due, in part, to the large number of feeder cattle shipped to this market from the ranges of the West and Southwest. The long-haul shipments involved in the latter case require rail shipment as a matter of expediency. The most common reasons advanced for the marked increases in motor truck shipments are as follows: 1. They are more convenient. Trucks enable animals to be loaded at the farm and moved directly to their destination. Also, in comparison with rail shipments, truck transportation is more elastic from the standpoint of size of loads, routes and schedules. Trucks vary in size from the standard pick-up to the semi-trailer, with a load capacity eoual to the standard 36 foot railroad car. In the case of rail shipments, it is 18. 10c. cit. Lil}. ordinarily necessiry to order the car in advance, to drive the animals from the farm to the shipping point, to bed and load the cars, and to consign the shipment to the designated market. Mu h of this inconvenience is eliminated in truck transportation. 2. Trucks have a lower transportation cost on short hauls. This is due to the extension of good roads and the improvement in the size and type of motor trucks. 3. They provide greater flexibility of time and place of marketing. Many progressive farmers follow market quo- tations very closely. Often they are able to ship their livestock by truck after getting an early morning market-news report. Motor trucks can also move in any direction, thus increasing the number of outlets a farmer has at his disposal. Without going into detail, it is safe to say that truck transportation has had two major effects on the markets. First, it brought about a change in stockyard management since the stockyards had been set up primarily to handle rail de- liveries. Consequently, the introduction of trucking on such a large scale demanded the complete transformation of stock- yard facilities. Second, it tended to influence farmers to ship to the nearby markets. In this respect, it has been a contributing factor to the decentralization of livestock marketing and slaughter. In recent years, railroads have granted numerous conces- sions to livestock producers in an effort to meet motor truck competition. These consilerations include local assembly by motor truck, more favorable rates on less than carload-lot shipments, and liberal unloading privileges cnrouto. Also, to their everlasting credit, the railroads have long supported and advanced proeressive livestock programs, both through their (uni competent personnel and in cooperation with the state agricultural colleges. Shrink, Bruisinr and Crippling of Livestock An important element in the transportation picture in- velnves the losses ststained from bruising, crippling and death that occur during the marketing process. ri‘hey rep- resnant a portion of the cost of marketing livestock; and, irutirectly, the producer foots most of the bill. For bruises tunially cannot be detected until after the animals have beeui slaughtered, and thus it is not practicable, since linzstock are weighed while still alive, to charge the loss irr'those who are responsible for it. And since packers take prrfloable losses into consideration when they offer prices for tike live animals, the burden of loss from bruising is shared bS’ all producers. Bruisinr may result from accidents, from improper han- dliuig or any number of other reasons. Whatever the reason, libsses incurred are surprisingly high and only serve to raise Dlfiices for all parties concerned. The interest of transportation agencies is based on the INDssible effect of excessive losses upon future patronage. witfll the more general dissemination of information on the Callses and extent of losses from bru‘sing there has been a teruiency for some shippers to avoid the type of transportation Uri) that is found to euvse excessive bruising. For this reason, truckers and roilroods have to be cautious in their hand ing of livestock. Shrirfl.nge is srcthcr impo rto:1t factor. The fsci: that tissue shrinksgc begi ns CSIWL in the period in transit and continues until the animals reach the slaughterhouse is s snifiennt to pro&”cers, dealers, transportation agencies, reos.nsble to suppose (7 slams htcrers and processors. It se m that the eoible portion of the car as will shrink at a greater rate then the inedible portion. iii: means that J ( hrinrage effects the more vslnoble parts oi the animal. NJ .1 '18 U) It is to the interest or lit OLHLIS, therefore, to move the livestock from or =in to nos tine tion in the shortest possible time. ihe preceding paragraph enumerates Still another 01 the many considerations that a former mist View in deciding how a.nd when to marlcet his livestock. This chapter has attCMpted -- to give you some of the problems that confront the farmer and certain facts which could aid him in his decision. Each individual farmer nos 3 problem of his own to decide. The ;progressive and successful isrmer is the one who investigates 'thoroughly and makes an occurs to deci sien on where tc raise his livestock, what marketing outlets to utilize and what type of transportation to employ. CEAPTSH IV FACTORS ITFLTETCIIC TTE PRICE OF NEAT Interaction of Farmer, Packer, Retailer While in mrst commercial fields the ultimate selling price represents the accumulation of expenses plus a profit, .1 in the meat ineustry the operaticn works largely in reverse. Generally the price at which meet is eventually sold rep« resents the best price that can be obtained from the con- suming public for the supply which is avai ab.e. These market prices for meat are translated through the neat packer into bids for livestock offered for sale by the producer. Every segment of the industry watches price trends and market conditions closely. Retail meat men -et cnly watch their own sales but also closely follow livestock and meat supplies and wholesale meat prices. They are constantly on the alert for daily and weekly flqctuations in livestock and wholesale prices. They bargain vigorously for lower prices when they know there is an increased supply of beef. ien there is less beef available, retail meat dealers may become aggressive buyers - willing to pay higher prices in order to obtain their beef requirements. The packer is equally vigilant. he knows at the begin- ning Of each day how much meat he has on hand ready for the 1 market. He instructs his salesmen to pet the best prices has to be sold. The packer then follows the market closely, from hour to hour, noting the prices at which his products are being sold. On the basis of the prices he is able to get for his meat and by-prcducts, and what he thinks he will be able to get in the immediate future, he sends his buyers into the livestock market to make bids for livestock. Here he has to compete with other neat plant buyers, dealers, and speculators, all of whom want to buy livestock. In addition he has to buy from eXpert salesmen (commission men who are trying to get the best possible prices for the producers. In the competi- tive bargaining which takes place, each buyer tries to buy live animals at a price that will enable him to make a profit after the meat and by-products have been sold and manufac- turing and distribution costs have been met. The producer has to decide when and how to move his livestock. Feed supplies, weather, seasons, and how the mar- ket looks at a particular time are a few of the factors which influence his decisions. Producers are also concerned about keeping marketing costs as low as is consistent with the marketing services rendered. The cost of transporting live- stock to market or to a slaughtering plant must be taken into account. This is true in a case where the producer pays for having the service performed for him and likewise in the event he transports the livestock himself. The cost of traisportaticn, therefore, must be considered in relation to the gross price offered at alternative markets. As mentioned previously, the cost may also be influenced by the type of transportation used. This is the general procedure employed by the various components of the marketing system in arriving at a price. There are, however, various factors that influence the over- all transaction which should be considered. These factors are presented in the following sections of this chapter. Supply and Demand Contrary to the opinion held by some, packers do not control livestock and meat prices. Rather, like most com- modities, they are dominated chiefly by supply-and—demand forces. That is, fluctuations in livesto k prices are due either to changes in the demand for meat or to changes in the supply of slaughter animals. Basic to the demand for any product is the consumer's desire for that product. The desire of consumers for meat has a very solid background of preferences, habits, and prej- udices. It is evidenced by the comparatively small change during the last forty years in the per capita consumption of meat compared with the change in some other items of our diet such as sugar, flour, potatoes and oranges. Government figures show that consumers, year-in and year-out, generally spend about the same per cent of their disposable income for meat. 5 For the past forty years, the percentage has averaged .6 per cent.1 3“ Livestock Prices. Swift and Company. Agricultural Res arch Department, Chicago, Bull. %%, p. 10 While the desire for meat has probably been very stable over the past half-century, the per capita demand has not. Demand depends not only on desire but also upon the ability to purchase. Changes in the per capita demand have been the result primarily of changes in consumer incomes. Thus the demand for meat has been found to be closely 'ssociated with national income. when national income is high, the demand for meat is strong; and, when national income is low, the demand for meat is weak. The supply of livestock, on the other hand, is to a considerable extent governed by the cost of production in relation to the prices at which livestock can be sold. If costs are high in relation to prices, the supply tends to decrease, and, if costs are low in relation to prices, the supply tends to increase. With meat, however, as with most other products of agricultural origin, th supplies on the market in any one year are almost wholly the result of decisions made by farmers in previous years and of influences which are beyond the control of the farmer. Price has little influence on supplies in the same year. For this reason, the total supply of live- stock marketed during a given year is approximately equal to the number produced for market. Because of the perishability of the animals, it is impracticable to retain them on the farm for any considerable length of time after they are ready for market. For short periods of time, however, the market supply of livestock may be somewhat adjusted by holding part of the supply off the market or by marketing; earlier than normally planned. This may be done in response to clmngges in prices of livestock. or to changes in feed prices. Cyclical Trends The price cycle as it applies to livestock may be de- fined as that period oi‘ time during; which the price for a on certain kind of livestock advances from a low point to a high point and then declines to a low point again. The length of time between the peak of one cycle and the peak of the following cycle varies with different species of livestock. Even for a given species he length of time . 1 usually fluctuates over the course of time. The cattle cycle is more evident in cattle population figures than in cattle prices. For this reason, the cattle population cycle will be discussed along with its relation- ship to the price cycle. When cattle prices commence a dox-nu-Jard swing, producers in increasing numbers become discouraged and start to liqui- date their herds. As the decline continues, a growing pro- Portion of current market receipts (of cattle) is composed 01' cows and heifers which under other circumstances would be I‘e‘tained for breeding. This liquidation continues after the peak of the actual production cycle has been reached and the Cattle population has begun to decline. Finally, this 110111 dation begins to dry up, as the production adjustments or individual producers are temporarily completed. Market receipts gradually fall, until the. price movement is reversed in an upward direction. As prices rise, actual and potential jproducers become increasihfly optimistic, more and more ani- rnals are retained for production purposes, and the cattle jpopulation expands. However, t;e rise in market receipts is - ,4 O (0 The so-called typical, or average, seasonal movement of hog prices also corresponds with the alternate periods of light and heavy hog marketings which result from the sea- sonal nature of hog production. The months of heaviest hog production and s aughter have already been given in Chapter III. The degree of average seasonal movement of hog prices, however, is much less than that of market receipts. The principal reason for this is that packers place large quantities of lard and pork products in storage during the months of heavy receipts and sell these products during the months of light receipts. This serves as a stabilizing influence on hog prices over the year since the available supply of pork products is adjusted to the relatively stable seasonal demand. Lambs and sheep Unlike cattle or hogs, there is a relatively steady seasonal movement of lamb prices. The reason for this is that producers and feeders of lamb have relatively few opportunities to vary their production, feeding and marketing programs in esponse to changes in seasonal factors, and hence the sea- *‘5 onal distribution of market receipts of lambs is relatively d) D uniform from year to year. Lambs are marketed at different times during the year depending on the section of the country in which they are produced. These market receipts are highly seasonal, a fl," 0c 1-! condition wh'ch mcald indicate an cerally wide fluctuati n in seasonrl prices. However, approximately 20 per cent of the lambs received at public stockyards during the year and up to NO to 50 per cent received during the fall months (the latter representing nearly 75 per cent of total annual feeder shipments) are reshipped to feed lots.“ They are then returned to mark:t during the winter after feeding periods of varying lenfith. These shipments to feeders serve to adjust the slanrhter of sheep and lambs at a remarkably uniform rate throughout the year. The general seasonal movement of lamb prices which results from th as conditions is shown in Figure 8. The higher prices for lambs in the spring result not only from the relatively light market receipts, but also from the fact that a large portion of these lambs are of high qtality, being either milk- fod or well-finished grain-fed lambs. Increased market receipts in the summer, fall, and early winter account for the decline in lamb prices during that period. The progressive producer is well aware of these seasonal influences on the price of all animals, and plans his produc— tion and market operations accordingly. At the seme time, these variations in livestock prices are closely associated with fluctuations in retail meat prices, so that the retailer must be equally alert and responsive to both the normal sea— sonal variations in prices and the deviations whicn accompany 4. Ibid. p. 1:00 16.00 15.50 15.00 luau m .00 ”-4 poo“- - -: 15.50 Price per th. 8 13 12 .5d Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Figure 8 - Seasonal variation in fat-lamb prices at St. Louis (From Mo. Agr. Expt. Ser. Circ. 263.) 03 6U W ( 1".“ " ' 4' w .1 3 ~ ‘ n! r -. 1 ,‘v ‘ " 0 ~ " - >° the“. lbw better anvlfit-h«lflfi the retailrr has concerning them, the better job of buyin: and nerchardisins he will be k... able to perform. Price Differentials Between Markets Competition in the meat industry is not restricted to farmers, meat packers, retail meat dealers, or any other individuals who might be interested in buying livestock or meat. There is also a continuous competition for meat that goes on amonn the markets themselves. Every market is competing with every other market for its meat Supplies. The New York market, for example, is in competition with St. Louis, Philadelphia, Trenton, and Detroit as well as thousands of cities and towns located all over the United States.5 Because of this competition, the sales organizations of the various meat packing companies are in constant communi- cation with all markets by means of telephone, telegraph or personal contact. In this way they are able to determine just how much each market is paying for meat and arrange the distribution of their supplies accordingly — shipping greater quantities to the hish markets and reducing, when necessary, the shipment to the low markets. The object of this procedure is to obtain the best possible price for the supplies of meat they have on hand. It is also throush this means that the surplus meat production of the Central West is distributed throughout the entire country. 5. Markets Compete with Markets. Swift and Company. Agricul- tural Research Department, Bull. No. l, p. 2 . 4'1.“ A p- I ‘ ' u r 1' x ‘ ‘ "I r — '. . ‘ en - As a rule the 5(rkcis locaiem at the die.iest distance V- . as.-.“ 0 “L. '1‘ -._ “7..., I. pm. -. from Lfibte llVGfibUCfi-pTOQWCiH; sections of pay the hithest prices. hrrlcet r in the east, for exorule, must pay a price high ch.u to make it worth the effort and cost of the neat packer LC ship his uxeat from the cities where his plants are located. Were it not fo' price differentials of this type, it would no*; be orolil ble icr syn,cne io ship 6 11,. J meat from he producing to the consuming areas. When Ifew York City (or any other market) pays more for its meat than Chicago by an amouni equal to or abo"e the cos of transportation, then an increased amount of meat will be shi ppo d to this market. 1is increased supply of meat will H. H. bring about a decl he n price in that market, and then some d. other market will become Le highest point. The same proce— dure will be repeated until still another market USSimOS icp prices. In this way prices are in a continually fluctuating status, influenced by demand on one side and leveled off by supply on the other This situation also siist s for tie producer since one or his most difficult tasks ‘s the choosing cf the best market outlet. There are often wide fluctuations in the day-to-day price differentials on the same gra me of livestock between different private and public markets. If this were not sr, {he sI'_jper could select his bcsi outlet once and for all. As it stands, the price differertial between markets may or may not warrant his inppiny ie the one efferin: tLC hirhcst price. Transportation costs or CTFCT factors such as shrink, bruisinr or cripplini may be prvribitive, and thus in luerce 6. Loc. cit. Ob ,---‘, 1",..- i- 1 -- ,M.» ._. .,,,r - ~-_. -,_' .. armfllxel. 1A? muti_F'QClfl€‘lflLPiififlr'LO b1» (y? t}(-:uL:1r1twfi you point and pay for the cost of shinning or to buy locally. qany tires 0 perticnlar market may be temporarily over- supplied. Since meat is e perishable product and must be sold within a certain period, very often this condition will force an over-supply into consuming channels at lowered priccs. The retail men who is aware of such situations is just one step ahead of his competitor. Price Spreads Between Live Animal and Finished Product The question often arises as to why a custcner, when pnrch.sing a steak, must pay almost four times as much per pound at retail as the meat packer paid per pound for the live animal. There are three outstanding reasons for this condition. First, only sixty per cent of a choice steer is carcass beef. Second, only a small portion of the carcass is steak. Third, there are many necessary costs between beef on the open range and meat on the kitchen range. ‘hc best way to explain these reasons is by way of exemplo. A meat packer performs the initial transaction, .‘lA purchasing a 1000 pound chcicc steer at $25.H§ per hindred- weight. So his original cost is $2§h.50 Which includes all of the live animal. This includes the hide, head, bone, horns and hocfs, blood, veter, paunch, and similar waste saterials. 7. Cattle....NUmbers Prices Spread. Swift and Company. Agricultural Research Department, p. 3 c; 3‘!“ .\\ "‘ . r‘ ‘ ‘\ '.', ‘ "‘ 1‘ "ll‘ ‘ ""’ ‘. 0 J . - ' fl- 1 ~ I '- hLC“ 1L1; lC(%J.,ounu s,nll3 Ls dressed rnr., thtrc lcuuuxx: i ,. .. . ‘ a ’5 . ‘- . . . ..: . . ., . _ ' -° coo 001303 CT carcass oaef (o0 per cent). This ncans that in J order for ihe packer to get back the total dollars paid for the live steer, the “arcass must sell for more than h27h¢ p0? pound. (cost figfih.“0 divided by weight 000 pounds equals costppcr pound M2Vbe). The week following tho purchase of the steer, the choice carcass beef is sold for h2§¢ a pound or $255.00. This total $255.00 minus the cost $2§h.§0 leaves the packer with 50¢ to help pay the cost of buying, slaughtering, refrigerating, sellin , advertising, deliv ring, processing by—products, shrinkage and still leave him with a profit. It is pointed out in the following chapter that the value of the animal by— products generally assures the packer of this profit. Now the carcass beef "s in the hands of the retailer. The cost to him was $255.00, so he must sell it to the consumer for $310.00 in order to provide a margin wide enough to cover such costs as rent, labor, depreciation on equipment and fixtures, taxes, lighting, supplies, advertising and other operating expenses, as Jell as trimminfi less and natural shrinkage in the weight of the beef carcass when converted into retail cuts. But the retailer still has a problem. Meat eaters are unwilling to pay as much for some cuts as for oihe 5. Thus, he must sell over half the carcass beef for a price below the average price per pound in order to induce the customer to buy. Conversely, he must sell the choicest cuts of meat which '2) <1 the consuner will pay a premium for, at a hifher than erase price in order to attain hic gross margin. Together, this ccmbination of prices nekc' u the total Valle of the car- cass. Steau, heir" 0 :5 O O "3 a O :3“ (‘1 p. 0 O U) ('1' E 2%; ’1 ) (.3 5') desirable CLAPTEH V TYE HEAT PACKING IKDVSTRY Necessary Limitations The meat packing industry comprises plants of various sizes and slaughterers of various types. A breakdown of these varieties should give a more accurate picture of the industry. In 1952 there were H58 establishments slaughtering under Federal inspection. The number of plants operating without Federal inspection was divided into two groups. The first group included those plants slaughtering over two mil— lion pounds live weight per year and totaled 796. The second group included plants whose annual slaughter was less than we million pounds live weight but more than 300,000 pounds. This Group totaled 2209. In addition to these plants, there b were approximately 11 thousand butchers slaughtering less than 300,000 pounds live weight per year.1 However, for the purpose of this report, the reference to a meat packing plant will include only those coming within the limits of the following definition. "This industry comprises establishments primarily on- gaged in the slaughtering of cattle, hogs, sheep, lambs, calves :nd other animals, for meat in be sold fresh or 1. Facts and Figures about the Meat Packing Industry and Its Products. American Meat Institute, Chicago, 1994, P- 2s 'I’U ’8 S 3 1 1‘ ‘ C. . C _‘I to be used on t 3 one premises in canning and C‘riL€ ai‘.d in making 3 la .—..I‘d and other p-mr' 1m n2 This definition excludes a relatively lo ”I C number (f small plants which slar.gl:t or only a few lead of livestock ‘ eacn year (chiefly for their own sale direct to consumers), H locker plants and simila‘ firms operating on a strictly local basis, as well as slaughter by farmers. However, it includes about 2,000 companie es which process approximately 85 per cent of the nation's total m at supply, and which is that portion of the total that normally moves through wholesale ehanne s , to retailers.3 There are certain companies that have long been prominent in the meat packing industry. Organizations such as Swift nd Com.any, Arm ur and Company, Wilson and Company and Cuda by 9.) Packing Company at one time provided more than #2 per cent of the total meat obtained from animals slaughtered in the course of a year.br However, as mentioned previously, the trend toward decentralization has gradually reduced this percentage. Many interior plants have sprung up close to the producing areas and have consequently consumed a fair share of livestock that might otherwise have gone to the major packers. Since these major packers are located mainly on the central markets, they have countered this trend throush decentralization of their own operations, chiefly through direct buying and pur- chases of some of the interior plants. Aside from the major packers, there are many other 2. Financial Results of the Meat Packing Industry. American Meat Institute. Department of Marketing, Chicago, 1953, p. 2 1. Lee. cit. J a. Ensminger, M. E. Animal Science. Danville, Illinois: The Interstate Printers and Publishers, 1952, p. 253 packers of impcrtence serving particular areas. Figure 9 lists the national and some of the rosional packers as well v V ‘ ‘fi as neir beef brands in decreasing order of their grade. Services of the Meat Packer The manner in which the producer ships his livestock to any of the various outlets at his disposal has been described. Livestock at this point have completed the first leg of their journey and it is not long before they continue -w on. This further distribution of the meat supply of the nation is the responsibility of the packers. 4. It is the undertaking of the meat packing industry LO convert the available supply of slaughter animals marketed by farmers and ranchers into meat and other products desired by consumers, and to distribute these products in such a manner as to sa isfv most adequately the demand for them. In render- ing this service, modern meat packing plants actually perform four distinct fun tions:5 1. The production of fresh meats. 2. The production of cured and processed meats. E. The complete utilization of by-products. . The transportation and efficient distribution of fresh and processed meats from areas of production to centers of consumption. Each Jill be discussed in turn. The Production of Fresh Meats Packing plants may process cattle, calves, lambs and hogs or any combination of these animals. Some packers have killing 5. Ibid. p. 266 >11 -1 IGFR o 7 Nany pickers stamp their beef with various trade names or brands as an indication of ”oli* Ofte" the some brords are used on v al and lomb. This is especially true of the first or top ranl. ThC beCf br‘f s of the nrtional and some of the r .51 onal packers follow in decreasin3 order of their gra do. 066) ARIIOUR A“D COI ’PANY - Star, Banner, Crescent CT'DATI BRLDTIERS CO. - Peacock, Jack Sprat, Ce-Be-Co TTIE CT. DAIIY PACKII .G COMPANY - Puritan, Tex, Fancy, Rival, Thrift CIRCLE PACxI"’ CO. - Champion, Blue Ribbon, Red Ribbon, Special E! D" QVOIN PACKING CO. - Gov't. grades except on high Commercials, which are branded Tip Top GEO. A. HORREL & CO. - Best, Merit, Value, Hormel G. H. HAMMOND CO. - Rosebud, Famous, Hammond HOME PACh ING CO. - Dependable, wabash, Home HVNTER PACKING COMPANY - Ace, King, Queen HYGRADE FOOD PRODUCTS CO. — Peerless, Honey Brand, Favorite ILLINOIS PACh I“G CO. - Francy, Crown, Merit ' IOWA PACKING CO. - Old Homestead, I‘a :nous, Manor JOHN MORRELL & CO. - Special, Evergood, Pride, Xtrafine, Morrell, Allrite KINGAE & CO. - Reliable, Circle, Peerless, Shamrock OSCAR MAYER & CO. - Yellow Band, Capital, Special THE BATH PACKING COMPANY - Steers and Heifers - Blackhswk Delux, Blackhawk, Cornland, Recon, Sunvale, Budget THE IAT‘I PACIHIIG COhPAIEY - Cows - Crest, Harvest, Sycamore, Club, Economy ST. LOUIS INDEPENDEUT PACKING CO. - Mayrose, Tidy, Independent SCHLUDEIBERG-KJRDLE CO. - Esskay Quality, Highland, Beauties, Sun-Up STAHL-HEYER, INC. - Ace, King, Crown Sh"FT & COMPA"Y- Premium, Select, Arrow WILSO IT CO NC. - Certified, Special, Ideal, Leader, Wilsco . ---—.~A n “-1 1-. as 1 1 Y? A, 1- 1‘ A .- II-.. TTIAAMAvan '73 beds which can haidle POO cattle per hour. Tic entire oper- y.) (-4- I.“ ('3 ation is performed 01 style of an assembly line; one man performs his Specific job and then the cnimal passes n to ‘the next man. Most of the jobs in the slaughtering and meat packing industry are of a sinslo repetitive nature. For example, the only task of the cattle splitter is to split the beef carcass down the middle after it has been skinned. Jobs in the meat packing industry fall into categories ”I! related to the various operations. Slaughtering of animals, preparation of the carcass, processing of the various cuts, and the sale and distribution of the final product are the principle categories. Killing floor operations are the first step in meat production. In the case of hogs and lambs, work- ers fasten the animals by a hind leg to an overhead conveyor. Cattle are stunned in narrow pens and then allowed to slide down a few feet on to the killing floor proper, where the hind legs are slackled with chains and the animals are raised up. The animals are dispatched by the stickers and the blood is then drawn from the carcass. Skinning of cattle and lambs and de-hairing of hogs are also done on the killing floor. Hog de-hairing includes scalding with hot water, scraping, singeing with a blowtorch, washing with water and spraying with steam. In the skinning of cattle, the skin is loosened from the front legs which are then cut or broken off. The skin is next loosened from one part and then from another until finally the whole hide is removed in one piece. Each of these simple steps is performed by a different worker. When the carcass has been properly prepared, it Fees to the cutting floor. Workers in the department where the actual moat cutting takes place are generally on a higher skill level than thos- cn the killing floor. They must know the anatomy cl inc animals, the various uts of meat, and how to make these cuts with the minimum amount of waste or damage to the car- cass. A high degree of skill is necessary in the use of butchering and boning tools, such as knives, hand or power- driven saws, and cleavers. am All internal organs are removed except the kidneys. If t the plant is federally inspected, the carcass and viscera are examined at this stage in the slaughtering process. The carcass is then split through the center of the backbone and the tail is removed. The split carcass or sides are washed with warm water under pressure. The better carcasses are shrouded tightly with cloth so that they may -ave a smoother appearance following chilling. Following slaughter, the sides or carcasses are sent to the coolers where they are kept at a temperature of about 343 F. for a minimum period of twenty—four hours. They are then processed into wholesale, primal or re- tail cuts depending on the animal slaughtered. Hogs are processed into retail cuts by the packers. Cattle, having been divided into two equal sides, are further divided into two forecuarters and two hindquarters. Veal calves and lamb carcasses are left whole. Because of the high moisture content of veal, the hide is usually left on for the purpose of re- ducing evaporation. This also produces a more desirable carcass \3 or color. 0‘\ Kosher Slaughter eat for the Jewish trade must come from animals slaugh- tered according to the rules of Shehitah (the ancient dietary rules). Although people usually think in terms of beef when Kos he rin5 is mentioned, lamb, mutton, veal, and even poultry are dressed 'n this manner. In Tosher sl au ht er the animal is hoisted without stun- ning rho is cut across the throat with a special type cf knife. The killing is performed by a rabbi of the Jewish church or a specially trained representative. This method of killing causes more instant death and a rapid, free flow of blood from the animal. The rabbi also makes an inspection of the lines while dr cssizg. If the carcass is acceptable, it is mam*led on the brisket with a cross inside a circle The mark also gives the date of slaughter and the name of the inspector. Kosher meat must be sold by the retailer within seventy~ two hours after the time it is killed, or it must be washed and reinstated by a representative of the synagogue every subs eouont seventy-two hours. A maximum total holding period of 216 hours is allowed following slaughter. For this reason, rapid handling of Kosher beef followin" slaughter is imperative. Because most of the four million Jewish people in the United States reside in the eastern states, large numbers of live cattle and lambs are shi ippod from the large ma Mrcets farther 1 west to be slaughtered in or near thC eastern consuming areas. H The Production Oi Cured and Processed Meats ') The majority of the meat slaughtered, dressed and chilled the packing plan 3 is ready lCT shipment to branch houses or retailers. Some meats, however, require processing, or curing, before they are ready. Bacon and hams are examples. Pork sides are cut according to need end local customs, but generally it may be said they follow a division comprising hams, shoulders, bacon, and loins. Curing is of two kinds. In the sweet pickle cure, the pork cuts are immersed in vats of sweet pickle, which is a liquid mixture of salt and sweetening, and are left to absorb the pickle until the requisite cure is attained. In the dry cure, the cuts are packed in layers in watertight containers with sugar, salt, and other curing agents sprinkled between the layers. In the dry salt cure, the pork cuts are laid one upon the other in tiers, with salt sprinkled on and between them. For hams, there are also artery pumping and heavy spray pumping cures. When the sweet pickled and dry-cured meats are sufficiently impregnated, they are smoked over a wood fire. There is also a distinction in the length of time for curing. Long cures sometimes call for from 30 to ho days. Today, these long cures are seldom used. The short cure, new popular with pork packers, requires anywhere from 2 to 10 days. The manufacture of many kinds ,f sausages is an important segment of the meat packing industry. The last government cenc s listed more than one thousand sausage establishments, o.) kl reducing about 1.7 billion pounds of Federally Inspected '/ '4’ massese ir;l€“fl+.7 So Shftf)(flfli§l:i essentiaflflsr<10 chop;cd venerally beef and pork, whicn is cured, Spiced, and stuffed into beef, sheep and no: casings. Sausages may be marketed either ‘aw or cooked. When marketed fresh they are either dried and smoked, or sirply air-dried. There are two main divisions of sausag:s. One is the dry, or summer type, such as cervelat, thurinfor, salrmi, mortadella and pepperoni, which will keep for a long time wiih- 1 out refrigeration if held in a cool, dry, dark place. The V other type of sausage is classed a (.1 fresh, and includes L bolognas, frankfurters, head cheese and fresh pork sausage. ‘ The latter type should be held in the refrigerator until re— quired for consumption. Some sausages may be eaten as pur- chased, without additonel cooking while others are cooked for varying periods before serving. Most sausage plants are closely safeguarded by Federal, State and City health regulations and inspection. The canned meat business likewise has shown tremendous growth in the last half dozen_years. In 1953, he production was l,hh7,000,000 pounds. In the seven-year period between 19u7 and 1953, the production of canned meats increased 338,000, 000 pounds.8 The growth of canned meat consumption by Ameri- cans, excluding the Armed Services, is pointed up in that per capita consumption in 1952 was 9.23 pounds compared to 3.53 ( pounds in 1939.) of Public Relations, Chicago, 1955, n. 5 A. '7. Meafffor the Millions. American Meat Institute. Department 8. Loc. cit. O /. Facts and Figures about the Meat Packing Industry and Its Products. Op. Cit. p. 53 / One of ‘he main reasons for the rise in canned neat consumption, according to some auJLoritles, is that these products are easy on the pockstb rclr. anned m- zats lend them— selves well to advertising arid other mass merchandising techniques, since the brand name is presented on the cal that reaches the consumer. The nation's 1m ebaby population is also contributing to rising demand for canned meats. About seventy-five companies can meat - ten or twelve ° ' r 10 f". more than were in the busi Iness prior to horld har II. All of the major packers produce canned meat. A number of others are not in the fresh meat business, but specialize in canned meats. The Complete Utilization of By-products The total of the by-preducts of the American meat pack- ing industry runs into a large volume and value and forms a considerable portion of total production. Various by-products require different methods of processing, refrigeration, storage, packaging and trarsportatie n bef; re being useful to mankind. Without the aid of science the packer would never have to work out methods of saving the different by- becn able products of cattle. These products benefit the human race in 3 any ways. Many ailments are relieved by extracts from cattle ' ‘ J glrnds. The discovery of insulin for relief of diaoetes and the use of liver products for pernicious anemia are well- fin "fi known. io mane one pound o: pure, dry insulin requires materials from the pancreas of wbout 100,000 hots or 60,000 cattle.ll host meat hookers sell tie glands which they pro- duce to laboratories manufacturing insulin and other finished pharmaceuticals. Another important point to consider is that the utility value of by-products increases the price which the cattle- man receives for his animals and redrces the cost of beef to consumers. In many years the revenue from those by-products r1 is sufficient to pay the expense of slaughtering the cattle, : _transporting the beef from meat packing plants to retailers, refrigeration, sales expense, taxes, similar operating costs, and still leave a profit. It should be remembered, however, that their contriouiion is bv no means the most important one. While it is true that the returns from the manufacture of by-products are very large in the aggregate, due to he immense volume, the total return is minor compared to that derived from the sale of the main product of the meat packing industry, namely meat. The relationship of the value of by-products to the total value of meat and by-products varies with the kind of live- stock. Table II shows the approximate average percentage A distrib‘tion over a period of rears of the total money K received by meat packers for meat, by-produets, and hides or . . l2 pelts obtained from lambs, hogs, calves, and cattle. II} ‘Meat for he Millions. 0p. cit. p. 6 12. Lamb By-products. Swift and Company. Agricultural Research Department, Chicago, Bull. 10, p. l t0 1 TABLE II 3 Carcass Hide Other heat or‘Pelt By-prodrcts Total Cattle 85.0 6.# 835' 100 Lambs 75.1 15.2 9.7 100 Calves 77.9 13.0 8.5 100 Hogs 96.3(includes -— 3.7 100 .%3rd> — — “ \‘m—n.—-‘~‘— u—-»--..__.h ---_—.... .a" -.- L. _‘ ~n~ It should be understood that the percentage return from meat and the different kinds of by-products varies from year to year. In addition, sharp declines in the value of important by-products can be an important factor in bringing about lower prices for steers. In December, 1932, a 1000 pound steer was worth filo less to the packer than it was in 1950 because of a 70 per cent decrease in the value of tallow and a 5% per cent decrease in the value of hides. Tallow, of which.a 1000 pound steer yields approximately 40 pounds, dropped from nearl! 15% cents per pound to %% cents per pound Q) in these two years. Hides, which average about 60 pounds for a 1000 pound steer, dropped from 36 cents per prund to l % cents per pound during the same period.13 Situations of this nature serve to reduce the retu'n to the producer and raise the price to the consumer. Transportation and Distribution of Fresh and Processed Meats The channels of movement of meat and meat products from packing plants to consumers and other users are shown in Figure 10. Only the two principal nethods of distribution will be discussed; namely, branch house service and refrig- 13. Facts and Figures about the Meat Packing Industry and Its Products. 0p. cit. p. 44 pm cu» 81 Wu.tOzoum J<¢3533¢o< no adamam maom+ .omz MKDPJDUEG,‘ no P2w£k¢ 20 03.3 .mmmm: «Bio 32 mzmznmzoqu E. 2.23; 92365 20m... mhunoomi :mz oz< .532 m0 qu2m>os .._o m4m22 _ H 0 fl 4_ 1 ,. n 1-, .I v_ I“ 1 , ’“teflfll to nreveni tie renderiny prudvct Eran being used IIl ~05 ' ‘o-‘Y _ ,., “f. ,_'_9 N 'o‘,"“-'r‘ "A. Cl“ etLler‘ ptxrpcwscui. MC‘ bet.-cs: JLA: ttup c. 1 L 1 tan ”.3. 1c, ,1 . - ‘- N F' —‘ 1 F .I‘ )’II . 1“,» 7.. . ‘.. - 1.3,01H3Iisiezrt snsall. ngl ”;C (;U, ,J r?- ants (histrrgnwi as end is concerned. Plent Ins eetien In additie n to the ento-mertem .nd pest—mortcn ins p6 “cti ns referrec to the government meat inspectors have the power to close a HI nt tha' is not sanitary in every respect. In order H to conform with the requirements laid drxn by the Governncnt the floors and tables in a plant must be washed every day, tools must be thoroughly sterilized, and workmen must have clean garments. Ample lavaiory facilities, wash basins and dressin" rooms must be provided so that the work may be carried on in a most so tary mainer. The same minute attention is given to the handling and care of meats on their way to market. Before a refrigerator ear or truck is loaded, it is thoroughly scalded with steam and hot water. About three tons of ice and eight hundred pounds of salt are put into the ice chambers to cool a refrig- ator car, the salt causing the ice to melt and absorb the heat. It takes about this quantity to get the refrigerator car chilled before the meat is put in, and the car must be iced age in Vhen the meat is loaded. In order to keep the temperature cool and even throughout the overland journey icins stations are maintained at various points along the railWaYs so that ice and salt may be replenished every twenty- four hours. Motor trucks generally utilize mechanical refrig- In this chapter it has ‘een pointed Hols, process them, and It 1 v A. Iniekinfi cereanics purchase live ani an r‘ plfevide traL.portation facilities for their customo s. is; certainly an efficient component of the marketirl system arid a.s,oeial puaranteo to the consuming Public that their rt:at supply will always be available in the freshest and sa:fest eenditien possible. CHAPTER v1 FUNDAMENTALS ow LETAIL MANAGEMENT Chain store organizations have deiinite ways in which they operate and definite company policies which must be followed at each operational level. These policies are communicated through the various levels of command to the market managers. Consequently market managers have a definite set of rules to follow and are limited in‘certain phases of operation. Most operators seem to feel that standardized cutting methods are of vital importance for successful meat mer- chandising and operating in a chain company. For this rea- son, they have established definite cutting methods, and, in many cases, have put them in writing (manuals). This report will not be concerned with any meat-cutting principles or methods, since they are clearly presented in these chain store operating manuals. In addition, there is a wealth of valuable material contained in these manuals which is at the disposal of all store personnel. Such items as the selection, training and supervision of personnel, customer service, expenses, equip- ment, pilfering, records, safety rules, and similar data are included, as well as store level receiving, cooler arrange- 91 ment, displays, selling material and even cooking methods. None of these topics will be discussed, at least not directly. The contents of this chapter will be aimed rather in outlining some of the activities engaged in above store level in order to provide store personnel with a background knowledge of the overall chain store meat Gpclation. Such knowledge could be extremely useful, both in enabling an employee to better understand his own position in the opera- tion, and in preparing him for future positions requiring a more extensive coverage of the meat industry. Sources of Supply One of the prerequisites of the chain store operator is to have a reliable source of supply. Good relationships with suppliers are of vital importance. Not only do regular sources "pay good dividends in the pinches", but also in day-to-day negotiations during normal times. Mutual con— fidence relationships between chains and suppliers make it easier to buy, assure more uniform quality, regular delivery schedules and other advantages. While some companies recommend "getting a good supply source and staying with it", others feel that it is necessary to spread sources because if one source fails temporarily, as in the case of a war, it is practically impossible to get supplies. Policies on selecting the source of supply vary with different companies. Buying The buying of meats is an important undertaking in the chain store operation. The perishability of the product necessitates careful analysis and accurate decisions. In order to make these decisions the buyer must have a thorough knowledge of market conditions. Valuable market information may be obtained through various daily, semi-weekly or week- ly publications and bulletins published by the United States Department of Agriculture as well as reports issued by pri- vate concerns interested in livestock marketing. The anal- ysis of these reports is tied in with a record of past sales and associated with the current retail price structure in formulating plans for purchasing the necessary supply of meat for a certain period. There are, of course, other guides at the disposal of the buyer, such as store orders and com- petitive conditions, which may influence his decisions. It is the Job of the buyer to evaluate this information and co- ordinate his decision with that of the meat sales department in arriving at the best sales program possible. Sales Planning The sales department likewise has the task of selecting the most attractive items to feature in its weekly advertis- ing. The sales force must consider market conditions as well as the buyer. Seasonal variations in price can be of extreme importance in reaching a decision. The supply of livestock en the market, reflected in consumer demand at retail level, 93 is a very impcrtant factor. MvSt operators have a somewhat similar procedure. It includes careful watching of the mar- kets, the seassn, the supply and demand situation, and, particularly, studies of the needs of the censumers in a particular area to enable them to vary their diets and pre- vide for their special regional and seasonal requirements. Many companies practice advance sales planning to vary- ing extents. One at the ebjcctives of this type of planning is to find and correct mistakes before they are made. An- other is to get the best possible realistic estimates ef volume - tonnage and dollars for each cut. The proximity of stores to a meat packing area has an influence on the nature and timing of advance sales planning. Companies located in the heart of these areas do not have to contend with transportation and time of travel difficulties. Consequently, they can plan their sales closer and are more flexible in adjusting to market conditions. Programs are scheduled anywhere frem four days to thirteen weeks, although the average is probably somewhere between three and four weeks. The meat buyers representing chains located a considerable distance from the packing plants, generally negotiate with these packers about ten days prior to the date of delivery. Since the price is established on the date of purchase, there is a possibility of intervening fluctuations which may in- fluence the sales plan. Where the chain stores are situated in a meat packing area, or where buying is performed on a local basis, negatiations can be made within several days of the delivery date and consequently the chance of price reduc- 7., tions or advances is reduced. Most companies plan and operate on a classification basis, that is, they arrive at a sales quota for each item. They decide what gross profit each item will bring in a particular week and develop a sales program to achieve balanced selling that will provide the overall gross profit desired. 0n judging the final results, and the tolerances allowed, most companies seem to feel that "circumstances alter cases." If results are unsatisfactory in a particular store, it may be due to the area in which it operates, or heaviest sales may be on items with the lowest gross, or there may be other reasons. Whatever the case, steps are taken to correct the situation as quickly as possible. District managers and meat Specialists are responsible for these trouble areas, and in some cases, special consideration must be given to individual stores in order to solve the problem. Distribution There is considerable difference of opinion concerning the manner in which meat should be distributed from meat packer to retailer. One of the main distinctions centers about the use of company-owned meat warehouses. Some large chains operate their own warehouses and are constructing new ones as they are needed, while other chains prefer the use of packer branch houses or local distributors. One of the largest chains in the country has only three meat warehouses at the present time, and barring a change in plans, will cease warehouse operations completely. The major factor in \0 U1 either case, of course, is cost. Where the cost of distri- bution is shown to be less in one instance, that particular method will be used. The chain operating its own warehouse will generally buy in carload lots in order to take advantage of lower trans- portation costs and possible lower market prices. These car- loads, shipped from packer to warehouse rail siding, usually constitute the bulk of the chain's meat requirements. Com- pany-owned or leased refrigerated trucks then deliver the 5 meat to the retail stores. Supplementary ordering may be ILv 4.. _ . _ done through local slaughterers, local distributors, or local branch houses. On some occasions, veal or lamb may be pur- chased locally due to consumer preference for a particular type of meat or to market surpluses and resultant lower prices. Without a meat warehouse, a chain has to depend on the local slaughterers, local distributors, packer branch houses or local packing plants. Chains using this method are gener- ally located in the midwest where the sources of supply are plentiful. Handling costs on the part of company employees are eliminated except at retail level since one of the distri- butors mentioned will deliver the meat orders directly to the store. However, transportation costs are liable to be higher without carload rates and the market price is likely to be higher since the cost of transporting the meat to the branch houses and local distribution points will have to be included in the price. The final decision depends on these factors: the cost of distribution, the difference in market prices, the radius of as of deliveries to the stcr s, and the service that is given by the parties concerned. In addition, it is necessary for a chain to have ufficient volume to handle carload lots in order to make warehousing pay. Finally, warehouse control is generally considered to be an important factor in controlling retail shrink. One operator summed it up: "control is best through the warehouse, but warehousing and delivery are not always practical".l Store Ordering Ordering is based on the previous weeks' records kept by the meat department manager in his store, modified by evaluation of prices, seasonal demand, holidays and inventory. Many different practices are followed in establishing schedules and procedures for ordering. Generally, orders are taken from stores one week to ten days or more in advance, with adjustments and fill-in orders made nearer the time of actual delivery. Orders from stores may be evaluated at district or division level by meat specialists or even by order clerks, who call attention to "out of line" orders. General practice, however, is to permit changes only when the situation has been reported to a supervisor, who then discusses the matter with the store manager or meat manager. Several companies use a telephone ordering system so as to bring orders and delivery one day closer together. 1. fifiat Merchandising and Operating. National ssociation of Food Chains. Washington, D. C. Summary Report, 1952, p. 12 Inventory Control It is generally conceded that while inventory control is necessary, it should not be emphasized to such a point where it interferes with sales. As one meat executive expressed it, "it is better to have a large inventory on Saturday night than to be out of business on Monday morning”.2 It should be pointed out that a flat standard of Saturday night inven- tory to weekly sales can be very misleading. It is important to have a balanced inventory and this is the joint responsi- bility of meat managers and supervisors. A Companies differ in setting up standards for inventory. Several companies represented at the National Association of Food Chains Meat Clinic reported as follows: "20 per cent of sales tonnage is a good figure but it tends to get up to 25 per cent; 20 per cent of all fresh meat is one company's standard, but it generally reaches 23 per cent with a 25 per cent figure on provisions, based on net cost of merchandise with five deliveries a week; another company reported an average 26 per cent carry- over with variation depending on when the store gets its first delivery the next week - lower if Monday, higher if Tuesday. Still another company reported a 30 per cent carry-over brought about because of long distances to stores, and need for having inventory to avoid loss of early week sales; one company regarded inventory as being excellent if less than 25 per cent of weekly sales, good if 30 per cent, fair if 35 per cent, poor if 40 per cent; formula for one company was 2,000 lbs. of inventory for up to 310,000 weekly meat sales."3 Regardless of what percentage is used as a guide, the goal should be to carry as little meat as possible over the weekend without running short. ” Accurate inventory control ¥ 2. Loc. cit. (2-8 I will help reduce natural shrinkage, the number of markdowns, and also help store managers in both ordering and merchandis- ing. ‘ In ccnnection with inventory control, it should be pointed out that most companies are as concerned about stock overages as they are about stock shortages. They feel that 'stock overages'in the long run mean loss of business and loss U H of customers. Stock shortages are the result of numerous f deficiencies such as poor ordering, improper cutting methods, F inefficient receiving methods, and usually are corrected by a conference between a line supervisor and meat manager, with the aid of the meat specialist, if there happens to be one. Information Available to Meat Manager More and more companies are adopting the policy of giving the store managers a greater amount of information concerning sales and other important items. The belief is that managers should be informed of coming events. Many chains feel that giving managers the whole story brings them in on management, inspires them with confidence and puts more responsibility upon them. Information may be communicated to the meat manager through the use of bulletins or imparted verbally by way of supervision. Companies in general do not seem too concerned about leaks of advance planning to competitors. They are interested primarily in achieving an efficient operation, and if they consider it sufficiently important to keep managers well in- formed, that is the policy they will follow. ()9 J . -_ . L;. Integration 0: heat Packer - Retailer Two of the largest retail chain companies in the United States own and operate their own meat packing plants. Al- though this is no innovation in the food industry, it is nevertheless a distinct form of integration at the present time. During the war years when meat supplies were scarce, many of the large chains employed their own packing plants. However, following World War II, the supply of meat increased and the majority of companies departed from the meat packing business to concentrate on retailing. American Stores Com- pany and the National Tea Company retained their plants and have maintained a successful operation through the years. American Stores Company has two meat packing plants located in Lincoln, Nebraska and Pueblo, Colorado. Slaughter- ing is confined to cattle and lambs and the plants are operated the same basically as the major packers. The selection of livestock at the central markets, concentration yards, and similar outlets is performed by buyers employed by the com- pany. Range fed cattle and lambs are shipped to company-owned feed yards and fed out to meet the specifications of the com- pany. All carcasses dressed out in the packing plants are government graded. Distribution methods resemble those of the major packers. Carcasses are shipped by rail to any of nine company-owned warehouses located in Philadelphia, Pa., Allentown, Pa., Philadelphia, Pa. (#2), Forty-fort, Pa., Baltimore, Md.3 Kearny, N. J., Johnstown, Pa., Syracuse, N. Y., and finffalo, N. Y. From these points the carcasses are moved bylrefrig- \ w \ H Information received in response to questionnaire;\‘ ‘ O ~ ~ :3 ‘11‘5 r-.‘"zul erated truck to all stores in the company (approximately 8M5). This initial shipment, however, only represents about 55 per cent of total store shipments. The remaining: 1+5 per cent is purchased from packer branch houses or other local distri- butors . Until now, there is no prepackagiug done at the meat. plant level; all packaging is performed in the stores. The National Tea Company operates in essentially the same manner with a few exceptions. They own two meat packing plants, one located in Denver, Colorado and the second in Fergus Falls, Minnesota. The company has its own livestock buying department and buys both slaughter and feeder cattle and hogs. These cattle and hogs are fed to the specifications or the company with all carcass beef graded by United States Government employees. Unlike American Stores Company, hogs are slaughtered along with cattle (no lamb slaughtering) and the distribution System is set up differently. All meat leaving the packing Plants is transported by refrigerated truck. There are no rail shipments. Although they do operate their own warehouses, a. great deal of the meat never leaves the refrigerated trailers and is delivered direct to the retail stores. The reason for this is that all branches of the company, excluding Chicago, only receive approximately 20'per cent of their beef supply from the Denver Packing plant, and approximately 10 per cent of their pork and smoked meats from Fergus Falls. In the ChiCago branch (285 stores), however, approximately 75 per Cent of the beef is supplied from their Denver Packing Plant, and 25 per cent of their pork and smoked meats from their lCl Fergus Falls Packing Plant. The remainder of their cattle and hogs and all lamb and veal are purchased from outside packing plants. Both American Stores Company and the National Tea Com- pany operate their packing plants in an efficient manner. Like any integrated operation, however, there are certain problems that exist. The operation of a meat packing plant requires a different type of personnel than the typical re- tail food chain. Management as well as manual workers must be well informed in their positions. The processing itself requires a certain amount of specialization and mechanization and only experienced men can be entrusted with the job of planning, analyzing and coordinating the complete operation. It is for these reasons that many companies have preferred to remain strictly in the business of retailing. A Comparison of Meat Cutting Tests Meat cutting tests are performed by companies and utilized by them as a guide in arriving at retail prices. It is not necessary to perform such tests frequently since they are usually established as standard cutting procedures. Unless there is a radical change in the cutting techniques of a company or there is a departure from the customary type of carcasses handled (differing in weight, conformation and fin- ish), there would be no need for conducting such tests very often. A cutting test establishes two basic things: the weight of the individual primal cuts received from a carcass and the 102 percentage of the carcass which these primal cuts represent. Using Figure 11 as an example, it will be noted that ”short ribs” weigh three pounds, six ounces and represent l.H per cent of the carcass, the "plate and navel" weigh fifteen pounds, three ounces, representing 6.2 per cent of the car- cass, and so on down the line. The total weight (244 pounds, # ounces) of the side naturally equals 100 per cent. When the per cent of carcass of any one of the primal cuts is multiplied by their respective retail price per pound, the resultant figure represents the return in dollars that a each primal out should brine. The total dollar return of the whole side is computed by adding up the individual dollar returns from the primal cuts. Since the cost of the side is known, it is a simple matter to subtract the cost from the total retail value of the side in order to arrive at a final gross profit dollar figure. More will be said about this pro- cedure in the following section of this chapter. The purpose here is to point out the difference in cutting methods, percentages of carcass and gross profit percentages obtained in different sections of the country. Figure ll and 12 illustrate New York and Chicago style cutting tests in that respective order. Many comparisons can be made from these charts, especially from the hindquarter. The greatest distinction lies in the utilization of the round. New York merchandises boneless top, bottom and eye round separately, whereas the Midwest prefers a round steak (bone-in) composed of all three of these cuts. Rump roasts are a popular seller in the Midwest while attracting little 103 FIGURE ll r.’ NEW YQKE STILE STANDARD CUTTING TdST) SIDE 0H BEnF iEISRT 4 OP RETAIL ITEM - POREQUARTER LBS. OZ. CARCASS PER LB. EXT. SHORT RIBS 3 6 1.4 .35 s 49 PLATE & NAVEL (BONE IN) 15 3 6.2 .25 155 SRIRT STEAK 1 2 .5 .65 33 BRISKET, BUNELESS 6 9 2.7 .62 167 CROSS RIB, BONELESS 9 9 3.9 .69 269 SPIN, BORELESS 4 6 1.8 .45 81 CHUCK ROAST (BONE IN) 26 12 10.9 .47 512 RIB ROAST 11 3 4.6 .63 290 NEWPORT ROAST 4 6 1.7 .89 151 STEw BEEF 12 7 5.1 .65 332 SALISBURY STEAK 4 2 1.7 .65 111 CHOPPED BEEP 12 8 5.1 .45 230 SHOP FAT 8 5 3.4 .08 27 BONES 12 6 5.0 .02 10 TOTAL FOREQUARTEH 132 4 54.0 92417 ITEM - RINDQUARTER TOP ROUND (BONELESS) 10 10 4.4 .79 t 348 EYE ROUND (BONELESS) 4 2 1.7 .79 134 BUTTQM ROUND (BONELESS) 9 2 9,7 .79 292 SIRLOIN STEAK 21 12 8.9 .75 667 PORTERHOUSE STEAK 14 5 5,9 .75 44 TOP SIRLOIN 9 11 4.0 .79 31 FLANK STEAK 1 6 .6 .65 39 SHIN, BONELESS 3 1 1.3 .45 59 CHOPPED MEAT 1 .4 .45 18 SALISBURY STEAK 10 2 4.1 .65 267 KIDNEY 14 .4 .3 13 COD FAT g 1 1.3 .O 10 SHOP PAT 3.8 .08 26 SUET 4 8 1. .10 18 BONES 10 6 4.2 02 08 TOTAL HINDQUARTER 112 46.0 $2658 TOTAL SIDE 244 4 100.0 $5075 COST 4150 GROSS PROFIT T 925 GROSS PROFIT PER CENT 18.2% 3. Meat Cutting Test received from a large Eastern food chain. 103 FIGKhE ll 5 I‘ll-3W YORK. STl’LE S'l‘Al‘TDAr-ZJ) CUT‘l’II‘JG il‘g'lS'l' SiDE Oi" BESF AEIORT 1 OR RETAIL ITER - FOREQUARTER LBS. z. CARCASS PER LB. EAT. SPORT RIBS 3 6 1.4 .35 s 49 PLATE a RAVEL (BONE IN) 15 3 6.2 .25 155 SKIRT STEAK 1 2 .5 .65 33 BRISKET, HOMELESS 6 9 2.7 .62 167 CROSS RIB, BOKELESS 9 9 3.9 .69 269 SPIN, BORELESS 4 6 1.8 .45 81 CHUCK ROAST (BONE IN) 26 12 10.9 .47 512 RIB ROAST 11 3 4.6 .63 290 NEWPORT ROAST 4 6 1.7 .89 151 STEw BEEP 12 7 5.1 .65 332 SALISBURY STEAK 4 2 1.7 .65 111 CHOPPED BEEP 12 8 5.1 .45 230 SHOP FAT 8 5 3.4 .08 27 BONES 12 6 5.0 .02 10 TOTAL FUREQUARTER 132 4 54.0 S2417 I”EN - BINDQUARTER TOP ROUND (BONELESS) 10 10 4.4 .79 t 348 EYE ROUND (BORELESS) 4 2 1.7 .79 134 BOTTJM ROUND (BONELESS) 9 2 “,7 .79 292 SIRLOIR STEAK 21 12 8.9 .75 667 PORTERROUSE STEAK 14 5 5,9 .75 44 TOP SIRLOIN 9 11 4.0 .79 31 FLANK STEAK 1 6 .6 .65 9 SHIN, BONELESS 3 1 1.3 .45 59 CHOPPED MEAT 1 .4 .45 18 SALISBURY STEAK 10 2 4.1 .65 267 KIDNEY 14 .4 .3 13 COD FAT g 1 1.3 .O 10 SROP PAT 1 3'8 .08 2b SUET 4 8 1. .10 18 BONES 10 6 4.2 02 08 TOTAL RINDQUARTER 112 46.0 A2658 TOTAL SIDE 244 4 100.0 25075 COST 4150 GROSS PROFIT E 925 GROSS PROFIT PER CERT 18.2% 5. Meat Cutting Test received from a large Eastern food chain. 10“ FIGURE 12 CEICAOO STYLE CUTTING TESTO SIDE OF BEEF WEIGH‘ 5 OR RETAIL ITEN - FOREQUARTER LBS. OE. CARCASS PER LB. EXT. 7” RIB STEAK 9 13 4.1 .79 E 326 CHUCK BLADE 31 12.7 .49 621 CHUCK ARN 10 8 4.3 .53 226 ENGLISH ONT 8 7 3.4 .53 179 BONELESS NECK 11 4.5 .59 266 BRISKET 9 13 3.9 .29 113 SHORT RIBS 6 11 2.7 .33 9O PLATE 12 8 5.1 .19 97 TRINNINGS 27 11.1 .33 365 TOTAL POREQNARTER 126 12 51.8 $2283 ITEN - HINDQUARTER PORTERHOUSE STEAK 13 3 5.4 .98 E 531 SIRLOIN STEAK 13 9 5.6 .89 498 ROUND STEAK (BONE IN) 17 12 7.3 .89 652 SIRLOIN TIP 7 12 3.2 .99 320 RLANK STEAK 1 3 . 5 . 95 47 HUMP ROAST 9 7 3.8 .69 259 HEEL OR ROUND 5 15 2.4 .69 168 KIDNEYS 15 .9 .19 07 TOTAL HINDQUARTER 69 12 28.6 92482 FATS 28 8 11.7 .005 06 BONES 17 4 7.1 .005 O4 SHRINK 2 .8 TOTAL SIDE 244 4 100.0 $4775 COST 3950 GROSS PROFIT s 825 GROSS PROFIT PER CENT 17.3% 6.7 Meat Cutting Test received from a large Western food chain 105 attention in the New York area because of the abundance of top, bottom, eye and crossrib roasts. The reason for these differences, of course, is that demand for various cuts differs in certain sections of the country. The differences in per cent of carcass are attributable to this variation in cutting methods. For example, the rump roast prepared in the Midwest is composed of portions that make up the round, sirloin and sirloin tip in New York. There- fore, the per cent of carcass of these three cuts will be less in the Midwest than in New York. Before going any farther, it should be pointed out that the difference in gross profit shown on these charts is not the direct result of any cutting methods. Market conditions and pressure of competition as well as the financial and marginal backlog accumulated by a company over a previous period may have an effect on the gross profit figure. In ad- dition, the figure is a flexible one and will fluctuate from week to week in relation to the meat tonnage and retail prices maintained. Competition from other companies and other products will also have its effect. It is the combination of all these factors which enables the meat merchandiser to arrive at a given overall gross profit figure. It should be pointed out further that it is not practical to compare prices since the two tests were taken in separate years and the cost of the beef was not the same. It is, how- ever, possible to transpose these figures into gross profit percentages for each individual primal cut. This is done by computing the cost of an item and subtracting the cost from 100 its extended dollar return at retail so as to arrive at a gross profit in dollars for the item. The gross profit in dollars divided by the dollar return at retail will decide the gross profit percentage. As an example, in Figure 11, the top sirloin constitutes four per cent of the carcass. Since the total cost of the carcass is $41.50, the cost of top sirloin would be $1.60 (t4l.50)(.04). The known return at retail minus the cost leaves the gross profit in dollars ($3.16-$d.66==$l.50). This gross profit in dollars ($1.50) divided by the dollar return at retail ($3.10) will give the gross profit percentage of the single item, top sirloin 1&9 3 _ (3.1 —.47 per cent). Figure 13 lists the gross profit per- centages made on all primal cuts listed under New York and Chicago style cutting methods. By computing these percentages, it is now possible to Show the contrast between the two methods. From the chart in Figure 13, it can be clearly seen how consumer demand affects the price that can be placed on retail cuts of meat. In the New York area, the forequarter provides a 22 per cent gross profit. Only the plate and short ribs are sold at a loss while the remaining items, excluding chopped beef and boneless shin, are sold at a respectable margin. The Midwest market sells the plate, short ribs, brisket and trim- mings at a loss. The only items that sell at a high margin are the chuck and the rib and the overall gross profit for the forequarter is only 10 per cent. The reverse is true of the hindquarter. Gross profits ranging from 42 to 61 per cent permit the Midwest to obtain 55 per cent overall. The New York market can only obtain 44 107 . # ElGUHE l3 GROSS PROFIT PER ‘ENT MADE ON VARIOUS CUTS OF mggT (EAT AND BONE ARE NOT CONSIDERED HERE)* EOREOUARTER GROSS . GROSS NEW YORK STYLE PROEIT A CHICAGO STYLE PROFIT A SHORT RIBS -16€ SRORT RIBS - 19% PLATE & NAVEL ~66% PLATE -107% SKIRT STEAK 36 BRISKET 33 BRISKET - 36% CROSSRIB, BONELESS 40 CRNCK ARM 25 SHIN BONELESS 7 CHECK ROAST (BLADE) 12 CHUCK BLADE 19 RIB ROAST 3N 7H RIB STEAK 5O NENPORT ROAST 5 STEw BEEF 3 BONELESS NECK 33 SALISBURY STEAK 36 CHOPPED BEEP 8 TRINNINGS -20% TOTAL EOREONARTER 22% 10% HINDQUARTER TOP ROUND (BONELESS) N7 ROUND STEAK (BONE IN) 56 EYE ROUND " H7 HEEL OF ROUND N3 BOTTOM ROUND " R7 BUMP ROAST N2 SIRLOIN STEAK as SIRLOIN STEAK 56 PORTERROUSE STEAK 4N PORTERHOUSE STEAK 60 TOP SIRLOIN N7 SIRLOIN TIP 61 FLANK STEAK 36 PLANK STEAK 57 SHIN, BONELESS 8 CHOPPED MEAT 6 SALISBURY STEAK 36 KIDNEY -31% KIDNEY .-129% TOTAL HINDQUARTER NNN 55% * If fat and bone were included, total gross profit percentages would be lower. The purpose of the chart is to show gross profit percentages for individual items. # These figures have been computed by the writer from the cutting tests shown in Figures 11 and 12. 108 per cent gross profit. These figures disclose certain facts. The consumer in the Midwest is evidently ready and willing to purchase the choicest cuts of meat but will only accept the less desirable items at a very low price. For this reason, the meat depart- ment must obtain a high gross profit percentage on the choicest cuts in order to arrive at the desired overall percentage. Percentages are spread more evenly in the New York area since many of the less desirable cuts will be accepted by the consumer more readily. Brisket, for example, can be sold at a gross profit of 33 per cent whereas the Midwest retailer ust sell it at a loss. The question of whether a demand can be created for these less desirable items is a debatable one. Changes in the location of population may create this demand as people retain there likes and dislikes when they move from one place to another. Consumer education is another possibility. In comparing the two styles of cutting, it is evident that the New York method offers more in the way of variety and value. Variety can be a big selling point. The New York method has all the items offered from the Chicago style and then some. Additional items include chuck steaks, boneless brisket, flanken, boneless crossrib roasts, Newport roasts and Yankee Pot Roast from the foreqnarter and boneless top, bottom and eye round roasts, boneless top round steaks, short steaks, and top sirloin roasts from the hindquarter. The reference here is to meat items that are displayed in retail meat departments. With this variety, a housewife has a chance to vary her servings in beef 10C alone. It may all he beef, but it looks different, it is shaped different and it can be cooked differently. The consumer receives a better value since the Choiccr cuts of meat do not have to provide as high a margin as In purchasing choice cuts of .0; the Midwest. A person desiring an meat will consequently pay less over the course of time and still be eating the meat that he desires most. From the viewpoint of the retailer, however, it would be easier to work under the Chicago style of cutting. The con- sumer is willing to pay high prices for the choicest cuts of meat. The meat man does not have to put as much work into merchandising the forequarter (although his margin could be increased if he did). Labor costs could possibly be lower since the New York style demands more time and effort in pre- paring this greater variety. The intention in this camparison has not been to show a preference for one method or the other, but merely to point out some of the differences and the advantages and disadvan- tages contained in them. Establishing the Retail Price The methods of establishing the retail price vary with the cempany although all employ the same general procedure. lune method to be described is merely a snide and is not com- pulsory in the particular company in which it is used. Most cnnnpanies use some form of guide, but few follow it exactly. inns reason for this is that the pricing system must remain .flexible in order to cope with changing market conditions, llO competition, and variations in demand brcught about by nation- ality or locality factors. Figure 1% shows a beef pricing guide used by a large Midwest chain. Similar pricing guides are also available for _lamb, veal and pork. Column I lists the Wholesale Cattle Costs per hundredweight, Column II the Let Weight Cost per pound while both are listed in a corresponding ratio. For example, when cattle costs $N6.SO to $h7.00 per hundredweight, the net weight cost per pound would be 8.60 (costs of transportation, handling, etc. are included in this figure). Column III lists the percentage weight of the primal cuts to the side. These are the figures computed from company cutting tests (see pageIOl). Column IV denotes the various cuts. Column V lists the cents per pound mark-up to be added to or subtracted from the net weight cost in order to arrive at the selling price. For example, using the same net weight cost $.60, the selling price of the sirloin would be $.98 ($.60i—$.38). Now the job is simply to extend the figures in the same manner as shown in the cutting tests. For instance, the percentage weight to the side of sirloin (5.1 per cent), multiplied by the selling price ($.98), would give the dollar return.at retail. This procedure would be followed down the line until the total dollar return at retail is calculated ($54.83). Once again, the mark-up is arrived at by subtracting the known.cost ($H7.l7) from the retail total ($54.83). In this case, the mark-up would be $7.66. ,As mentioned previously, these guides are available for all kinds of meat so that advanced reports can be made estimating lll FIGTRE 14 7 BEEF PRICING GVIDE COL I COL II 00L III 00L IE COL V ¢ Per Lb. Mark-up to be added to net weight to arrive at Wholesale Cattle Costs Net Weight %'Weight Per th. Cost Per Lb. to Side C U T selling price. $25.00 to 25.257 32 5T15 Sirloin .38 25.50 " 26.00 33 5.3 Porterhouse-3" .60 26.25 " 26.75 35 .5 Flank Steak .38 27.00 ” 27.50 35 .3 Beef Kidney -.#l 27.75 " 28.25 36 4.0 Rump Rolled .33 28.50 " 29.00 37 1.9 Back End Round .05 29.25 ” 29.75 38 6.6 Round Steak .38 30.00 " 30.50 39 3.6 Round Tip .38 30.75 " 31.50 40 1.3 Shank Meat -.17 31.75 ” 32.25 41 4.6 Trimmings -.15 32.50 " 33.00 #2 1.6 Round Swiss .35 33.25 " 33.75 43 9.7 Sq. Cut Chuck -.01 34.00 ” 35.50 Rh 3.0 Arm Roast .10 3H.75 " 35.25 #5 3.8 Neck Boneless .05 35.5 " 36.00 46 6.2 7" Rib Roast 5 Ribs .23 36.25 " 36.75 #7 2.5 Brisket Boneless .05 37.00 " 37.50 48 2.1 Shank Meat -.15 37.75 " 38.50 49 2.0 Short Ribs -.25 38.75 " 39.25 50 5.5 Navel (Bone In) -.31 39.50 " 40.00 51 3.3 English Cut .10 40.25 " 40.75 52 4.3 Trimmings -.15 41.00 " 41.50 53 1.6 Rib Roast 6/7 Rib -.01 51.75" 42.25 9+ 42.5 " 43.00 55 77.8% 53.25 " 53.75 56 4 .OO " 54.50 57 11.2 Fat 44.75 " 45.50 58 45.75 " 56.25 53 9.2 Bones 6.50 ” 47.00 60 . . 1,8 Waste & Shrink 58.00 " H8.50 62 22,2 48.75 " 40.25 63 100.0% 57.17 49.5 " 50.00 64 50.25" 50.75 65 51.00 " 51.50 66 51.75 " 52.50 67 This calculation based on: 52.75" 53.25 68 53.50 " 54.00 69 347.17 Cost 54.25 " 55.75 70 _ . . 55.00 " 55.50 71 $54.53 RGtEll 55.75 " 56.25 72 , 56.50 " 57.00 73 8 7.66 hark-up 57.25 " 57.75 7% 58.00 " 58.50 75 7. Beef Pricing Guide received from a large Midwestern food chain. 112 the production of the complete meat department operation (See Figure 15). Estimates are made fcr total pounds to be sold during the week, expected mark-up cents per pound and ex- pected total dollar gross profit. After the week has ended, these estimated figures can be compared with the actual figures (See Figure 16). In this way a company can estimafe how many gross profit dollars it eXpects to make and by comparing the estimates with actual figures, can determine whether the operation is going according .m..-‘ #111,“: ,_ Q. _..'-l-" I to plan and, if not, what circumstances have altered it and what action, if any, must be taken to remedy any discrepancies. Such procedures are necessary in order to maintain effi- ciency. Meat specialists or superviscrs must follow-up when a store goes out of line. It is with this View in mind - to help the merchandisor in the performance of his buying and sales programs - that pricing guides and various other reports are instituted and maintained. Con umer Education At the present time there is a great need for consumer education. The average housewife knows little about meat, outside of cooking methods perhaps. The increasing number of self-service cases will only serve to enhance this need. Con- sumers are simply not aware of the many cuts of meat available to them. They are not cognizant of the differences in grade and quality which exist in meat. They buy the same items week in and week out with little variance in their diet. This ADVAIIJCE MEAT Brvnich FIGURE 15 CLASSIFIED REPORT Week Beginning 113 Commodity Estimated Total Pounds to be Sold (1) Expected Mark- up Cents Per Pound (2) Expected total dollar Gross Profit (3) 1a Carcass Beef lb Beef For Grinding —A.- J-qu— u. Veal . —.-~—c—-—-.—.—v—--~o--- ‘ ”a... . _‘P—_---~w—.—"m-vvg .. . w Lamb Pork Loins Fresh Pork Shoulder Smoked Hams Bacon Smoked Picnics \DmVOm-me Sausage 10 Miscellaneous Meats 11 Poultry 12 Seafoods TOTAL FRESH MEATS 8} Report reeEived from a large hidwestern ood chain. 114 FICURE lo 89 Pkfii.O;) IIB‘T ICELCiUl 153733 ITmS WL Br.nen Period lQ____ ES Tim TE ACTUAL - Fe ail Val Mark b:aIk-up lbs % of Cost Estimated of Del's 7 S on Uel's Commodity Del'd Total Per Mark-Up Mt lbs.lb. ¢ Per Lb. la. Carcass Beef lb. Beef For Grinding 2. Veal 3. La me TOThI RAIL Si‘OCK h. Pork I Loins 5. Fresh Pork Shoulders 6. Smoked Ham 7. Bacon 8. Smoked Picnics 9. Sausage lO. Miscellon Meats 4 __ TOTAIPPURK H"' ' .m' "'"—_' PRODUCl ‘S .11. Poultry 1?. Sea Foods TOTAI_MEKY— (1 thru 12) 9. Report received from a large Midwestern food chain. 115 makes it more difficult for the retailer who must sell all of his meet, not just certain popular items. Consumer edu- cation could go a long way towards increasing ‘he sale of his less desirable cuts. The next decade is certain to create an even greater need for consumer education. The following chapter outlines two of the methods being perfected in preserving meats. The adoption of either one of these methods will leave the con- sumer even more in the dark than she is now. Freezing and g cold sterilization of meats are technical subjects and much i will have to be done in explaining these processes if the consumer is going to accept them. Time is now an important factor. One of the major packers in the United States ex- pects to have a full line of frozen meats for sale in retail .utlets by 1958.10 The problem of educating the consumer does not rest with the packer alone. Every component of the meat industry must do its part if the consumer is to continue to accept meat as the basis for her meal. She must be assured of quality and instructed in the proper methods of handling the product. Above all, she must be instilled with confidence in her pur- chases. Consumer education, in this respect, is a necessity. The majority of chain.store organizations have done little in furthering consumer education. What work as been accomplished has been performed mainly through the medium of 10. The Detroit Branch of Kroger Company is already merchan- dising a full line of frozen meats packaged by Swift and Company. llb advertising. Institutional advertisements concerning the Urined some prominence in the daily and L Q C.) H {_.I ,4. ‘<‘ O H: :1 O ,_ 1 p“ < ") Q h. weekly newspapers. Nuch more will have to be done if the meat department is to retain its share of total sales. There is a story to be told about meat, an interesting one, and people want to hear that story. It remains for some progressive, imaginative company to tell the story. The National Livestock and Meat Board has probably done more along this line than anyone else. This organization is unions in that every major gTOUp within the meat industry is represented. Their twenty-two man board is comprised of thirteen representatives of livestock growers and feeders, four representatives of livestock marketing agencies, three repre- sentatives of the meat packing industry, and two representa- tives of the nation's meat retailers. In addition to conducting an ambitious and effective education program in behalf of meat, the National Livestock and Meat Board finances much worthwhile. fundamental research in the field of meats at selected colleges and universities throuvhout the United‘States.ll The latest venture of the National Livestock and Meat Board is an extensive television program which will be pre- sented in forty-two states over a period of months. The pro- gram runs for four days and is titled "Meat-The New Look". Some of the information that is presented includes the story of meat as it was yesterday and how it is today, the "new look and design of meat," how to prepare meats, how to handle frozen meats, how to carve meats, and the "modern manner in meat today". Figure 17 outlines the schedule for one day of the week. The ‘II. ’Ensminger, M. E. Animal Science. Danville, Illino's: The Interstate Printers and Publishers, 1952, p. 286 FIGURE 17 v ,‘ r'1 l’l‘ *' r f" ,“r-v- .inA_- ino rxnv Loot“ -.u1esuaj l2 Yesterday's Beef on the Ranch (Photos) T" Today's Beef on the nanch Yesterday's Steak Today's Steak Steak cf the anture Line and Design of "The New Look” Steaks and Chops Sirloin Loirz Rib Tailoring "The New Look" Beef Short Loin Porterhcuse T-B one Club Preoaringi"The flew Look" Broiling Pan-broiling "The New Look" in Freezing Meat - Demonstrate drugistore wrap Moisture-proof, air-tight wrap Label and date Carving - The Coronation of "The New Look” Porterhouse Steak Ham Slice The ModernHManner in EEAT Today Have the steak cut at least 1" thick for brciling. Turn steaks only once during cookin3. One of every six men like steaks cooked rare. Take off weight with safety and comfort with lean m at in the diet. Infants need meat as early as six weeks of age. ’T CW? TO BE VSED: S EEF U1 Rib Steak Porterhouse Steak T—Bone Steak Club Steak Sirloin Steak Ground Beef VEA- Rib Chop Loin Chop Sirloin Steak 4 O“ m Lt "U Rib Chop Loin Chop Sirloin Chop Center Eam Slice ans Rib Chop Loin Chop Sirloin Chop 12. Received from Mr. A. R. Ring, National Livestock and Meat Board. i18 same subjects are discussed on the other days but in a dif- ferent light. The program will not stop here. Plans are beirg made to present a nationwide weekly program telling of the usefulness and necessity of meat in a series of actual life stories. It is hoped that the interest generated in this venture will provide the incentive neeced for other organizations and companies to enter the field with the same necessary vigor and enthusiasm. CHAPTER VII A LOOK TO THE FUTURE Preservation of Meats The food industry today is keeping a sharp eye on the H progress of scientists and research specialists in the 3"."- field of meat preservation. At this time the two major methods in the process of esperimentation are through freez- ing and through the use of cold sterilization. If and when either of these methods is perfected, the food industry will have taken a giant stride in eliminating both expense and loss through spoilage. The merchandise handled in food stores today consists of a high percentage of perishable items with a life expect- ancy of only a few days at most. The job of transporting these goods rapidly and safely is an extremely eXpensive one. The products must be in the hands of the consumer in as short a period as possible in order to retain the freshness and quality so essential to continued sales. The fabulous loss incurred through spoilage is another burdening expense. Under the present system, spoilage and high expense are a necessary part of the marketing system. Consecucntly, these factors are reflected in a higher price to the retailer and ultimately to the consumer. Advocates of meat preservation 120 are confident that they have the ability to remedy this situation by means of their own respective methods. Frozen Meatsl The acceptability of frozen meats has had a firm increase in the past few years. More and more people are purchasing home-freezers or utilizing the freezing units of their re- frigerators. The majority of consumers do not hesitate to buy fresh meats and then freeze them in their homes. They have discovered that frozen meats are just as palatable as fresh meats. But when it comes to selling frozen prepackaged meats, the retailer is confronted by considerable reluctance on the part of the consumer. For in this situation the consumer has not had the opportunity to View the meat in its fresh state and consequently is somewhat skeptical when purchasing it sight unseen. Like self-service meats, the consumer must be convinced of the merits of this innovation. The question also arises as to whether a frozen meat operation is scientifically sound for large scale distribution. The answer is definitely "yes" if processor, distributor, re- tailer, and consumer, all understand three important factors: (1) meat must be quick frozen; (2) frozen meats must be pro- tected at all times by freezer temperatures of zero or below; (3) proper packaging is essential. In order to protect the fresh beauty and maintain the bright appearance of meat, it must be quick frozen at below zero temperatures. Such freezing protects the flavor and lf' Carlin, G. T. Frozen Heats. Hational Food Conference sponsored by Swift and Company. Report of Proceedings. Florida, 1955, p. 96 goodness of the meat and the loss of meat juices on thawing is small. Slow freezing, on the other hand, produces a dark colored meat which lacks eye appeal and worse yet, when thawed, meat juices are lost sacrificing flavor, juiciness and food nutrients. The eye appeal of the quick frozen meat means satisfied customers and is in sharp contrast to the slow frozen product. Yet, quick freezing in itself is only part of the story. The bright color of quick frozen meat must be protected by below zero storage temperatures. In freezer storage the red color of beef remains bright over a period of six to eight months or more at below zero temperatures. At 100 above zero the meat becomes dark and unattractive in a matter of four months. If held at 25-280 F. the product, though still hard, changes to a reddish gray or gray-green color in less than a month's time. Together with quick freezing and low temperature storage, proper packaging is essential. Materials that permit loss of moisture cause an orange-red color to develop on the meat surface. The meat becomes sponge like in appearance. This “freezer burn” condition damages the appearance and causes an actual loss in weight of the meat. Consequently a tight wrapper is essential. Also, frost and ice crystals will form inside a loosely wrapped package. The industry has already seen how vacuum packaging pro- tects against discoloration of cured meats. EXposure to light causes a rapid fading of the bright color of sliced ham in a non-vacuum package, while sliced ham in a vacuum 122 package will retain i s original color for some time. Similar vacuum packages used on fresh meats will eliminate ”freezer burn” and ice crysirls and will help to protect against loss J of flavor. Comparable materials may serve the purpose as long is the meat is protected by a skin-tight transparent film. The exact manner in which frozen meats will develop is uncertain, but one thing is definite. The industry and the consumer will have to be educated concerning certain funda- —-- - .usoa mental principles. Observations made by specialists in the field have disclosed five main areas for the food industry to concentrate on: 1. Economics of frozen meat packages. In frozen meat packages, the homemaker will buy 100 per cent edible meat. Fat content will be just enough to give flavor, juiciness and protection during cooking. Excess fat and bone will no longer be shipped to the retailer and back to the renderer. Without bone and excess fat in the package, it would hardly be possible for frozen meats to compete on a price per pound basis with fresh cut "bone in" meats. However, once the housewife realizes that the true value of meat is the cost of the actual servings that the family eats, she will be a steady customer. 2. Convenience. The pressnre of modern day living makes convenience a real selling point. This is the fundamental principle of all frozen foods and it must be a basic character- 7 ___. _—_——_—._«——__.- , istic of frozen meets. Boneless cuts of meat arc easy to carve, slice uniformly and serve siMply. 3. How to cook. Many hcuscwives are un‘ertain about frozen meat cookery. They must e told how simple it is. She has her choice to thaw and cook or cook frozen. but above all, or» must be educated to prepare frozen meats properly. 4. Packages. It is a known fact that a fine display of a given product is the best possible salesman. Thus when I frozen meats are wrapped, each package becrmes its own sales- P! a man and that means colorful, appetizing pictures are a ne- E ,. ccssity. 5. Quality and Proper Handling. Since repeat sales come with uniform high quality, frozen packages must be made from a cuality product, and since customers today desire tenderness, flavor and juiciness, these features m st be in- cluded in the product. But quality does not end here. Everyone, including the consumer, must hold frozen meats at temperatures of zero or lower to make certain that the original cuality of the meat has been maintained. This concludes a brief outline of the essential pre- reouisites of frozen packaged meats. These packages may be the meats of tomorrow. The tremendous growth of the frozen food industry indicates that the consumer wants frozen foods. Perhaps the time has come for frozen meats to take their pro- per place in the rapidly eXpanding food industry. Cold Sterilizatien2 The process of cold sterilization is a simple one - foods 121+ are merely eXposed tn the right amounts of gamma radiation rays. EXperimcnts have shown that these rays kill the food spoilage bacteria without doing much to the food. No heat is developed. Hence the term cold sterilization and con- secuently, there is no‘cocking. haw meat when irradiated remains raw. Meat that has been subjected tc this process will re- main in a normal state indefinitely. There will be no Spoilage ard it will continue to look fresh. It is a pro- cess which destroys spoilage bacteria and apparently leaves the food as it was. In eliminating the bacteria, a major obstacle is removed. Neat can then be preserved and con- sequently, the problem of perishability and loss from spoil- age removed. The process, itself, takes only a few seconds. The product can be in its final package, even in the shipping container. The possibilities of minimizing expenses in this situation are enormous - it will simply be a matter of exploiting them. The Armed Forces are extremely interested in cold sterilization and its application to their needs in supplying better foods to the nation's soldiers and sailors, and have joined in the research and experimentation connected with it. Several recent articles have been printed regarding the Army's eXperience in this matter. Excerpts from these arti- cles follow: "Nine Mennonite conscientious objectors Monday began a diet of atemic-treated food in Denver, which eventually could make refrigerators cbsolescent and pu t power firms into the grocery business. ”The experiment was disclosed before a joint Congressional Word csubcommittee. "lhe grozp is lcrking into the Army's plan for preserving food‘without refrigeration by.“shertinr” it with atomic rays. The process vould have important battlefield benefits. "The Mennonites began a two-to-th ree Inonth diet of th. Womic-treated food. They volunteered in lieu of being dral ted for military service against their religious beliefs. "All the food they eat - raw, cooked or frozen - will be "shot" with atomic rays. The process kills decay-causin: bacteria and permits the food to be kept for several months without refrigeration. The food can be trea.ted after bein: canned or packaged. "-‘ajor Genera] K. L. Hastings, ounrtermaster goneral,s said the Army plans by l9§o to have its first pilot pl_nt to treat 1,000 tons of food a month.“ "The officers, one after another, told the Joint Atomic Energy Committee the details of their program to make food keep where it wouldn't before, except under refrigeration. Major Genera] R. F. Hartford talked about a net horizon in the iooci industry; he said the first pilot pla fint for widespread irradiation of e tables would be in operation in 1958. "He demonstrated how the process left a chuck of beef tenderloin unchanged in taste and appearance, while standard thermal sterilization literally cooked it. "Colonel w. D. Jackson said the rays turned raw meat gray, except when it was frozen first. Then it stayed red. After that the experts explained the vari- ous methods, all akin to the X-ray, which they are try- ing on foods. "These rays can be taken from present atomic wastes; they will be particularly plentiful as a by-product of the atomic electric plants which even now are being built. "The implication was that some day the electric company may take the fresh raw meats and vegetables, put them in small boxes, run the latter through the ray machine on a conveyor belt, and ship them to the grocery store, whens presumably they 'd stay good on the shelf for months.‘ Up to this point, this discussion has dealt with the advantageous possibilities of cold sterilization. Unfortu— ‘37'mxfficle in.The Detroit Free Press. John S. Knight Publi— cation, Vol. 125: No.¥6, (May 10, 1955 ), p. 2b 4. Othnan, F. C. Oh, Boy, Atomized Steaks! The Detroit Free Press. John S. Kniglt Phalica ion, Vol.125, No.'8, (liay12,10 5), p. 8 _.— ..._ .... .__- . “_........ 3-76 nately, this is not the entire story. Nothinr is perfect it seems and even this seemingly WCDUOTfU1 method for pre- serving focus has a fault - a serious fault - one which so far has prevented its use. While the primary reason for eating foods is to satisfy hunger and to secure nutrients, an all important consideration is their taste an appearance. Unfortunately, irradiation produces an undesirable flavor change and this, coupled with changes in appearance in certain cases, makes irradiated foods unacceptable. If cold sterilization is to be used, a way must .1 be found to overcome this obstacle, for no one will eat foods having a foreign flavor. The irradiated flavor resembles a kind of scorching. While much effort has be.n expended to date to work out a means of overccming this difficulty, and while the research continues in many laboratories, no satisfactory way to solve this problem has been found. This is the situation as it stands today. Research sci- entists know how to destroy the spoilage bacteria ut do not know how to secure a normal taste in irradiated foods. The question of how long it will be before a solution is found and irradiated foods will be sold can only be answered some- I“ time in the luture. The Relationship between Meat Production and Population Increases "The nation's livestcck and meat industry faces the tremendous task of stepping up meat production almost a million pounds a day over the 7,305 days constituting the next two decades in order to keep consumption in pace with f". r’v (I ,1 population growth. ”The neat 1e01lrercntc for California alone have nearly doubled from 1940 to 195. a2fi( they probably will double again durinw the next 20 years if the present rate of population grovt;h continxes. ”Our nation's human population now is more than 16% million, but twenty years from new - that is, in 1975 it is expected to be more than 2CD million, possibly even 225 million. In order to maintain the present neat consumption rate 0‘ around 1 0 pounds per person, by 1975 our present ne ational meat prodlotion will have to be 27 per cent greatel the H it is today. "5 These words were spok n by Wesley hardenbergh, president of the American Meat Institute, before an Animal Husbandry Livestcck Day gathering sponsored by the College of Agricul- ture, University of California, Davis. In examining this much—debated question of whether live- stock and meat production will be able to cope with the rapidly rising requirements of our nation's population, the fact that Americar agriculture has done very well up until now should not be overlooked. Although production, and con- sequently consumption, of different meats have had ups and downs through the years, the trend has been definitely up- ward in the total per capita consumption of beef, veal, pork, lamb, fish and poultry during the last forty years. This is a contradiction of the Malthusian Theory which, in effect, states that the proportion of meat in the average diet must decline as humanity continues to mount in numbers. It can be shown that the per capita consumption of all meats plus fish and poultry has actually risen, rather than declined, 4. '9 6 between 1910 and l952. however, the years to come may prove the Malthusian 32 Spceéh’by Wesley Hardonbergh, American Neat Institute. University of California, Davis, (January2 29, fiS). 6. Heat Consumption Trends. Armour's Analysis. Vol. 1, No. 10, (January—February 19535, p. 3 Theory tc be not far from the truth. Studies mode in 1920 show that per capita meat consumption in: 178.7 pounds annually in the decade 1&30-39, and reached a high of ap- proximately lte pounds in the decades ltSO_59 and 1890-99,? If these reports are accurate, three things may be assumed: (1) that the per capita consumption of meat has actually decreased over the past 120 years in accordance with the Malthusian Theory; (2) in View of the fact that population in the United States nas more than doubled since 1900, that animal agriculture has been grappling with a task of tremen- dous proportions and has performed wonders in actually raising the per capita consumption of meat during this period (1900- 1955); (3) that an even greater effort will have to be made in order to maintain the current per capita consumption. There are certain reasons to establish the validity of this third conclusion. Although per capita consumption of beef has shown a firm increase currently over the average for the period 1910-50, total cattle numbers, while increasing approximately 35 per cent, have not matched the 6% per cent 8 rise in human population during the same time interval. Im- proved breeding, better feeding, marketing at younger ages, and a more rapid turnover have helped to offset this widening gap. The question now is whether ca tle producers can pos- sibly equalize the even greater increases in population pre- dicted. 7: Ibid. p. l 8. Loc. cit. '1 "A" \ -‘_¢_’ One of the greatest deterrents in reaching the meat production goals of the future is the static nature of our available cro. acreage. Very little has been added during the past 30 years. Another factor in the distant future — if and when the stockmen reach the limit of their output — is whether there will be meat surplus countries to supply us with ever-increasing quantities of meat. Meat imports rose from 1.5 million pounds in 1900 to approximately 529 million in 1952. This increase can be misleading, however, for meat imports represent only 27%per cent of domestic pro- duction and there is some doubt whether this figure can be e increased appreciably.“ Current farm conditions can be misleading also. From a glance at the current United States farm surplus, one might conclude that science and mechanization have lured the farmer into overproduction. This is far from the truth. The embarrassing pile-up of wheat, corn, butter, etc. may soon vanish. One good drought could do it. In any case, it will soon be eaten away as the population boom adds 2.5 million mouths a year to the national stomach.lo If these mouths are to be fed, farmers must become much more scientific than even the best of them are today. Up until new, only the unfavorable factors have been discussed. The situation is not all bleak. There are many 9. flbid. p. 2 10. Food: Not Less, but More. Newsweek. (April 25, 1955), p. 110 lfif‘. things that have been done and are be’ng drne to preserve the well-rounded diet of the American people. The United States, which was an important meat exporting country at one time, has reduced its exports to one-tenth its former volume in an effort to meet industrial development and rapid population increases. Many misunderstandings or notions unfavorable to meat have been clarified or discredited. Erroneous beliefs that older people should reduce their meat quotas, that meat was not a proper food for infants, or that meat caused various physical ailmen s, have been exploited by research. These triumphs have widened the meat outlets and worked to the advantage of the entire livestock industry. Canned meats and meat preparations, as pointed out in a pre- vious chapter, have had a phenomenal development. A higher— quality product plus vigorous promotions have helped to popularize canned meats and thus increase the consumption of meat. Agricultural research scientists have contributed great- ly through the introduction of improved products ard processes. Just one activity in this area is the exploration by workers in the American Meat Institute Foundation at the University of Chicago of the possibility of curing hides with less salt and dehydratinr them so that shipping costs (an important item in the industry) may be reduced. If these studies can be developed and applied commercially, savings of millions of 11 dollars a year will be possible. ll. Speech by Wesley hardenbergh. Op. cit. 0 :;‘~ !...J (A) ‘1 Atomic fission, as a means Oi improvin: the keeping qualities of meet so that its shelf life and life in the home may be prolonged, ’3 under constant experimentation. The Heat Foundation has also clearly demonstrated the value of adding fat tc feed for poultry and dogs, and the same thing has been demonstrated to be true in the case of beef animals. Just how far these developments may go is not known, but at the present tim. they are providing a new outlet for fat at the rate of nearly a quarter of a billion 1 1“ pounds annually. a The American former has also had a change of heart and has participated heartily in the research efforts of the scientists. As one Iowa farm manager expressed it: ”Before the war, the county agent needed several seasons to put across a proven point on soil care or insect control. Most farmers would wait for the fellow down the road to try it first. Today, it's the other way around. A former snoops around an experiment station, then rushes back to try somiéiisccvery that the scien- tists haven't half tested." For the 1955 season, this science-minded farmer has a bumper crop of fresh wonders to keep his eye on. A Midwest experiment station is about to release a strain of corn with husks so tough a bird will not be able to penetrate. It will also fend off its old enemy, the borer. Since January, American cattlemen have been feeding a female sex hormone, stilbestrol, to 2 million steers in order to make them bigger quicker on less feed (an operation, scien- l2. Loc. Cit. l3. Foo.: Not Less, but More. Op. cit. n. 110 14. Loc. cit. tists say, that will not affect a steak-lover's manhood). Breeders also are talking seriously of impregnating 15 200,000 cows with the frozen semen of a single prize bull. Another current development is the work being done with antibiotics, the versatile wonder drufs which alone nay prove a potent factor in easing the prbblem. Startling feats are being performed in making an animal transform more of what it eats into good lean meat. Antibiotics were initially used on animals to knock out bacterial infections. However, scientists have dis- covered that, in small doses, they also make the animals grow Faster. First fed to chickens and pigs, they have been supercharging cattle and sheep to a profit doubling ~xtent in the last twc years. In Terre Haute, Indiana, the Pfizer Research and Development Farm, which feeds and weighs ex- perimental cattle, now serves a special antibiotic - and - hormone cocktail that is setting fantastic new records for induced growth.l6 Further utilization may develop in the antibiotic pre- servins of meat, dairy products and vegetables. This may soon compete with radiation sterilization of foods which is still some years away. Dr. F. E. Deatheridge, head of the Ohio State biochemistry department, embalms fresh-killed steers simply by pumping an antibiotic through their arteries. According to him, the neat will then keep through three hot summer days and acquire in the process a delicate aged flavor. 15. Loc. cit. 10. Ibid. p. 112 13 LU Simila“ly, by pumping brine and smoke flavor into a slaugh- 1. tered n03, Dr. Deathericne thinks he can put ham and bacon on the tab.e in three dazs instead of three weeks.17 To some experts - the ones who can see beyond the mis- leadin; mountains of today's surpluses - such advances are deceptive. They assert that they are not nearly enough to assure that United States agriculture will continue to get its job done. One of these men, r. Byron T. Shaw, farm research chief of the United States Department of Agriculture, estimates i that, if the average American is to continue to have as much 0 meat to eat as he did last year, all acreage that is current- ly idle will have to be back at work by 1960. By 1975, even if all marginal lands are used, there might be a deficit of more than 100 million acres. To meet this, livestock pro— duction alone will have to be doubled on the land at hand.18 Scientific research has come a long way and has done a tremendous job in maintaining our per capita meat supply, but the biggest test lies in the future. Technological advances on the farm have been rapid, but there is still much to be done. Mechanized as farming is, the farmer still spends an estimated 65 per cent of his day shovelinc, lifting and toting.19 A variety of radical labor-saving devices are needed. The marketing system must also be streamlined to keep up with production. The tight water supply over most of the Q: increase l7. Ibid. p. 114 18. Ibid. p. 112 19. Ibid. p. 115 13L. ‘_ nation will grow even tighter “W ’2 L3 0 ’3 CI H :3 :+ 1.4. A J F .o ._J I~—'- *‘3 O t 3 f") C.) 1‘) {D 2') (I) ’3 Ct- [~J ...J :1) Cf stricter conservation and more rcsesrct are essential. The question also arises as to whether or not research will be granted sufficient funds to carry on their work pro- perly. Henry T. fichni ht, president of the Council for Agri- cultural and Chemurgic Research, is alarmed by the fact that industry's investment in research is five times that of agri- culture. He maintains that: "It seems pretty shortsightefi when you consider that the $15 million spent to developqhybrid corn now brings in more than $1 billion a year."" To keep the United States diet as rich as now in protein, McKnight figures that the $300 million spent last year for farm research will have to be doubled within five years.21 This is still another problem that the farmer must face in his efforts to provide for the tremendous population increases to come. The answer to this perplexing problem lies somewhere in the future. 20. Ibid. p. 112 21. Loc. cit. CHAPTER VIII SUI‘JIIILXRI This report has been written for the benefit of grocery store personnel interested in acquiring a knowledge of the production and distribution or meat. It is the opinion of the writer that such information is often found lacking in grocery store personnel and consequently in young executives .oving up from store level positions. It is felt that an understanding of the fundamental methods employed in pro- ducing and distributing meat is important to anyone seeking executive status in the grocery chain store fieln, not only because of the significance of meat in the food industry, but also due to the need for developing men with ”well-round- ed” backgrounds who will one day be better qualified to assume the responsibilities of management. With this purpose in mind, an outline has been presented of the foremost components of the meat marketing system. Any one of these constituents would provide an extensive subject for research. ‘he intention of the writer has been to present .3» only that information which would be of value or interest LO grocery store personnel. The importance of neat cannot be over-emphasized. Its nutritional value alone is instrumental in assuring the health and vitality of human beings everwa: ere. Farmers receive much or their revenue from meat and almost half the land in this country is utilized by livest ck converting m and similar forage into fooCs suiiable for human consumption. The marketing of this highly desirable product is not per- formed without its ncolcr1 , however. Since twe-th rds of the nation's livestock is raised west of the Mississippi River and two-thirds of the people live eas of it, distri- bution is an important factor in satisfying the demand. Livestock is raised in certain area of the country U) in order to take advar tage of the eve ilable feed and climate ard because the topography of the land prohibits commerci a cultivation. Marketinr facilities have kept pace with an increased production of livestock. Producers cah market their cattle in r. any d fferent ways throurh such agencies as the public malt tots , local buyers, cooperative associations, auctions and concentration yards. Livestoclc marketinys not only vary widely from month to month but from week to week and day to day. This situation brings about a seasonal influence on the price of meat as does the duration of beef, hog and lamb cycles. Supply and demand conditions whichr esult from these factors have a definite effect throuohout the industry. A heavy supply tends to lower prices while a low supply tends to raise them. Deme nd depends on the desire of the purchaser and his ability to pay. Thus, vien national income goes up, per capita con- sumption of meat tends to go up and vice versa. To meet the deri a_nd fer fresh meat, the meat packing ('r if" . ItttSS ‘5’.) 3;/ business is geared to slaughter, process, and distribu e meet on a high-speed time-table. 0n the average, meat travels about 1,000 miles from producer to consumer. .I. Dressed meat is chilled and usually ready for local sale or movement to distant markets within two days after live- stock are slaughtered. From that time on, until the meat is sold to the retailer, the meat is maintained at 32-34 degrees temperature. About four to five days are usually needed to move the meat from midwestern meat packing plants to distant meat packers' wholesale branch houses or company-owned meat varehouses. Anoiher few days are needed to move the moat to the retailer so that approximately ten ays after the live- stock has been slaughtered, the neat has been purchased by retailers throughout the nation for their customers. From this point on, it is the responsibility of retail meat merchandisers to sell the product to the consumer. This is accomplished through the establishment of c mpetent buying and merchandising departments, efficient distribution systems, proper store ordering, effective inventory control and similar methods of management. Meat cutting tests are performed to provide a standard procedure and pricing guides used to help establish retail prices. The consumer must then be told about the advantages of meat and.subjected to an appealing display in retail meat cases. The future of meats is contained in the persistent efforts of scientific research to develop a method of preserving meats and thus eliminate the danger of perishability. Frozen meats and the process of cold sterilization are two prominent possi- 11“ “.(v bilities and till pro b bly play an important role in the formation of new :Mcrc Mncis ins techniques in the years to cone. '1! J. r...‘ 1c problem of population increases adversely affecting the consumption of nests is an important one, particularly for pelsorlnel associated with the food industry. It will require the concentrated effort of all members of the meat industry, with an invaluable assist from scientific research programs to enable neat producticnt okeeu pace \. ith rising population, and consequently, to maintain the average per capita consumption of meat. This concludes a brief summary of the material which has been presented in this thesis. It is the opinion of the writer that this t3pe of informe tion is important to store personnel. The broadening of the scope of store managers has created a need for ”well-rounded" men and indications are that this trend toward developing hirhly COMpetent men to perform the duties of store manager will continue. The objective of this thesis has been to fulfill part of that need; to present the essentials of meat production and distri- bution in order that an individual may attain a background {howledge of the meat industry. The conclusion is that all of these essentials are a fundamental part of the food industry and play an important role in the successful- Operation of a chain. It is also con- cluded that specific information of this nature can be con- ually utilized by the retailer; that it is 1m ortant to know about the significance of meat in a community; to under- 139 stand the problems and actions of the meat producer; to be able to analyze the various factors influencing the price of meat and plan accordingly; to be familiar with the operation of the meat packer who is the immediate source of supply for the retailer; to understand the fundamentals of retail manage- ment and consequently achieve better overall performance; and to have an up-to-date knowledge of current events and future possibilities. . Since the essentials of meat production and distribution re fundamental to the food industry and necessary for DJ successful operations, the final conclusion is that a great deal should be done to familiarize store personnel with this type of information. APPENDIX Questionnaire How many meat packing plants do you operate? Where are they located? What type of animals do you slaughter? Cattle? Calves? Hogs? Lamb? Are your meat packing plants operated the same basically as the major packers? Do you employ your own buyers to select livestock or do you utilize order buyers? Do you purchase any feeders or stockers and food they to y ur own specifications? Are your carcasses government graded or do you grade them yourself? How do you transport your carcasses from packing plant to retailer? Do you operate your own branch houses or warehouses? If so, how many and where are they located? How many of your retail stores are supplied with meat fr-n your plants? Do you buy any other meat to supplement your own supply? If so, what percentage of meat do you supply for your packing plants, and what percentage do you buy elsewhere? Do you do any processing into retail cuts and prepackaging on a centralised basis? (excluding pork and smoked items) Is your Company conducting any form of consumer education programs? If so, how are they conducted? 1'3 1331 L I O GI-EAPIIY Books Anon. Bv-Products of the Meet Packing Industry. Chicago: J‘ Insti‘nte of Meat Packing, 19SO,*H18 pp. Bull, S. Meat for the Table. New York, Toronto, London: McGrew-Hill Bock Company, Inc., 1951, 2&0 pp. Clemson, M. The Western Range Livestock_;pdustry. New York: MoGraw-Hill Book Company, l9§l,h00 pp. Deyoe, G. P., W. A. Ross and w. E. Peters. Raising_LiVestock. New York: KcGraw-Hill Book Company, 1950, 5ND pp. Dovell, A. A. and K. Bjorke. Liveggock Marketing. New York and London: McGrew-Hill Book Company, Inc., 19E1, 53% pp. Ensminger, N. E. Animal Science. Denville: The Interstate Printers and Publishers, 1932, 1096 pp. Hinman, R. B. and R. B. Harris. The Story of Meat. Chicago: Swift and Company, 19H7, 289 pp. Jensen, L. B. Meet and Meat Foods. New York: The Ronald Press Company, 1950, 218 pp. Moore, F. G. Manufacturing Manegenent. Homewood, Illinois: Richard D. Irwin, Incorporated, 1939, 832 pp. Peters, w. H. and R. H. Grummer. Lgvestock Production. New York: McGrew-Hill Book Company, 1951, 520 pp. Thomsen, F. L. and R. J. Foote. Agricultural Prices. New York, Toronto, London: McGrew—Hill Book Company, Inc., 1952, 509 pp. Working, E. J. Demand for Meat. Chicago: Institute of Meat Packing, 1954, 130 pp. Ziegler, P. T. The Meat We Eat. Denville: The Interstate Printers and Publishers, 1953, 376 pp. 10. 1]. l2. 13. 11+ . 15. 16. 17. 18. 142 '7‘- 'I , sooLlots Branch house Service. Swift an” Company, Chicago. 7 pp. Cattle and Ctlyes. Swift aye Comptny, Chica"c . 1954. 16 pp. Cattle By-Prodncts. wift and Company, Chicago. 4 pp. Cattle....?nmbers rices Sp re ad. Swift and Company, Chicaso. 0 pp. Eapy Does It. Sxif t and Company, Chicago. 16 pp. Economics of Livestock and heat. A‘mour and Company, Chicago. 1954. 13 pp. Facts and rip res Abe t the neat PackingkIndustry and IV. Products. American Mea.t Institute, Chicago. 1954. 59 pp. \ Financial EzeSUIts 01' 1r 0 Meat Packinr Industry 1953. American Leat Institute, Chicago. 1959. 35 PP. Freezingiof Meats. A21erice n Meat Institute, Chicago. 1959. % pp. ].ov to Plem the Bieat Department Inventory.l I:ational Asso iation 0; Retail Grocers, Chicago. M52. 3 pp. Lamb By-Products. Swift and Comps any, Chica aeo H pp. Livestock Prices. Swirt and Company, Chicago. 12 pp. Markets Compete with Markets. Swift and Company, Chicago. A pp. Meat and the Mississippi River. Swift and Company, Chicago. 20 pp. Meat for the Millions. American Meat Institute, Chicago. 1955. 8 pp- Meat Inspection. Armour and Company, Chicago. 1953. 9 PP- Meat Merchandising and Qperating. National Association of Food Chains, Washington. 1952. 23 pp. Meat Retailinngperations. National Association of Retail Grocers, Chicago. 1952. 33 pp. 24. 25. 26. 27. 1%; hodern Meat Retailing. National Association of Retail Grocers, Chicago. 199C. 52 pp. Pricin: detail Neat Cuts. National Livestock and Leat A..— Boarn, Chicago. 2d pp. §elf~Service Meats. National Association of Retail Grocers, Chicago. 1951. 120 pp. Swift's Service to Producer and Consumer. Swift and Company, Chicago. 28 pp. Technical Aspects of Prepackaged Meats. American Meat Institute, Chicago. 1955. 9 pp. The Food Value of Meat. National Livestock and heat Board, Chicago. 8pp. Ehe Significance of Jewish Holidays to the Livestock Producer. Swift and Company, Chicago. 8 pp. Theggtory of Dairy Animals. Swift and Company, Chicago. liipp- The Story of Meat Animals. Swift and Company, Chicago. 12 pp. Government Publications Livestock Market News Statistics. United States Department of Agriculture, Agricultural Marketing Service, Livestock Division, Washington, Statistical Bulletin No. lk3, June 195%. 6 pp. Marketing Margins for Beef. United States Department of Agriculture, Agricultural Marketing Service, Washington, December 1953, 30 pp. Retailing Prepackaged Meats. United States Department of Agriculture, Production and Marketing Administration, Mgrketing Research Branch, Washington, December 1949. 2 pp- The Livestock and Meat Situation. United States Department of Agriculture, Agricultural Marketing Service, Washington, Periodicals Faught, M. C. The Need for Executive Versatility. Dun's A Review and Modern Industry. (October 195%), pp. 31, 00-70. L1. \J’] Ecnd: 21y: L<:‘ss, kid ffisre. iiwnnmack. (icxril 2:3 iPDVS), Pp. 110-115. Font Ckv1w37p1icn 1E”1M10. ArygLni‘s.AnclgsIsu LIinuary— February 1953), pp. 1-4. 0 Othfian, F. C. Oh, Roy, itemized St- ans. 2pc De: Free Pr-ss. John S hnifiht Publ'cspion. Vol. 12‘3 r F?" . , n, r _' 11efrige retors' Dcom? The Detrci t “rec Press. John S. unighc Publication. Vul.127, No. D, (Day 10, 1955), 3h pp. Sp (.‘CC 116? s Taranwber"h, W. ”The Task of Stepnin Up K05 t Prodact101*.” An ma Ifl131un3ry Livestock Dzw;v,kn1versity of Calif 01m111, Davis, Janualy 1955. Ij.cks, P. ”Meat Sumo rvisors” Confererce of Operation, Incorp0111cu, Chice _0, October 1951. _ 1‘»: V 6.3 3 E3111 5" Nov 19 ”'56 NW 257173? ‘Afl .1... ‘.~ 11.51.. -- wft'jf) .97; OCLQ ‘1 3’::",+-1-r 1 ‘7 ' aim '9 If ‘ I. *IHIHMIHLIIMILIIH[Mill]!ll”UHHIIIHIHIH 4