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What is meant by the phrase "animal
products"?
What is the value of U.S. production
of beef, pork, dairy, and poultry?
What are the USDA grades of meat?
What percentage do producers receive
as a share of the total retail value of meat?
How concentrated has livestock production
become?
Q. What is meant by
the phrase "animal products?"
A. Animal products include meat and other products
derived from animals, such as eggs; dairy products
like
milk, whey, butter, and cheese; and byproducts such as
hides and fat. Some products—like fats, whey and
other proteins, blood, and bones—are used in the
manufacture of 1) health products such as soaps, toothpaste,
and surgical sutures; 2) pharmaceutical products such
as caplet and pill fillers and binders; and 3) industrial
products such as glue, lubricants, fertilizers, and plastics.
Meat animals include cattle, hogs, chickens, turkeys,
sheep, game birds, and fish.
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Q. What is the value
of U.S. production of beef, pork, dairy, and poultry?
A. Total farm cash receipts from livestock are
estimated to have surpassed $120 billion annually since
2003, with beef, dairy, poultry, and pork representing
well over 90 percent of this value. Among the four product
types, the value of beef production (including cull cows
and steer calves from dairy herds) accounts for the largest
share. Annual cash receipts from dairy products represent
the second-largest animal product sector, while broiler,
turkey, and egg production make poultry the third-largest
sector. Receipts from hog production represent the fourth-largest
sector. Other livestock and animal products—including
sheep and lambs, wool, goats and mohair, and aquaculture
products—produce farm cash receipts representing
about 5 percent of the total value of animal products.
Consumer preferences have given chicken a growing market
share for many years now. Beef and hog production is
influenced
by biological lags as producers respond to market prices.
These "cycles" are not evident in broiler and turkey
production because of the relatively short time required
(weeks compared
with years) to bring new animals to slaughter. For
more information, see U.S.
Beef Industry: Cattle Cycles, Price Spreads, and Packer
Concentration, which identifies both similarities
and differences between the cattle cycle of the 1990s
and previous cycles.
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Q. What are the USDA
grades of meat?
A. USDA has quality grades for beef, veal, lamb,
yearling mutton, and mutton. Although there are USDA quality
grades for pork, these do not carry through to the retail
level as do the grades for other kinds of meat.
For beef ,
USDA Prime, Choice, Select, and Standard grades come from
younger beef. The highest grade, USDA Prime, has abundant
marbling—flecks of fat within the lean muscle—that
enhances both flavor and juiciness. Prime beef is used
mostly by hotels and restaurants, but a small amount is
sold at retail. The grade most widely sold at retail is
USDA Choice, which has slightly less marbling but is of
very high quality. Consumer preference for leaner beef,
however, has increased the popularity of the Select grade.
Select beef can now be found at most retail meat counters.
Standard and Commercial grade beef frequently is sold
as ungraded or as "brand name" meat. The three lower grades—USDA
Utility, Cutter, and Canner—are seldom, if ever,
sold at retail but are used instead to make ground beef
and manufactured meat items such as frankfurters. The
standards for veal
are similar to those for beef.
Lamb
and mutton have Prime and Choice grades similar
to those for beef. Lower grades of lamb and mutton
(USDA Good, Utility,
and Cull) are seldom marked with the grade if sold at
retail.
Pork, like lamb, is generally produced from young animals
and is, therefore, less variable in tenderness than
beef.
Because of this consistency, USDA
grades for pork reflect only two levels of quality,
Acceptable and Unacceptable. Acceptable quality pork
is
also graded for yield (i.e., the ratio of lean to waste),
as are beef, lamb, and mutton. Unacceptable quality
pork—which
includes meat that is soft and watery—is graded
U.S. Utility. More information about meat grades is
available
in a USDA fact sheet on How
to Buy Meat.
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Q. What percentage do
producers receive as a share of the total retail value
of meat?
A. Price spreads are one of the measures
ERS uses to describe the allocation of the consumer
dollar among the various stages of the food marketing
chain.
The farm
share of retail prices has been decreasing for most
agricultural commodities and reflects both greater
production
efficiency in agriculture and rising marketing costs.
During the 1990s, the share of the retail price received
by beef producers declined from roughly 60 to 45 percent,
and from around 45 to 25-35 percent for pork producers.
The costs of marketing inputs—such as labor, packaging,
transportation, and energy—have kept pace with
inflation while livestock prices sometimes do not,
thus lowering
the farm share of the retail price. Since 2001, however,
producer shares have not declined, due to generally
higher
cattle and hog prices. ERS regularly calculates and posts
information on meat
price spreads.
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Q. How concentrated has
livestock production become?
A. Market concentration (the share of the market
controlled by the largest firms) varies widely across
the cattle, hog, dairy, and poultry industries. In the
case of beef, concentration also varies across the stages
of production, with cow-calf operations being the least
concentrated. Beef operations with herds of less than
100 beef cows represent the majority of U.S. beef operations
and account for nearly half the beef cows in the United
States. The cattle feeding industry, in contrast, is
much more concentrated. Feedlots with a capacity of
1,000 head
or more comprise a tiny fraction of total U.S. feedlots
but market the vast majority of fed cattle.
Dairy production still has a significant number of small
producers, as most producers still run operations with
less than 100 cows. However, there is a trend toward larger
herd sizes, particularly in the western United States.
Operations with more than 500 cows represent a very small
fraction of total dairy producers, but account for roughly
one-third of all milk cows and more than one-third of
all milk production.
Hog production has become much more concentrated in the
last two decades, as the number of hog operations has
decreased by more than half since the late 1980s. In the
early 2000s, over 90 percent of hog operations have less
than 1,000 head, but this group accounts for a relatively
small share of total hog production. Operations with at
least 10,000 head represent less than 1 percent of all
producers but more than half of total U.S. production.
The majority of hogs today are sold through production
contracts, where a processor provides the pigs and feed,
and a contracting producer provides facilities and labor.
Poultry production, particularly broiler production,
developed higher levels of concentration decades ago.
Production contracts—where a contractor (typically,
a poultry processor) provides the chicks and feed and
the grower provides facilities and labor—has been
the dominant form of broiler production since the mid-1950s.
In 1955, 85 percent of broilers were produced under production
contracts. The share was much the same in the early 2000s.
Production contracts are also significant for turkey and
egg production, but vertical integration (where the processor
handles production from start to finish) is more common,
particularly in egg production.
For more information, see the Farm
Structure Briefing Room.
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