1. Live Beef Evaluation & Pricing

2. History 1916 Standards for U.S. grades developed 1924 Market classes and grades of dressed beef developed 1927 Voluntary grading specifications 1941 Adopted Prime, Choice, Good Comm., Utility, Cutter, Canner 1956 Commercial spilt by age into Standard & Commercial 1965 Adopted standards for cutability “Yield Grades” 1973 Changed “Bull” grade to “Bullock” 1975 Elimination of conformation – Changed Good to be leaner 1980 10 minute minimum required after ribbing 1987 U.S. Good to Select 1989 Only Quality or Yield Grade assigned – “No Rolls” 1997 Select Grade restricted to A maturity; B maturity - Standard

3. History 1930’s 1950’s 1900’s 1940’s

5. History Early 1960’s Late 1960’s

6. History Early 1960’s Late 1960’s

7. History 1970’s 1980’s

8. History 1990’s 2000

9. History 1990’s 2000

10. National Beef Quality Audit’s Carcass wt679760748787 Fat thickness, in..62.59.47.49 REA, sq in11.812.912.813.1 USDA Yield Grade 3.4 3.2 2.8 3.0 Quality GradeCh-Sel86Sel79Sel85 % Prime &Choice75%55%48%51% % YG 1 & 2’s30%44%58%49.2 USDANBQANBQANBQA 1974 1991 1995 2000

11. Market Animal Evaluation USDA Grading Service –Livestock & Grain Market News Branch –Voluntary –Paid for by the packer USDA Grades –Yield grade – measures the lean to fat ratio –Quality – measures the palatability of the meat

12. Evaluation Factors YieldDressing Percent YieldYield Grade PalatabilityQuality Grade

13. Dressing Percent Dressing Percent = Hot Carcass Weight Live Weight X 100

14. Dressing Percent

15. - Fill - Hide - Mud - Fill - Sex - Fatness - Muscle Avg 62.5% 1288 1000 - 1505

16. Dressing Percent Live PriceDressing %Carcass Price $ 80.00 61 % $ 131.15 $ 80.00 65 % $ 123.10

17. Dressing Percent Carcass PriceDressing %Live Price $ 127.00 61.0 % $ 77.47 $ 127.00 65.0 % $ 82.55 $ 127.00 62.5 % $ 79.40 Live PriceDressing %Carcass Price $ 80.00 61 % $ 131.15 $ 80.00 65 % $ 123.10

18. Market Cattle Evaluation USDA Yield Grade –Measures cutability or the amount of lean to fat –Classified from 1 (High % Lean) to 5 (high % fat) % Boneless Trimmed Yield Grade % Retail Cuts 1 53.5 251.2 348.9 446.6 544.3

19. Yield Grade Factors HCW Weight 12 th Rib back fat Ribeye area Internal fat – kidney, pelvic, heart fat

20. Yield Grade Factors HCW Weight 12 th Rib back fat Ribeye area Internal fat – kidney, pelvic, heart fat

21. USDA Yield Grade Step 1: Determine back fat – starting point for determining Y.G. 12 th rib depth inchesPreliminary Y.G..0”2.0 Most desirable.2”2.5.4”3.0.6”3.5.8”4.0 1.0”4.5Least desirable

22. USDA Yield Grade Step 1: Determine back fat – starting point for determining Y.G. 12 th rib depth inchesPreliminary Y.G..0”2.0 Most desirable.2”2.5.4”3.0.5”3.3.6”3.5.8”4.0 1.0”4.5Least desirable Avg.50 Currently Avg.4

23. USDA Yield Grade Step 2: Determine Muscling –Average muscling 1.1 sq. inches of REA per 100 lbs live wt. –1200lb steer should have 13.2 sq. in. REA –Greater than 1.1 sq. in. then Lower the Y.G. (Desirable) –Less than 1.1 sq in. then Increase the Y.G. (Undesirable) –For every 1” difference +.3 from PYG

24. USDA Yield Grade Step 2: Determine Muscling HCWRequired REA 60011.0 70012.2 80013.4 90014.4

25. USDA Yield Grade Step 3: Determine Internal Fat (K.P.H. fat) –Most cattle have 2.5 % internal fat. –If cattle have less than 3.5% internal fat then lower Y.G. by.2 for every 1% decrease KPH,% Adjustment 4.0+.1 3.5 none 3.0-.1 2.5-.2

26. Quality Grade Evaluation USDA Quality Grade –Estimates the palatability (eating quality) of the meat Factors to consider when estimating Q.G. –Maturity – Young to Old – 5 classifications –Marbling – 10 degrees of marbling

27. USDA Quality Grades Prime Choice Select Standard

28. 309642Age72 2.53.568

29. Practice Comparisons Heifer – 1365 lbs

30. Practice Comparisons Steer – 1350 lbs

31. Cattle Maturity Past –Ossification of vertebrae Post-BSE –Dentition to identify cattle 30 mo of age –FSIS as set the following… Cattle with a full set of the first incisors are 24-30 mo Cattle with at least one of the second set of incisors are considered 30 mo of age or older

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33. 750 lbs Choice- Y.G. 2.5 960 lbs Prime Y.G. 4.0 850 lbs Select + Y.G. 2.3 820 lbs Select - Y.G. 2.2 990 lbs Choice- Y.G. 3.0 620 lbs Prime - Y.G. 3.3 730 lbs Select - Y.G. 1.5 891 lbs Choice O Y.G. 4.0 788 lbs Select + Y.G. 2.5 838 lbs Select - Y.G.1.6 675 lbs Choice - Y.G. 3.5

35. USDA Certified or Verified Certified - 52 –Specifications – ie. CAB –Company requests – Government Issues –Reviewing requirements www.ams.usda.gov Process Verified - 4 programs –Process (origin, handling, carcass cuts, ect.) –Simple - Nolan Ryans Tender Aged Beef

36. Alliances/Branded Beef Programs 52 Programs Currently Four Categories –Breed Associated –Commercial Beef Carcasses –Natural/Implant-Free –Vertical – Integrated Beef Cooperatives

37. Breed Breed Associated Angus – CAB –Supreme Angus Beef –Angus Alliance Hereford Limousin –Laura’s Lean –Nebraska Lean Limousin

38. Beef Breed Associated Dominated by British breeds –of 52 programs 40 Angus based Provided by USDA Marketing & Regulatory Programs

39. Commercial Beef Western Beef Alliance Montana Beef Network Fewer Specifications Pay fee for data

40. Natural/Implant Free Laura’s Lean 20-30,000 Colman Natural Beef Maverick Ranch 30-40,000

41. Vertical Integrated Alliance Northern Plains Premium Beef U.S. Premium Beef –Share holders Future Beef –Selected producers Ranchers Renaissance –Share profit or loss

42. Current Methods of Marketing Live Price Bids Carcass Price Bids – “In the Beef” Grade & Yield – “Grid Pricing” Formula Pricing

43. CERTIFIED ANGUS BEEF ® Product Sold by Program Licensees* * Fiscal Year (October 1 - September 30)

44. The Big Three’s Grids IBP – Real Time Market Value – RTMV Monfort – “Cutability” & “Quality” –Nebraska average for base - Adjusts to Choice Y3 Excel - Many Breed specific –Angus based on Quality no Premium for Sel Y1&Y2 Angus Gene Net, Angus Alliance etc. –Sterling Silver, Iowa Quality Beef, Nebraska Corn Fed –Ranchers Registry / Ranchers Renaissance

45. Figure 1. Quality Premiums and Discounts

47. IIIIIIIV

51. Figure 2. Cutability Premiums and Discounts

52. Figure 3. Carcass Weight Discounts