Dr. Francis L. Fluharty¹ and Dr. Henry Zerby^2
1 Department of Animal Sciences, The Ohio State University,
ph: (330)263-3904, e-mail: fluharty.1@osu.edu
² Department of Animal Sciences, The Ohio State University,
ph: (614)688 4584, e-mail: zerby.8@osu.edu

Economics of Grids:
Why are some carcasses worth more than others to packers even though the cattle in a pen were similar in breed, type, frame size, and muscle thickness? The answer is likely to be differences in yield grade, marbling score, or percent retail yield. A lower USDA yield grade corresponds with to a higher percent of the carcass in total saleable retail product (more value). General guidelines for USDA Yield Grade (YG) and the corresponding cutability, or
percent of the carcass in closely trimmed roasts and steaks from the round, loin, rib, and chuck which are: YG1 > 52.3% cutability; YG2 50 – 52.3%, YG3 47.7 – 50%, YG4 45.4 –47.7%, YG5 < 45.4%. Recently, there has been an increase in the number of Yield Grade 4 carcasses at some packing plants. This increase is due primarily to an increased use of grid pricing systems that
use USDA choice, YG3 carcasses as the base price , and pay premiums for carcasses with greater cutability and marbling, and discounts for carcasses with less cutability and marbling. There may not actually be more cattle being harvested with excess fat, but now that carcasses are being bought based on actual value, more YG 4 cattle are being graded rather than considered “no rolls” (not given a yield grade).

The USDA yield grade formula is:
Yield Grade = 2.50 + (2.5 x adjusted back fat thickness, inches) + (.20 x percent kidney, pelvic, and heart fat) + (.0038 x hot carcass weight) – (.32 x ribeye area, square inches). A steer weighing 1210 live, and having a 62% dressing percentage which resulted in a 750 pound USDA choice carcass with .5 inches of backfat, 3.5% KPH fat, and a 12.4 square inch ribeye would have a yield grade of:
YG = 2.50 + (2.5 ´ .5) + (.2 ´ 3.5) + (.0038 ´ 750) – (.32 ´ 12.4)
YG = 3.33 (only whole number yield grades are used, so this is a yield grade 3 carcass)

Now, if that same steer were fed for an additional 30 days, gained 3.0 pounds per day, and taken to 1300 pounds with a 63.5% dressing percentage which resulted in a 825 pound USDA choice carcass with .7 inches of backfat, 4.0% KPH fat, and a 12.7 square inch ribeye, the yield grade would be:
YG = 2.50 + (2.5 ´ .7) + (.2 ´ 4.0) + (.0038 ´ 825) – (.32 ´ 12.7)
YG = 4.13 (only whole number yield grades are used, so this is a yield grade 4 carcass)

Assume that the choice, YG3 base price this week is $1.05/lb ($105/cwt), and the discount for YG4 carcasses is $.15 ($15/cwt).
The value of the first carcass is: 750 ´ $1.05 = $787.50
The value of the second carcass is: 825 ´ .90 ($1.05/lb - .15/lb for YG4 discount) = $742.50

As a cattle feeder, you would have lost $45.00 ($787.50 - $742.50 = $45.00) taking the steer from 1210 pounds to 1300 pounds, right? WRONG! What about the feed and yardage charges? Overhead costs are often referred to as "yardage charges". In cattle feedlots these usually average $.25 to .35 per head per day, and are roughly .08 to .09 per pound of gain.
Assume:
Corn at $2.35/bushel ? 56 lb./bushel = .042/lb.
Supplement at $250/ton ¸ 2000 lb./ton = .125/lb.
Hay at $100/ton ¸ 2000 lb./ton = .05/lb.
Assume the diet is 80% whole shelled corn (WSC) and 10% supplement, and 10% hay on a dry matter (DM) basis, and all ingredients are 86% dry matter (14% moisture).

80% WSC at .042/lb = $.0336/lb, 10% Supplement at .125/lb = $.0125, 10%
Hay at .05/lb = $.0050, Total Price per lb of diet = $.0511

Take the average weight of the steer for the 30 additional days on feed (1210 + 1300) ¸ 2 = 1255 lbs., and assume that it was eating 2.0% of body weight (BW) on a DM basis = 1255 ´ .02 = 25.1 lb of dry feed ¸ 86% dry matter = 29.19 lb of feed as fed.

Assume that the overhead cost "yardage charge" = .27/day, and at 3.0 lb./day gain, that’s .09/lb of gain. If a steer gains 3.0 lb/day and eats 29.19 lb of feed, the feed conversion is
29.19 ¸ 3.0 = 9.73 lb feed/lb gain (feed efficiency).
ACTUAL COST OF ADDITIONAL 90 POUNDS OF GAIN:
Feed =.0511 cents/lb x 9.73 lb feed/lb gain = $.4972 /lb gain, Yardage =
.27/day ? 3.0 lb/day gain = $.0900 /lb gain
Total cost per pound of additional gain = $.5872 /lb gain
90 pounds of additional gain x .5872 per pound of gain = $52.85

As a cattle feeder, you would have lost $45.00 ($787.50 - $742.50 = $45.00) + $52.85 (90 pounds of additional gain ´ .5872 per pound of gain) for a GRAND TOTAL LOSS OF $97.85 taking the steer from 1210 pounds to 1300 pounds.

Explanation

Are marbling and backfat deposited at the same rate? How does diet affect on carcass quality? To answer these questions, you probably need to understand some basics of ruminant nutrient use and animal growth as well as where management can improve carcass characteristics so that your cattle achieve their genetic potential.

You need to understand that all nutrients (energy, protein, vitamins, minerals, and water) are used in a hierarchy that goes from maintenance ® development ® growth ® lactation ® reproduction ® fattening. This means that an animal must have sufficient nutrients to maintain its body before bone or muscle growth can occur, and these must occur before fattening can
occur. Typically, cattle are finished on high concentrate diets for a period of time ranging from 80-280 days prior to harvest. This finishing period allows for more rapid, efficient growth, and increased intramuscular fat (marbling) deposition so that the cattle carcasses grade choice compared with cattle grown on forage-based feeding systems. In general, tissues are deposited in the order of: 1. brain, 2. bone, 3. muscle, and 4. fat. A young, rapidly
growing animal that is in a linear phase of growth will naturally put on more bone and muscle. As an animal ages, and its' genetic potential for muscle growth begins to plateau, it will put on fat. Guenther et al. (1965) reported on the effects of feeding steers on a high or moderate level of nutrition. Steers fed the high level of nutrition deposited both lean and fat at a faster rate than steers fed at a moderate level of nutrition on both age- and weight-constant bases. However, in both groups, the rate of fat deposition accelerated as the animals aged, whereas the rate of lean deposition decreased. The rate of fat accumulation was most rapid in the latter part of the feeding period, after lean deposition had begun to subside, which caused a decrease in the lean:fat ratio as the animals matured. As a result of much
of this early work, the general idea has been developed that marbling is the last fat that is put on, and occurs only after an animal has already put on most of its' muscle. However, the age at which an animal starts expressing marbling is much younger than many people think, and many animals reach their carcasses’ final USDA quality grade long before they leave the feedlot. May et al. (1992) studied the growth and development of yearling (16 month old) Angus x Hereford steers that were fed a high-concentrate diet for up to 196 days with animals being harvested every 28 days. Animals were harvested after 0, 28, 56, 84, 112, 140, 168, and 196 days fed. Steers reached their genetic potential for marbling by 112 days, although backfat
increased from .57 inches at day 112 to .59 inches at day 140, .71 inches at day 168, and .83 inches at day 196. Ribeye area was not different between days 112 and 168, ranging from 12.8 to 13.1 square inches. However, hot carcass weight at day 112, 140, 168, and 196 was 721, 778, 804, and 919, respectively. Animal growth after 112 days of a high-concentrate diet did not improve marbling or ribeye area between 112 and 168 days, but backfat increased substantially. This lead to a yield grade of 2.9 at 112 day, 3.2 at 140 days, 3.7 at 168 days, and 4.0 at 196 days. Therefore, management of cattle should be aimed at optimizing profitability through genetics and nutrition that take advantage of grid marketing systems that reward marbling and retail yield.

Guenther, J. J., D. H. Bushman, L. S. Pope and R. D. Morrison. 1965. Growth and development of the major carcass tissues in beef calves from weaning to harvest weight, with reference to the effect of plane of nutrition. J. Anim. Sci. 24:1184.

May, S. G., H. G. Dolezal, D. R. Gill, F. K. Ray, and D. S. Buchanan. Effects of days fed, carcass grade traits, and subcutaneous fat removal on postmortem muscle characteristics and beef palatability.  

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