Questions & Answers
- 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?
A. Animal products include meat and other products derived from animals, such as eggs; dairy products, such as milk, whey, butter, and cheese; and byproducts, such as hides and fat. Some products--for example, fats, whey and other proteins, blood, and bones--are used in manufacturing 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.
A. Total farm cash receipts from livestock are estimated to have surpassed $115 billion annually since 2004, with beef, poultry, dairy, and pork representing 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 broiler, turkey, and egg production represent the second-largest animal product sector, while dairy production is 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 less than 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 to bring new animals to slaughter, compared with hog and cattle production which take several months or years. 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.
A. USDA has quality grades for beef, veal, lamb, yearling mutton, and mutton. Although USDA quality grades exist 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.
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 percent to 45 percent and for pork producers from around 45 percent to 25-35 percent. During 2000-07, farmers' share for beef has fluctuated between 40 and 55 percent and for pork between 20 and 40 percent. ERS regularly calculates and posts information on Meat Price Spreads.
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 fewer than 100 beef cows represent the majority of U.S. beef operations and account for nearly half of U.S. beef cows. 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 fewer than 100 cows. However, there is a trend toward larger herds, particularly in the Western United States. Operations with more than 500 cows represent a very small fraction of total dairy producers, but account for more than half of all milk cows and milk production.
Hog production has become much more concentrated in the last two decades, as the number of hog operations has decreased by two-thirds since the late 1980s and early 1990s. More than 80 percent of hog operations now have fewer than 1,000 head, but this group accounts for only about 10 percent of total hog inventories. Operations with at least 5,000 head represent less than 5 percent of all producers but more than half of total U.S. inventories. The majority of hogs today are sold through production contracts, under which a processor provides the pigs and feed and a contracting producer provides facilities and labor.
Poultry production, particularly broiler production, became more concentrated 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 is much the same in the 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.