American study offers insight on retail split
Neither had I until his name popped up during an internet search I was doing for information on beef carcase meat yields; my interest in the subject having been rekindled recently by stories in the press that the IFA were proposing a 20 cents bonus for cattle who met certain conditions on the QPS grid.
Mr Hahn is an agriculture economist who works in the Economic Research Services section of the United States Department of Agriculture in Washington. Among other things his section produces what are know as price spreads.
These are in effect sheets of figures that analysis farm, wholesale and retail prices for food once you have certain information. The type of work the US government’s ERS section does would, I suspect, be impossible in Ireland at present, because the information required might well be deemed either private or market sensitive.
However, that does not appear to be the case in America. Putting it very simply, the figures I was looking at for beef showed the farmers share of the retail sales price in the US to be 52.2% for the last quarter of 2011, with the 2011 yearly average being 49.9%.
This was ground-breaking stuff! So intrigued was I that I sent an email to the address of a Mr William Hahn that I found at the bottom of the page. A very few hours later I was reading a very courteous and informative reply. The key to the system is that during the 1990s it became law to report both farm and wholesale beef prices to the USDA (United States Department of Agriculture) Agriculture Marketing Section.
That’s only half the story though, the Government then sends out employees from the Bureau of Labour Statistics across the country and they note down supermarket prices for individual cuts. Once you have all the figures you can begin to put together a composite for whole steer price.
Apart from the fact there are an awful lot of figures to be inputted, the basic workings of the system appear relatively simple. Then again all the best ideas are usually blindingly simple. The beauty of it is that it gives the consumer, farmer and Government vital information.
While I know this type of price analysis has been tried from time to time in Ireland by private individuals, usually taking a beef animal and pricing the carcase through a butchers. What sets William Hahn’s and his department work apart is the fact the operation is funded by the US taxpayer as a service and as such it is a creditable national price survey done on a regular basis.
I can see some people out there thinking, “If we were to know the wholesale and retail prices of all individual meat cuts that should in theory mean we might be able to work out the value of a live animal standing in a yard.” Allowing for grades and meat yields the answer is maybe yes.
On the subject of meat yields from cattle, Tegasc did a lot of work in this area under the direction of Dr Drennan a number of years ago in advance of the introduction of the QPS grid. I wonder if the raw data gathered at that time is still available. Coupled with our departments own reporting of weekly QPS prices the possibility exists that we could begin to develop a system similar to the one in the US.
However, without the involvement of one of the national farm organisations in a push to see such a development through it is doubtful in my opinion that the main players in the food sector would agree voluntarily to such a system.
Given that beef prices are where they are at the moment they may not even be the appetite among producers for such developments. However, the same I suspect could not be said for the pig sector though!
