Alternative Beef Production Systems: Issues and Implications

Changing consumer demands are supporting alternative beef rearing methods which is challenging grain-fed systems as alternative systems attract premiums.
calendar icon 30 April 2013
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USDA Economic Research Service


The US Department of Agriculture explore the market outlook implications of these changes by examining the specific production technologies behind alternative production systems and products.

Beef produced through each system is often associated with claims relating to input and other resource use, land allocation, environmental impacts, greenhouse gas emissions (GHG), animal welfare, the use (or not) of specific animal health products, slaughter/processing infrastructure and efficiencies, and providing continuous supplies of safe products for both domestic and international markets.

Markets are rapidly changing as consumers demand various combinations of these attributes in their beef products and as science and consumer knowledge converge. We explore the market outlook implications of these changes by examining the specific production technologies behind alternative production systems and products.

Comparing Beef Production Systems

Historically, cattle production for beef or dairy in the United States has been a forage-based industry, and virtually all beef production systems continue to use significant quantities of forages or other roughages as the primary feed source. Over time, and as land became more intensively used to produce both crops and livestock (more animals on less pasture land as more land was converted to cropland and other uses), the introduction of grain into feed rations shortened the beef production period and resulted in a more tender meat product containing more intramuscular fat, or “marbling.”

Land-use patterns shifted away from forage production to grain production for both human food and animal feed, increasing efficiencies in terms of reduced costs per unit of product. Large concentrated cattle-feeding operations evolved as a way to capture economies of size and other production and supply chain efficiencies that reduced cattle and beef production costs.

While practices vary widely across specific beef production systems, most cattle are typically born and raised on range or pasture land for the majority of their lives. Cattle in the United States, whether finished with grain or forages, spend at least half of their lives on pasture of some sort (fig. 1).

A pasture phase is virtually universal, largely because cattle, as ruminants,3 have the ability to convert cellulose (a significant component of all plants) into meat. Other than nursing, virtually all of the animal’s initial weight gain comes from some form of forage, with roughages—pasture, hay, silage, or alternative forages—accounting for almost the entire ration fed to a beef calf prior to placement in a feedlot. Roughages are also necessary in feedlot rations to maintain healthy digestive systems in grain-fed cattle.

Roughly 80 percent of commercial beef production (the average ratio of steer and heifer slaughter to total slaughter adjusted for differences in carcass weights, 2005-11) is “fed beef” and comes from cattle—mostly steers and heifers—fed grain for finishing. Between 15 and 20 percent of cattle on feed are fed in feedlots with less than 1,000-head capacity.

Beef from grain-fed cattle often reaches the highest quality categories of (in descending order) Prime, Choice, and Select. The remaining 20 percent of commercial production is “nonfed beef” and comes from cattle that are generally not fed feedlot rations, such as dairy cows, beef cows, dairy bulls, beef bulls, and other animals.

Nonfed beef seldom achieves even the Select grade because it lacks marbling or comes from cattle that are too old to be categorized in the top three grades. Higher quality grass-finished beef—also “nonfed beef”—can be graded as Choice or Select. Similarly, while culled dairy cows are considered nonfed beef, they often have been fed rations containing grains to enhance milk production during most of their lives and, while too old to be graded as Prime, Choice, or Select, they can still contain significant fat and marbling.

Conventional Beef Production

Conventional beef production is defined for our purposes as traditional feedlot production of grain-fed beef in which steers and heifers receive feed rations consisting largely of grain-based energy and protein to achieve maximum weight gains at the lowest possible cost while in the feedlot. In conventional beef production, producers may—not all do—use antibiotics and growth promotants to enhance production through gains in feed efficiency and feed conversion.

Feed costs are, thus, reduced and animal health is improved partly by reducing acidosis, which reduces the number of livers (or cattle) condemned as unfit for human consumption. Conventional production practices can vary widely. For example, animals may or may not be fed or implanted with growth promoting products, and commercial and/or natural fertilizers may or may not be used to produce the grain and forages fed to animals.

Figure 1 Production-Cycle Timelines For Grass-Finished Versus Conventional Grain-Fed Beef Production 1

Source: USDA, Economic Research Service.
1 Veal is excluded from this report and this figure. Veal accounts for half of 1 percent of total beef and veal and is generally produced while the veal calf is in the "nursing" range, sometimes as young as 2 weeks of age. Further, Holstein steers and some Holstein heifers constitute a small portion of total cattle fed, but many are finished in programs that place them on feed (generally a milk- or milk-replacer-based ration ) soon after birth, moving to more conventional feed rations until slaughter at weights comparable with fed cattle. These cattle are also not explicitly represented in the figure. As a result of the differences in feeding approaches, and a high degree of biological variability in cattle, actual demarcations between production phases vary considerably. For example, calves are weaned at ages extending from 5 months to 9 months of age, and feeding periods may differ by several months.

In conventional beef production, virtually all of the weight gained prior to placement in the feedlot comes from some form of forage (see fig. 1). Cattle may enter the feedlot directly after weaning (calf-fed) or be backgrounded (grown) in dry lots or on pasture (“stockered”) prior to placement in feedlots as short- (younger) or long- (older, larger) yearlings.

Cattle backgrounded in dry lots are fed a growing ration composed of energy, protein, and forages. Cattle on pasture or forage generally gain between 0.75 and 2.50 pounds per day, depending on the quality of the forage (and regardless of production system).

Dairy calves may spend some time on milkreplacer and calf rations before either being slaughtered for veal or placed into more conventional beef production systems where calves are grown on pasture or harvested forages before being placed in feedlots. Generally, a fed steer at slaughter will have entered the feedlot weighing 600-900 pounds and will reach a typical slaughter weight of 1,200-1,500 pounds; fed heifers generally weigh 100-200 pounds less than steers when slaughtered.

Feedlot rations are carefully formulated to maximize growth rates for a concentrated time at minimum cost. In the feedlot, cattle will be on feed for 120-240 days and gain an average of 2.5-4 pounds per day. Each animal will consume 4,000-4,300 pounds of total feed on an “as-fed” basis4 while in a feedlot.

Depending on the feeding stage and relative feed prices, feedlot rations will consist of about 80-85 percent grain (usually corn), distillers’ grains, and/or other sources of starch/energy, and 10-15 percent hay, silage, or other forage.

The remaining share of the ration will include some protein source like soybean or cottonseed meal, sometimes in conjunction with urea, which cattle can efficiently convert to protein. While in feedlots, cattle will convert 5-7 pounds of total feed (dry-matter basis, or 6-10 pounds on an as-fed basis) to 1 pound of gain (consisting of beef, bone, fat, organs, hide, other byproducts, and waste).

Increased feeding of ethanol coproducts like distillers’ grains and corn gluten feed has somewhat altered what is considered a “typical” ration because coproducts now can constitute 20-50 percent of the ration.

The energy content of ethanol coproducts is on par with other energy sources (grains), and protein content is intermediate between energy-rich grains, which contain about 12 percent protein, and protein feeds like soybean meal, which contain over 40 percent protein. Cattle can be fed a wide variety of other byproducts from food manufacturing (e.g., cookie crumbs, sugar beet tops, and orange pulp) to reduce feeding costs.

Beef cows are likely to have eaten forages all their lives. Recent surveys indicate that when pasture forages did not provide all the nutrients a cow needs, 75 percent of beef cow operations fed some supplemental protein during the year, and those that did averaged 173 days per operation (157 days per animal) (USDA/APHIS, 2010).

Just over half of operations fed energy supplements during the year, and 70 percent of those operations fed energy supplements for 3 months or longer (USDA/APHIS, 2010). Beef cows will weigh about 1,100 pounds when culled (removed from the breeding herd) and will produce a carcass (dress) weighing around 50-55 percent of its liveweight. Beef also is produced from culled bulls, which may be fed some grain, but primarily for maintenance and body condition for breeding rather than for beef production.

Dairy cattle also consume large quantities of grain, primarily for milk production and cow maintenance. Dairy cow slaughter averages around 47 percent of total commercial cow slaughter. Dairy cows are generally heavier than beef cows when culled and as dressed carcasses.

Grass-Fed Beef Production

As most cattle consume forages nearly all their lives, a distinction must be made between grass-fed animals and grass-finished animals. Grass-finished cattle have grazed only on grass, pasture land, or other forages and, most importantly, have been fattened only on grass or forages to achieve adequate levels of finish to carcasses within an economically feasible time prior to slaughter.

Finishing cattle on grass or forages alone requires large quantities of high-quality forages and strong operator-management skills. Otherwise, grass-fed beef is not substantially different from beef produced from culled cattle or beef imported for processing in that it generally lacks sufficient fat to reach an acceptable quality grade level (equivalent to USDA Select, Choice, or Prime grades).

The type and quality of forage fed to cattle affects animal weight gain and carcass characteristics. To increase an animal’s weight solely on forage, the animal must have year-round access to high-quality forage. Providing sufficient high-quality forages throughout the year is physically difficult and costly in much of the United States because of the seasonal growth habits and nutrient contents of most forages.

Further, cold temperatures increase energy requirements necessary to maintain an animal’s normal body functions, which must be met before growth and fat deposition take place. Alternatively, during warmer temperatures, reduced feed intake presents a challenge to achieving sufficient quality while forage-finishing cattle.

Producers who market high-quality forage-finished beef have reduced variances that may occur in the product as a result of differences in genetics, forage type and quality, and/or other management practices. They accomplish this through careful attention to grazing management and often by using breeds with selected characteristics or genetics.

Faucitano et al. (2008) found that, when fed to the same level of finish (8 millimeters of backfat), there was no statistically significant difference in tenderness scores between beef from cattle fed grass and silage and those fed grain. Another study reported, however, that feeding grain to cattle reduced the length of the feeding period by 21 percent (Berthiaume et al., 2006), which generally lowers per-unit production costs .

Comparing Production Systems

Beef produced and marketed with different claims may have been raised in a system that shares some production characteristics and marketable attributes with another system (fig. 2). For example, grass-finished beef may qualify as “natural” or “certified organic” as a part of a more comprehensive production system; however, grass-finished beef is not by default “natural” or “certified organic” and vice versa.

Beef from an animal may be marketed as “grass/forage-fed,” for example, but if given antibiotics or implanted with growth promotants, it would be disqualified from many specific “natural” beef programs and certainly from being labeled as organic. Likewise, beef from cattle raised on pastures treated with synthetic fertilizers would not qualify as organic, and beef from cattle raised naturally or organically may not have been exclusively fed forages.

Grass-only production, however, can be tailored to use minimal or no antibiotics or hormones, thus reducing the potential for residues in meat or organs—which is virtually zero if proper drug label directions are followed—and, when coupled with other distinguishing criteria, can lead to grass-finished products amenable to natural or certified organic beef production systems.

Figure 2 Some Beef Production Technologies Overlap, but Some are Mutually Exclusive

These production systems have existed for many years, so research comparing production systems is dated, and, in some cases, precedes current designations. Most alternative production systems differ from conventional systems only in the final finishing phase.

Natural, certified organic, and grass-finished beef production systems often emphasize feeding forages to animals or grazing pastures to achieve weight gains and a level of fi nish6 acceptable to the market. Some natural and certified organic beef is grain-fed.

Only about two-thirds of organic beef is grain-fed because of the high costs of organic feeds compared with conventionally grown feeds (Roberts et al., 2007). Roberts et al. (2007) observed that premiums for organic feeds were 57 percent above conventional feeds. In some years, organic grains may only carry premiums of 25 percent or so, although premiums are generally much higher, sometimes more than 100 percent higher, which accounts for some of the difference in observed costs for organic versus conventionally fed beef .

Morley et al. (2011) found a statistically significant difference in the number of days fed between conventionally fed (162 days) and cattle fed without antibiotics (212 days) but no differences in beginning or ending weights. Acevedo et al. (2006) demonstrated the profit advantages of shortened production periods associated with grain feeding and the impact of varying premiums on net present values from each of their simulated production technologies.

Conventional grain feeding was 52 percent more profitable than natural grain feeding and 5.6 times more profitable than organic grain feeding, largely as a result of the high cost of organic grain. Grain feeding was more profitable than grass feeding for both organic and natural production, and natural grass feeding was the least profitable technology by a wide margin, largely as a result of the small premiums associated with its products.

In their meta-analysis of efficiency gains from pharmaceutical technologies, Wileman et al. (2009) analyzed results from 51 studies of conventional, organic, and natural beef production with untreated control groups, finding significant efficiency gains and cost reductions from the use of pharmaceuticals (mainly antibiotics and implants) in beef production.

Their analysis indicated efficiency gains of 17 percent in average daily gain (ADG) and 9 percent in weight-gain-to-feed ratios (G:F) from a single hormone implant. Further results indicated a 53-percent reduction in morbidity and a 27-percent reduction in mortality from metaphylaxis (whole-group treatment with pharmaceuticals) upon the arrival of cattle at the feedlot.

In their study, feeding tylosin (an antibiotic) to feedlot cattle reduced risks of liver abscesses by 8 percent but no consistent advantage over control groups with respect to ADG, G:F, or feed intake (dry-matter basis: DMI).

These efficiency gains and other factors (e.g., organically grown grains cost more than conventionally grown grains) resulted in simulated cost advantages of conventionally produced cattle over others of $77/head (over nonimplanted control groups) and $349/head (over organically fed cattle). They also found that a 10-percent increase in the price of organic feed increased costs by $54/head.

Alternative Beef Products and Labeling

Natural beef—The USDA definition of natural beef refers only to the product itself and not specific animal production practices. For beef to be labeled as “natural,” the product must contain no artificial ingredients or added color and must be minimally processed.7 USDA does not require any certification standards or regulations on how the animal should be raised.8 As a result, natural beef can be produced by conventional or other grain-feeding practices. Additional labels that convey use of a “natural” production system are largely defined and regulated by the companies or organizations that label the product as “natural.” However, naturally raised beef, produced according to the standards of a natural beef production program, generally means that the animal has not been implanted with artificial hormones or fed antibiotics, ionophores,9 or other additives. The production program of an individual or company, however, may qualify for various quality or process merits verified by USDA’s Agricultural Marketing Service (AMS) Process Verified Program, which allows the producer to qualify for marketing claims that may appear on labels (see

Organic beef—Marketing organic beef was hampered until 1999 when USDA approved a provisional label for organic meat and poultry (Greene, 2001). Meat and poultry fall under USDA jurisdiction, while organic crops fall under U.S. Food and Drug Administration (FDA) jurisdiction and were allowed to be labeled “organic” much earlier than meat. As a result, organic beef production prior to 1999 was often labeled as “natural,” “organic fed” , or other designations.

Grass-fed beef—As is the case with “natural” beef, production practices of grass-finished beef depend largely on either the individual producer’s standard practices or those defined and regulated by the companies that label the product “grass-fed” or “grass-finished.” Beef from grass-fed ruminants, however, can be labeled with a “grass (forage) fed” marketing claim through the AMS Process Verified Program if fed according to USDA standards. Under this verification standard, grass or forage must be the exclusive feed source throughout the lifetime of the ruminant animal except for milk consumed prior to weaning. The animal cannot be fed grain or any grain byproduct prior to marketing and must have continuous access to pasture during the growing season. However, silage is an accepted feed that can consist of relatively large portions of grain. For example, corn silage, which averages 10-20 percent grain, can consist of up to a third or more grain (Bates, 1998), which blurs the distinction between grain-fed and forage-fed.

Slaughter and Processing Issues: “Locally” Sourced Products10

Because alternative cattle production systems are often smaller, local, and dispersed operations, increasing consumer demand for alternatively produced beef has implications for animal slaughter and processing.

While most conventionally produced beef is processed in large plants, beef produced from alternative systems often is processed at smaller, local facilities. Locally sourced beef products can be defined by region, company, marketing channel, and by consumer definitions, and can vary by scale of production, supply chain, and marketing outlet.

“Local” can imply beef from a producer selling a portion of an animal to a neighbor to much more complex arrangements like a set of producers raising animals in a designated production system, for a local meat brand, marketed fresh on a year-round basis to restaurants, retailers, and other food service. Limitations in slaughter and processing locally sourced beef are often cited—particularly by producers—as one of the key barriers to the marketing and expansion of alternatively produced beef.

Both consolidation and attrition have occurred in the livestock slaughter sector over the last decade, and processing infrastructure is such that most livestock in the United States are processed at a relatively small number of large-volume federally inspected (FI) plants. During the last 10 years, 55 percent of cattle were slaughtered in plants that process 1 million or more head per year, just under 44 percent were slaughtered in plants that process 10,000 to fewer than 1 million head per year, and just over 1 percent were slaughtered in plants that process fewer than 10,000 head per year (USDA/NASS, 2012).

However, large plants with scale economies, even if conveniently located, are essentially unavailable to local meat producers due to mismatches in scale, services, and business models (Johnson et al., 2012).

Producers using alternative systems are not always able to provide larger lots of the uniformly sized animals preferred by larger processors, thus leaving them to rely on small-scale slaughter or processing facilities. Larger slaughter facilities also cite biosecurity issues (infectious disease transmission, traceability, etc.) for not accepting cattle from small-scale producers, who do not have the resources or organizational capacity to enforce particular standards (e.g., Crutchfield et al., 1997).

Further, many larger plants that might otherwise consider working with small livestock producers fi nd it financially infeasible to break carcasses down further than subprimal cuts. Large plants that do retail cutting typically sell the product under their own label. If they were to process small batches of custom product, they would fi nd it laborintensive and a potential confl ict of interest (Johnson et al., 2012).

Location issues also limit the viability of smaller processors. In 2009, USDA’s Rural Development Agency identified areas in the United States where small livestock and poultry operations are concentrated and where there is a lack of small federally and/or State-inspected slaughter establishments in their vicinity, which can affect marketing and interstate commerce.

For cattle, lack of small slaughter facilities in relation to large numbers of small farms is evident across central Texas and into Oklahoma, Arkansas, and Missouri; areas of the Southeast along the Appalachian Mountains; and numerous counties in the West (Arizona, Washington, Oregon) (USDA/FSIS, 2010).

Even in areas with a number of small appropriate slaughter/processing facilities, these facilities may not be economically feasible due to a lack of consistent throughput of cattle. Growth in small-scale slaughter and processing facilities depends on whether producers in need of these services can provide enough throughput, for enough of the year, and pay a high enough fee for the services to make such facilities economically viable.

Further, lack of slaughter facilities may not always be the limiting factor for local or alternative production; quality retail cutting may be a greater challenge in some areas for local marketers considering that retail cutting is more labor intensive and therefore more costly (Johnson et al., 2012).

Alternative methods for slaughter and processing geared toward niche markets—such as local and regional market aggregators and mobile slaughter facilities—may help meet some of the need for increased slaughter and processing capacity in localized areas. In such systems, both processors and their customers can benefit from scale economies, particularly with regard to collection and sales of byproducts, as well as with efficiencies gained from using the same cutting methods for larger groups of carcasses. Further developments in structural innovations for slaughter and processing are necessary to enable the growth of alternative livestock producers marketing product to consumers in their region or community.

Figure 3 Multiple Beef Production Systems Provide Consumers with Beef Products that Match their Preferences

Sources: USDA,Economic Research Service. Photos: Monte Vandeveer and Kenneth H. Mathews, Jr.

Further Reading

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April 2013

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