Who Will Pay for Impact of Textured Beef Crisis?

ANALYSIS - The fall out over Lean Finely Textured Beef in the US is building, writes Chris Harris.
calendar icon 12 April 2012
clock icon 3 minute read

The debate now appears to be moving into the question of labelling the product for the consumer, as Congresswoman Chellie Pingree has introduced a bill to ensure the consumer knows what they are eating.

The Requiring Easy and Accurate Labelling of Beef Act (REAL Beef Act) would require any beef containing 'finely textured ground beef' to have a label at the final point of sale.

"Consumers have made it pretty clear they don't want this stuff in their food," Congresswoman Pingree said.

"If a product contains connective tissue and beef scraps and has been treated with ammonia, you ought to be able to know that when you pick it up in the grocery store."

Finely textured lean beef trimmings have been the subject of a grassroots effort to get it out of school lunches with more than a quarter of a million people signing an online petition.

"This is about choice and transparency. Parents and consumers want to choose whether or not they serve pink slime but they can't do that unless they know whether or not it's in the product they are buying," the congresswoman said.

However, the repercussions could be going even deeper as this week economists reported that the concerns over the product had started to hit the market, with the price of fresh 50 per cent lean beef trimmings falling by 50 per cent in in just five weeks. These trimmings are not the mechanically recovered and treated meat but the fresh offcuts from the carcase.

University of Missouri economist Ron Plain reported that beef carcase cutout value had also fallen for the fifth week in a row.

There are concerns in the industry that the furore among consumers, politicians and activists is seeing stock piles of 50 per cent lean beef trimmings and beef fat trimmings building up.

Steve Meyer and Len Steiner in their CME Group Daily Livestock Report also express concerns that there could be a knock on effect in the market to pork, with lower grinding values in beef also producing lower pork trimming prices.

Steve Meyer and Len Steiner say that pork trim prices have been gradually falling since the beginning of March at a time when traditionally they are on the increase.

However, in the long run, the removal of Lean Finely Textured Beef from processed products such as burgers and sausages could start to see prices of lean ground beef rise significantly as more higher value beef trimmings will be required to make up for the loss of LFTB.

A similar situation will be faced in Europe as the European Commission has called a halt to the use of desinewed meat (DSM) in products. More higher valued product will be needed to make up for the shortfall of the cheaper protein.

However, the question still remains: Who will pick up the bill for the use of this higher priced product if both lean finely textured beef and desinewed meat are removed from manufacturing? Can the retailer or foodservice outlet pass the higher prices on to the consumer or will they squeeze the processor? In which case will the processor then demand lower prices from the producer in order to keep costs down?

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