Wednesday, September 7, 2011

Buying a side of beef: Lesson three - calculating the price of a side of beef

In the continuation of our "How Stuff Works" series on how to buy a side of beef, today we discuss how to calculate the price for a share of beef. If you are just joining us, be sure to catch up on lessons one and two first.

Buying a side of beef can be an economical way of filling the freezer and supporting your local farmer but the process can be extremely confusing for the first time customer. Here's a detailed primer on how it works and what to expect.

In Lesson two we learned about the differences between live weight, hanging weight and cut and wrap yield and how between each stage of processing, there is a certain amount of loss known as dress percentage and percent cutability. Now that we understand how the beef is weighed, we can discuss how to calculate the costs associated with purchasing a side of beef.

There are several methods farmers use to calculate the price of a side of beef for their customer. The single most common method is based on the hanging weight plus the butcher fees. Frequently this will be expressed as, "$3.00/lb hanging weight plus cut and wrap". {Update Fall 2014 - beef prices are significantly higher than when I originally wrote this series in 2011. Nowadays, fall prices range from $4.00 to $5.00/lb hanging weight in my area, more in other seasons when there is not as much competition}

That is great, but doesn't really help a customer prepare for the how much the beef will actually be. Since you are most likely purchasing shares in a live animal when you agree to buy beef from the farmer, neither one of you will know the exact price for that animal until it is sent to the butcher and you get the hanging weight.

Once the beef is at the butcher and you know the hanging weight you can easily calculate the price of your share. If the hanging weight is 582 and you agree to purchase a quarter beef at $3.00/lb the fees are calculated as such:

582 lbs x $3.00/lb = $1746 / 4 = $436.50 to the farmer for a quarter beef

The $436.50 is to be paid to the farmer but as a customer, you are still responsible for the fees the butcher charges to cut and wrap the beef.

In some instances, the farmer will deliver the animal to the processing facility, pay for the fees and then the customer picks up the meat from the farmer, pays his share for the beef and reimburses the farmer for the cut and wrap fees. A more common practice, is for you to pay the farmer for your share then go to the butcher to pick up your meat and pay the butcher for the cut and wrap. When talking with a farmer about potentially purchasing a share, ask if you will be picking up the meat from the farmer or the butcher.

So back to butcher fees. Each facility is different and has different fees. The most common fees include a per pound fee based on the hanging weight, a kill fee and possibly a tallow or bone disposal fee. There can be other fees if you opt for products like summer sausage, hotdogs/brats or pre-formed patties.

If you are providing custom cutting instructions to the butcher, ask what their fees are. That way you will know exactly how much your side of beef will cost. The fees that my current butcher charges are .55c/lb cut and wrap plus a $65.00 kill fee.

So if we return to our example hanging weight of 582 and you have purchased a quarter share, here is how to calculate the fees for cut and wrap:

582 lbs x .55c/lb + 65 = 385.10 / 4 = $96.28 in cut wrap for a quarter beef

Total price for a quarter beef:
$436.50 to the farmer + $96.28 to the butcher = $532.78

[Updated to add a note about cost: For a more detailed explanation, please see the comment below]
 We now know the price paid for our quarter beef ($532.78), now lets apply the price to the yield of the meat to determine our personal cost. In Lesson Two we use the example of 76% cutability (the final yield of meat when cut and wrapped, this is what will go in your freezer). 

582 lbs hanging weight x .76 cutability = 442lbs of cut and wrapped meat
442 lbs / 4 = 110.5 lbs of meat cut and wrapped for a quarter beef
Price = $532.78 / 145.5 lbs of meat hanging weight (582/4) = $3.66/lb
Cost = $532.78 / 110.5 lbs of meat cut and wrapped (442/4) = $4.82/lb

OK, now we know how much we are spending, but what kind of cuts come from a beef? Lesson four will walk through how a beef is broken down and all the different options for steaks, roasts and other cuts.


14 comments:

Anonymous said...

You do not mention how to get the price of the meat in the freezer. The hanging weight price is VERY different than box weight price due to trim,fat and bone and etc. So if I paid $1144 for half a steer hanging at 288lb and in the box at 182 pounds (which I did) costing $144 to process that is $1144 devided by 182lbs at $6.28 a pound...Now before processing it was $3.47 a pound to the rancher. I lost 106 pounds due to processing and that is where the big jump in price comes from...I do not see where you address this in your article...Just Say'n

Katia said...

Thank you for your comment! Lesson three discusses the steps involved in calculating the price of the side of beef. In most all private treaty transactions between a farmer and a consumer, this price will be based on the hanging weight of the the animal because that is always a known variable (the butcher will always weigh the sides because that is how they calculate their fees). Occasionally the price is based on the live weight of the steer (if the farmer has a scale) but is almost never based on the finished or cut and wrap weight of the animal. I do walk through the calculations to estimate “cut and wrap yield” or “package weight” in Lesson Two:

“During each step of processing, some weight is lost. It is very important to keep this fact in mind when trying to calculate exactly how much meat your share will contain. Remember:

live weight x dress percentage x carcass yield = cut and wrap yield”

In Lesson Two I give the example of 76% cutability or carcass yield (the remaining meat left over after the cut and wrap process removes trim and bone) as an average. This percentage varies greatly depending on the instructions you provide to your butcher as well as breed, how the animal is finished and how long the animal hangs at the locker before it is cut and wrapped. Based on your numbers, your percent cutability was 63% (188lbs c/w weight/288lb hanging weight). I don't know the specifics of how you had your side cut out but in general a lower number usually means more boneless cuts and burger.

From what I can understand your comment centers around the difference between “price” and “cost” which are two very different things. I have updated the post to more accurately reflect this terminology. “Price” refers to exactly that, the sticker price of what you pay. In your example, your price was $1,288 ($1,144 to the farmer and $144 to the butcher. I am including butcher fees here because that price is static, you pay that regardless of what meat you take home).

In economics, cost involves the sacrifices we make to facilitate the exchange of goods. In this example of buying a side of beef, the costs may include not only the amount of money you paid (price) but also your time tracking down the farmer, talking with the butcher, time spent reading this article (!), fuel and time for traveling to pick up your meat, the electricity involved in keeping your freezer cold and specifically the point you referenced in your comment, your overall “loss” of 106 pounds from the hanging weight.

Which brings me to another point in economics, value. If price is what you pay, value is what you get.
So in your example, you paid $1,288 for a half steer weighing 288lbs. The “price” for that meat is $4.47/lb ($1288/288lb hanging weight). You point out that the meat actually “cost” you $7.08/lb ($1288/182lbs cut and wrapped). The question then centers on whether or not you feel that the sacrifices you made (106lbs of weight lost during the cut and wrap process) in paying the cost of the meat still leaves you feeling like you got a good value for your dollar. Since value is subjective, only you will know the answer to this one :) I sincerely hope you do. Thank you so much for stopping by, taking the time to leave such a thoughtful comment and supporting your local farmer!

Anonymous said...

Sorry, I mislead you in my figures and re-explained myself on another post. Im new at this posting stuff...So: $1000 to rancher for 288lb hanging 1/2 beef and $144 for process fees with 182 lbs wrapped OR $1144/182=$6.28 a pound. I am happy with what I received and the meat is so much better than the store. The burger is wonderful. We get what we pay for and everyone has to make money in the deal. Yes I have a basic cutting list of nothing fancy: The various steak cuts, roasts and burger with brisket, tritip and tenderloin. I like bone in on all my steaks and roasts but forgot to tell the butcher so he boned out the meat. Thus a good reason why the wrapped weight was lower than normal. So yes I did have a lot of burger. About 43# of burger and 49 # of whole muscle meat. The rancher, who is a high school buddy of mine, give me the family rate, ;), and recvd $3.47 a pound for the 1/2 and I thought that was a good deal. He mentioned he didn't make a thing but Im thinkn he did but that's a moot point anyway because he puts out great tasting beef. Sorry to be repetitive. Great site by the way.

Katia said...

Thanks for coming back to follow up! I really appreciated your earlier comment and I think it is a very important aspect of buying a side of beef for the first time buyer. Many folks wonder where on earth all the meat they paid for went and this can lead to an unnecessarily soured relationship with the farmer, butcher or both. Thanks for taking the time to research the process.

I'm so glad that you are pleased with your purchase! The meat may seem more expensive than at the store but you can certainly taste the difference and you get to support your farmer and buddy as well as your local butcher along the way. Win/win!

Cheers!

Anonymous said...

Well one more thing then I will leave this be till next year to let you know how things went...I split this 1/2 with another high school bud of mine and he told me it was pricey but was okay with it. I told him he cannot find chemical free, antibiotic free, stress free well hayed ( Colorado doesn't have Iowa grass) and grained out lean beef that tastes like this. Furthermore I told him he could have come picked his 1/4 up threw it in the cooler and ate off it like a caveman or processed it himself to "SAVE" more money and feel like he won the beef lottery. People just don't understand what happens in the process and are frustrated with their "less than a mountain pile" of meat that comes out the door in the box...That's why everyone who buys a side or a whole beef should do their home work. And in that you have done a great job in educating myself...I will pass this link along. Have a great year. Andy.

Nate Carnahan said...

this is a refreashing site that i will refer new first time buyers as i get exsausted from time to time trying to exsplan to someone that just baught a 1/4 or a side why they had to pay what they did for what they got and why they dont have a freezer full of T bones

Katia said...

Thanks Nate! Just happy to be doing my part in consumer education.

Anonymous said...

great site, I learned exactly what I was looking for. thank you

Katia said...

Wonderful! So happy to help.

HSLD said...

This is really an all encompassing blog that is very helpful to those getting into buying quality meats! I appreciate your time and energy getting this well thought out blog together!

DeeAnn Darrow said...

Everyone has provided great information into the economic side of it, and for that I am grateful! Now, my question is, since this is MY first time getting into this, what size freezer do I need to have on hand for a quarter or half side of beef AFTER processing? I'm pretty sure it isn't going to fit in the freezer portion of my side by side fridge/freezer!

Katia said...

Thanks for stopping by DeeAnn and great question!

To give you a visual - about 30lbs of frozen meat will fill a paper grocery sack to the tippy top if stacked for maximum efficient use of space. A quarter of beef is between four and five "sacks". I have seen quarters fit in a side-by-side but that leaves no room for any other frozen foods.

Another way to estimate space requirements is by cubic feet - a grocery bag is a little less than 0.5 cubic feet. Thus a quarter beef needs at least 2.5 cubic feet of storage space (0.5 cu ft/sack x 5 sacks). Add in another .5 or 1.0 cubic feet for those of use that are not master stackers.

One of the small square chest freezers (about 7 cu feet) will hold a half a beef (about 5 cu feet) and leave a space at the top for other frozen goods. Keep in mind that the more bone-in cuts, the less uniform the packages for stacking and the more space required.

Hope that helps! Thanks for visiting.

Anonymous said...

I am buying my first side of beef and to be honest, I expect a lot of grilling this summer. I do feel like a noob because not understanding the whole fees and stuff. This site does help me a lot, so thank you. My question is after my processing fee from the meat cutters. The Farmer told me to pay them 2 dollars per pound of the total pounds I receive from butcher when I pick up my meat. I feel like I am doing good right?

Katia said...

Hey sorry to have missed your comment, it somehow got stuck in moderation.

Anyway, your question seems to boil down to: Is $2/lb cut add wrap weight a fair price. Let's pencil it out:

Let's use the numbers provided in the post above in blue to get an estimate for final package weight. If a 582lb HW yields a 442lb packaged weight, we are looking at 110lbs of cut and wrapped meat for a quarter beef.

You were quoted $2/lb to the butcher. 110LB x $2/lb = $220 in processing fees.

In the example above, the same 110LB cut and wrapped quarter has $98.28 in processing fees which breaks down to $0.89/LB of final cut and wrapped meat.

Butcher prices do vary by region but that price does seem a little high. I know some farmers will overestimate processing fees so when customers go to pick up their meat the bill is not as high as anticipated.

One other possibility that can add on significant processing costs involves having jerky, summer sausage, brats and other smokehouse products made. These products really rack up the processing fees and can add on another $4-6 per finished pound. The smallest batches most facilities can accommodate is 25 lbs. So adding on a batch of summer sausage can increase your processing fees by up to $125.

My advice would be to check in with the farmer once more and ask what facility they use. Then call the butcher and ask what their fees are to get a more accurate investment.

Best of luck!

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