# Presentation: 138608

## Processing The Devil In The Details

**Red Meat Processing**

-  Why can’t Red Meat be just like other fully substitutable items such as cheese, tomatoes, chicken or turkey?
- Devilish Details:
- USDA has the _***highest standards than anyone else in the world***_!!
- _[http://www.ams.usda.gov/lscp/beef/beefannounce.htm](http://www.ams.usda.gov/lscp/beef/beefannounce.htm)_
- No one else has these tight of standards:
- (not MacDonald's, not the US Military, not the Japanese Market, not Morton's, not Ruth Chris, or your own school commercial bids!)
- Zero Tolerance for Ecoli in raw form
- Zero Tolerance for Salmonella in raw form
- 85 / 15 Blend
- No downers
- Domestic only
- Graded and Inspected by USDA, AMS
- The processor of the meat has to set up to run in a specific way per USDA AMS requirements

## What does this do to the cost of the raw material if purchased on the open market by a Processor?
USDA per the Nov 15th Price list says that A594 Beef is valued at $1.5216 per pound
Commercially purchased A594 equivalent from one of the USDA suppliers as of 7/10/07 was $1.665 per pound
 USDA National Weekly Pricing for Week 7/2/07 for 85/15 Blend made from 90% Chemical lean and 50% Chemical lean is $1.296 per pound (this specification is not zero tolerance for salmonella in the raw form but is zero for ecoli 057-H7)
http://www.ams.usda.gov/foodserv/2007Reports/AG20070702WFoodservice.pdf
The difference is $.369 per pound between 85/15 National Average and commercial equivalent of A594 !

- USDA per the Nov 15th Price list says that A594 Beef is valued at $1.5216 per pound
- Commercially purchased A594 equivalent from one of the USDA suppliers as of 7/10/07 was $1.665 per pound
-  USDA National Weekly Pricing for Week 7/2/07 for 85/15 Blend made from 90% Chemical lean and 50% Chemical lean is $1.296 per pound (this specification is not zero tolerance for salmonella in the raw form but is zero for ecoli 057-H7)
- _[http://www.ams.usda.gov/foodserv/2007Reports/AG20070702WFoodservice.pdf](http://www.ams.usda.gov/foodserv/2007Reports/AG20070702WFoodservice.pdf)_
- The difference is $.369 per pound between 85/15 National Average and commercial equivalent of A594 !

**Red Meat Processing**

## Lets look a a finished product example of Beef Patties
Beef Patties made using donated A594 on a FFS/ MFFS basis:
         20 # net case weight / 130 patties that are 2.46 oz each for 2 oz M/MA
	DF needed to produce 1 case is approximately 16.5 #’s of A594
	Case cost is $19.50 per case or $.15 per serving delivered to distribution (cost of the A594 Ground Beef is not included in this price)

- Beef Patties made using donated A594 on a FFS/ MFFS basis:
-          20 # net case weight / 130 patties that are 2.46 oz each for 2 oz M/MA
- 	DF needed to produce 1 case is approximately 16.5 #’s of A594
- 	Case cost is $19.50 per case or $.15 per serving delivered to distribution (cost of the A594 Ground Beef is not included in this price)

**Red Meat Processing**

## Lets look a a finished product example of Beef Patties
Beef Patties made using donated A594 on a NOI basis:
         20 # net case weight / 130 patties that are 2.46 oz each for 2 oz M/MA
	DF needed to produce 1 case is approximately 16.5 #’s of A594 Equivalent purchased at $1.665 #
	Case cost is $52.46 per case delivered to distribution (cost of the A594 Ground Beef is included in this price) marked up 10% by distributor $57.70 - $25.16 = $32.53 cs / $.2502 per patty

- Beef Patties made using donated A594 on a NOI basis:
-          20 # net case weight / 130 patties that are 2.46 oz each for 2 oz M/MA
- 	DF needed to produce 1 case is approximately 16.5 #’s of A594 Equivalent purchased at $1.665 #
- 	Case cost is $52.46 per case delivered to distribution (cost of the A594 Ground Beef is included in this price) marked up 10% by distributor $57.70 - $25.16 = $32.53 cs / $.2502 per patty

**Red Meat Processing**

## Lets look a a finished product example of Beef Patties
Beef Patties made using commercial beef blend of 90’s and 50’s:
         20 # net case weight / 130 patties that are 2.46 oz each for 2 oz M/MA
	DF needed to produce 1 case is approximately 16.5 #’s of commercial beef blend of 90’s and 50’s purchased at $1.295 #
	Case cost is $45.16 per case delivered to distribution (cost of the commercial beef blend of 90’s and 50’s is included in this price) marked up 10% by distributor $49.67 / $.382 per patty 
Difference between NOI beef patty vs commercial price before commodity discount is $8.03 per case.

- Beef Patties made using commercial beef blend of 90’s and 50’s:
-          20 # net case weight / 130 patties that are 2.46 oz each for 2 oz M/MA
- 	DF needed to produce 1 case is approximately 16.5 #’s of commercial beef blend of 90’s and 50’s purchased at $1.295 #
- 	Case cost is $45.16 per case delivered to distribution (cost of the commercial beef blend of 90’s and 50’s is included in this price) marked up 10% by distributor $49.67 / $.382 per patty
- Difference between NOI beef patty vs commercial price before commodity discount is $8.03 per case.

**Red Meat Processing**

## The Puzzle of Poultry Processing

- The Devilish Details

## The Goal	

- Highest Return on Commodity Dollar
- Know the Quantity We Will Receive
- Receive it When We Need It

## Substitution

- What Does It Mean—Industry
- Commingle Delivery Order Numbers
- Purchase of Raw Loads
- The Risks
- What Does It Mean—Customer
- Timely Deliveries
- Costs

## Yields	

- Guaranteed Minimum Return
- Product Variety
- Case Return
- Costs
- Standard Yield
- Case Return
- Product Variety
- Costs

## The Results