1 Yates, Lawrence - AMS

From: Close, D (Don) <Don.Close@raboag.com>

Sent: Wednesday, November 12, 2014 9:05 AM

To: Yates, Lawrence - AMS Subject: Comments for US Beef Grading System

Attachments: Grading Changes.pdf

Hello Mr. Yates,

Please see my attached comments in regards to changes in the US Beef Grading System.

Don Close VP, Food & Agriculture Research & Advisory, Animal Protein

___________________________

Rabo AgriFinance
12443 Olive Boulevard, Suite 50, St. Louis, Missouri 63141 Phone: (314) 317-8205 Cell: (314) 401-7566

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This email (including any attachments to it) is confidential, le gally privileged, subject to copy right and is sent for the pers onal attention of the intended recipient only. If you have received this email in error, please advise us immediately and delete it. You are notified that disclosing, copying, distributing or taking any action in reliance on the co ntents of this information is strictly prohibited. Although we have taken reasonable precautions to ensure no viruses are present in this email, we cannot accept responsibility for any loss or damage a rising from the viruses in this email or attachments. We exclude any liability for the content of this email, or for the consequences of any ac tions taken on the basis of the information provided in this email or its attachments, unless that information is subsequently confirmed in writin g.Mr

. Lawrence Yates

Beef Carcass Revisions

Standardization Branch LPS Program, AMS, USDA 1400 Independence Ave. SW. Stop 0258

Washington, DC 20250

Dear Mr

. Yates,

For the request for open comments regarding the USDA Beef Grading System I

would like to ma ke some brief comments. G iven the time since the last revisions were made and the change in fed cattle carcass weights and characteristics

, an evaluation of the grading system is long over due. I would like to compliment the Grading Service for accepting th e challenge of making needed updates.

Quality Grading:

Under the current grading system the separation in degrees of marbling from small to moderate all falling under the choice category is simply too wide. While the intent to get the largest number of c arcasses into the highes t value possible makes sense for the industry

, the variation within the choice grade creates too much variability of eating quality for consumers.

T he broad number of premium labels in the market today are all pulling cattle

from th e top one third to one half of the choice offering and sell at a justifiably higher price. Unfortunately, the remaining bottom half of the choice selection that is selling under a store banner or commodity product simply does not have the consistency of

ea ting quality. As a result consumers are confused and frustrated when they are buying beef with a choice label that has so much variation in consistency.

Given the fact that over 70% of the carcasses being graded are C hoice or better some narrowing of the C hoice specifications is needed. This could be accomplished in one of three ways. T he P rime grade could be expanded into at least a portion of the moderate degree . T hat would increase the number of P rime. A n entirely new category

could be added that would fall between the existing C hoice and S elect grades or the

Select label expand into the small degree category.

R efined labeling would provide consumers a more consistent eating experience

within the quality grade they cho o se to buy. The improved consistency would enhance reliability and build consumer confidence in the beef they are buying.

Yield Grade:

While carcass weights have escalated in size over time and especially in the last few years

, the premium and discount schedule has become increasingly ins ignificant. Under this period of tight cattle supplies the need for weight per head and the need for more cattle that will grade choice has trumped the disadvantage of an over weight carcass. This will not always be the case.Another factor that has great ly changed the dynamics of yield grades has been the

escalation in the quantity of beef consumed as ground beef . As a result, the value of trimmings in relationship to the carcass or cutout value as a whole has escalated

. Y ield grade specifications are in even greater need of updating than are the quality grades. Over the past ten years and during the period that many plants transitioned to electronic grading the decision was made to drop the yield grade or to stop reporting yield grades in the Weekly Gra ding Report. The loss of timely yield grade data to the market place as a whole has become a huge disadvantage to producers. When the yield data was reported weekly, producers and or market analyst s could track the yield data and make an educated determi nation if fed cattle supplies were in tight supply or when fed cattle supplies were backing up. As a result this information enabled producers to determine how aggressive they needed to be in marketing cattle. With the current surge in carcass weights and the modern genetics

tha t enables the cattle to be taken to heavier and heavier weights the lack of timely yield grade data has become even more of a n unfair disadvantage to producers. It is critically important that weekly yield grade data reporting is ret urned.

Thank you for considering my perspectives on this important issue

.

Don Close

Rabo Agrifinance

12443 Olive Blvd. Suite 50 Saint Louis, MO 63141

314

- 317

- 8205