Differences in weight, muscling, color and other carcass attributes help determine the potential economic value of a pork carcass. Typically percentage of lean (as measured by backfat depth) and carcass weight are the principal measures used in value-based marketing programs.
Current carcass evaluation technologies typically provide only a marginal contribution for muscling, using a loin muscle measurement, to the payment producers receive. And, carcass weights are getting heavier. USDA reports average carcass weights have increased almost a pounda year over the past 10 years.
Many value-based marketing programs used by pork slaughter plants have increased premiums above their reported base price for heavier pork carcasses that are also leaner. Leaner animals also may have higher yields, which means less cost in trimming and boning. In the end, heavier carcasses mean heavier loins, hams and bellies.
The Quality Lean Growth Modeling Project, managed by the National Pork Producers Council and funded by the National Pork Board, offered the unique opportunity to determine the average value of the hams, loins and bellies from the six genetic lines at three different slaughter weights --250, 290 and 330 lb. Diet differences were also tested against genetic lines and live market weights. Value is considered to be gross revenues in the analysis of this data set.
Two things should be kept in mind when thinking about these results. First, increased gross revenues do not necessarily mean increased returns per head. However, if a producer can be cost competitive at heavier weights, there are value-based marketing programs that provide economic incentives for heavier carcasses. Second, pork slaughter firms face a derived demand from wholesalers and retailers who use loins, hams and other primal cuts to set price.
Value-based marketing programs typically have not included primal cut weights for a couple of reasons, at least, in part.
First, reliable carcass evaluation technologies capable of operating in high-speed environments have not been found. Also, the need to pay producers promptly before the value of the carcass is determined has hindered the development of buying programs based on primal cut values.
Consequently, it is important to note that the figures reported here are averages. Each pork slaughter and processing firm has developed their own competitive strategy. They in turn negotiate with wholesale and retail buyers. A key part of their strategy is product differentiation, which means that plants may process pork carcasses in different ways for different customers. Thus, these results can provide information to different segments in the pork value chain.
Determining Value The six genetic lines in the Quality Lean Growth Modeling Project, Lines A through F, were selected for their diversity in representing a broad cross-section of genetics used in the industry. (See 'Understanding Lean Growth' Blueprint, National Hog Farmer, Oct. 15, 1998.) The four diets fed in the study varied only in their lysine content. Complete data on ham, loin and belly weight for 694 carcasses was used in this analysis.
Data from the U.S. Department of Agriculture's Agricultural Marketing Service was used to value the loins, hams, and bellies. Ten years of prices (1988-97) were used in this analysis. Average weight multiplied by the price (converted to a per pound basis) provided the 'average value.'
Fresh Loin Value Differences No significant differences were found when testing average value in one diet vs. another diet within all lines for loins. In other words, no diet affected the average loin value of a specific line. This is not surprising given that diets are typically used to accelerate growth, not to increase muscular mass.
With this understanding, we can focus on differences between genetic lines at the three market weights (250, 290, 330 lb.).
Figure 1 presents the loin mean (measured in $/head) per line for the three live weight categories. As you would expect, value increases as carcass weight increases. Loins were valued at approximately $40/carcass (250 lb. live weight) and increased to almost $50/carcass (330 lb. live weight).
Note that loin value significantly increased over the 290- to 330-lb. range relative to the 250- to 290-lb. range. This suggests that average (therefore, marginal) loin revenue is greater between 290 and 330 lb. No line had a significant greater value relative to the other lines. Loins are an important portion of overall pork carcass value.
Variability of loin value/carcass, determined by the standard deviation, increased as the carcasses got heavier (see Figure 2). The range was approximately $2 at 250 lb. for all six lines. However, variability increased over the lines as the animals got heavier.
At 330 lb., Lines A, B and C had approximately a $6 standard deviation relative to only $3 for Line A. This difference was significant which suggests that Line A has less variability in loin value.
Ham Value Differences Similar to loins, no significant differences were found when testing average value in one diet vs. another diet within all lines for pork hams. Again, diet did not affect average ham value of any genetic line. The ham mean (measured in $/head) per line for the three live weight categories is shown in Figure 3.
Again, value increases as carcass weight increases. Fresh pork hams were valued at approximately $32/carcass at 250 lb. and increased to approximately $40/carcass at 330 lb. Value increased at approximately the same rate between both live weight categories.
Line A had significantly less value relative to the other five lines due to the lower ham weights at the three market weights.
Variability (measured in $/head) increased as the carcasses got heavier for all six lines (see Figure 4). However, variability leveled off over the 290 to 330 lb. weight range. At 330 lb., Line F had less than $2 standard deviation relative to $3.50 for Line C. The range of differences between lines did not change.
Belly Value Differences Figures 5 and 6 present the mean and standard deviation, respectively, for pork bellies at the three market weights. No significant interaction between value and diet was found, so the data was aggregated across diets, as was the case for loins and hams. It was interesting to note that Line A, which had significantly less ham weight relative to the other lines, had significantly greater belly value per animal. Producers selling to a plant that may have a market for bacon relative to hams could benefit from this line.
At 250 lb., belly value was approximately $15/head for all six lines. However, the range began to differ between the lines at 290 lb. At 330 lb., Line A had a value of over $20/head while other lines averaged between $18.50 and $20. Similar to hams, the standard deviation increased by almost $1/animal up to 290 lb., then leveled off at 330 lb. With respect to standard deviation, Line A had the lowest average standard deviation at $1 with Lines D and E having over $2 deviations.
Significance To Producers? What do these results suggest for producers and others in the pork value chain? First, we would have to know the marginal costs for the four diets fed before we can determine whether the increase in loin, ham and belly values at these heavier live weights might translate into increased producer returns under various value-based marketing programs. Still, the results suggest that increased revenues are possible at heavier carcass weights for these genetic lines.
The relative lack of increase in variability from 290 to 330 lb. was positive. Producers should carefully consider individual plant carcass merit pricing systems prior to marketing heavier weights as noted by John McKissick (National Hog Farmer, Oct. 15, 1998, page 48). It may be likely that animals which can maintain loin, ham and belly growth at heavier weights will be more valuable given the increase in marketing weights in recent years. However, on the margin, focusing on improvements to reduce variability between 250 and 260 lb. is a much more rational goal given current value-based marketing programs.