Breaking Down The Burger. A Ground Beef Cost Analysis From The Farmers Perspective.
“Farm direct is more expensive.” “The grocery store is my only option” I am sure you have heard it all before. Let’s look at the beef market of today. I took a 12 year old cow to the sale barn in Cobden (Renfrew Pontiac Livestock) last Tuesday and I received a cheque for just over $2,500 dollars.
For those who do not know how livestock markets work, meat cattle are sold by the pound. This price is the price regardless of grass fed, grain fed, pasture raised, grain finished, the list goes on.
Let us break down the cost if I were to turn this animal into ground beef. The general rule of thumb is that the carcass weight (what is left after removing the hide and innards) is approximately 60% of the animal’s live weight. This cow in particular weighed 1,705 pounds. So that puts the carcass weight of this particular animal at 1023 pounds.
Now comes the butchering. Of that 1,023 pound carcass the excess fat and bones are removed. The fat and bones make up approximately 30-35% of the carcass weight. Let’s assume we are going to grind all of the meat into hamburger and not make roasts or steaks. This leaves the farmer with roughly 660 pounds of ground beef.
I gathered the prices for ground beef (not on sale) at a variety of grocery stores in the Ottawa Valley area and the consensus was that a pound of ground beef costs around $7 dollars per pound.
For the sake of this article let us pretend that there is no difference in the quality, flavour, and nutrients in local ground beef versus grocery store ground beef. Although we know the two products are vastly different.
Alright so, $7.00 dollars a pound times my 660 pounds of ground beef leaves me with $4620 dollars for my cow. This is before I pay the butcher to slaughter and process my beef. The butcher charges 1.15 per pound to process the carcass ($1.15 dollars times 1023 pounds) and an additional $250 dollar fee for slaughtering. This charge amounts to $1,426.45.
So if we take the price of the cow and the price of the processing what is the farmer left with in terms of profit.
Cost of Cow = $2,540.45
Cost of Processing = $1,426.45
Total Cost = $3,966.90
Burger Sales – Total Cost = $653.10
The farmer makes just under $1 dollar per pound profit on that hamburger. This cost analysis does not add in the trucking of the animal to the facility or the customer service aspect of selling farm direct.
Let’s put our rubber boots and greasy ball caps on for a second, what does $653.10 buy an Ontario beef farmer in May 2024.
- 3 tanks of fuel for the tractor
- Almost the processing of ½ a beef
- 2 and 1/3 tons of corn
- Pasture rent for 4 cow/calf pairs
- One years insurance for a truck and trailer
- 1/2 ton of fertilizer
- 60 2×4’s
- 2 pairs of Dunlop rubber boots
The moral of the story, is it does not buy you a heck of a lot.
When you choose to buy groceries, think about where that money is going to end up. All of the expenses listed above will impact the lives of farmers as well as other members of the community in some way shape or form.
You hear the words like “corporate greed” and “greedflation” being tossed around a lot lately. If you think about it, consumers have the power to change the market. Sure, it is less convenient to purchase from a local farmer, and yes it might cost you a dime more. But in the big picture, investing in that 10 pounds of ground beef from a local farmer will provide you more benefits as opposed to buying that pound of ground beef wrapped in cellophane at the big box grocery store.