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Monday, April 27, 2009

The Price of Grass-Fed vs. Grain-Fed Beef
By Monica @ 1:52 PM PermaLink

A few months ago I was involved in an internet discussion about the affordability (or rather, the perceived non-affordability) of grass-fed beef. This led me to investigate the costs of grass-fed beef in a bit more detail.

Let's compare the costs of current grain-finished beef with mostly grass-fed beef. I'll use two fairly comparable products: Costco beef and local beef from Colorado's Best Beef Company (CBB).

I say "mostly grass-fed" because the product I'm using for comparison isn't grass-finished. At CBB, the cattle are fed grains for probably the last couple of weeks of their lives. However, there's a vast difference between this beef and the feedlot beef in stores. There are no additional inputs from antibiotics or steroids. The cattle are raised on pasture, which doesn't create a waste and animal health problem as it does in feedlot practices where literally tens of thousands of animals are packed per square mile (correction: I had written "acre". I think we can all see it's physically impossible to get that many animals per acre unless we're stacking them high). From a human health perspective, the omega fatty acid ratio and conjugated linoleic acid content resulting from a short grain-finishing time may render this beef as somewhat less ideal than grass-finished beef. It's still corn-finished beef. However, the finishing time is drastically reduced under a mostly grass-fed model. This beef is much higher quality and tastes spectacular.

But how much does it cost?

The grass-fed beef from CBB is approximately $5.61 per pound, but this doesn't tell you very much because it doesn't allow for a direct comparison of cuts. If it's all ground beef then obviously that's twice as expensive as grocery store feedlot beef!! So, I went through the list of cuts and poundage that are received in a bulk order of 1/2 beef from Colorado's Best Beef Company. Then, I went to Costco and listed the prices per pound for all of these different cuts: T bones, ribeyes, sirloin, round roast, top round, bottom round, chuck, flank, prime rib, sirloin tip, heel of round, arm roast, rump roast, brisket, stew meat, short ribs, soup bones, and ground beef. Where Costco didn't have these cuts, I used local grocery store prices/lb.

What I discovered is that if you buy the same poundage of the same cuts at Costco, you will pay 71% of the cost of the local, grass-fed beef. At Costco you'd pay $922.30. Buying the same poundage and cuts 1/2 beef in bulk from CBB you would pay $1303.70. (If you'd like to see the calculations, feel free to email me.)

Is it worth it? It depends on your individual value hierarchy. Most of the cuts at Costco are USDA graded as Choice. Costco Choice ribeye is $6.89/lb while Costco Prime ribeye is $8.89/lb. Most of the cuts at Costco aren't available as Prime cuts, so I couldn't make that comparison. I would imagine most of the cuts from CBB are Prime, therefore making CBB affordable when you fairly compare quality.

It's up to the individual to decide whether the environmental, animal welfare, taste, health benefits, and convenience of buying in bulk are worth the extra cost. It certainly helps to have a big freezer and some cash up front. For us this is worth it, partly because we do not eat out that often due to living in a remote area. Furthermore, I have discovered in the past year that with a little bit more effort I can make a far more delicious dish than I can get in most restaurants when I have access to quality ingredients.

This local beef would be even cheaper if producers had not been hit hard by increase in corn costs due to federally mandated ethanol production:

Those of us on the meat production side of agriculture have been thrown a curve ball over the last year by the federally mandated production of ethanol. The historic corn price discovery, dictated by supply and demand, has been replaced by a highly subsidized ethanol industry whose appetite for corn and ability to bid the price up has resulted in record high corn (and rest of the feed commodities) prices. These prices are only to be replaced with higher record prices every time the government opens its mouth.

Here, though, I have to point something out. Historic corn prices are not driven solely by supply and demand. This is a mixed economy where prices are also driven by subsidies and USDA economists. I have to point out that even with the ethanol boondoggle, corn prices are still probably lower than they would be due to the existence of government programs that are designed to drive down the price of corn. Yes, I think this is the case even with federally-mandated and subsidized ethanol production. This is not only because the price of corn is directly lowered due to subsidies but because the subsidies encourage overproduction which further lowers the price. I'm not sure anyone can really make a decent stab at what the price of corn would be in a free market. It's an incredibly complex situation since corn has been artificially cheapened since the mid-1900s.

In relation to grass feeding, I've encountered a lot of speculation online that either 1) a grass-fed model can't feed the world or that 2) it's not affordable. I'll address the first issue in a later post. As to the second issue, let's consider a commodity where subsidies are pretty much absent:lamb. All lamb is pasture-raised, whether it's in Australia, New Zealand, Chile, or the US. This means the market isn't skewed by feed costs. And what do you find? If you go to different stores you will find that all of these products are pretty competitive in price, despite the foreign products having additional transportation costs.

I'd like to end by pointing out that New Zealand's farm economy is almost purely free-market -- unlike the intensely socialized farming system that exists in the United States. There are practically no farm subsidies in New Zealand, and the farm products are quite competitive even on an international basis. The cost of milk production in New Zealand is among the lowest in the world, too. All the cows in New Zealand are grass-fed. And they don't use rBGH to boost milk production, either. New Zealand cows do not see an ounce of grain, except the seed heads they might find on a farm field. How can farmers possibly afford to grass feed? Isn't grass feeding supposed to be expensive?

What's my point? The grass-fed animal production model works -- when it doesn't have to unfairly complete with subsidized grains, EQIP subsidized waste disposal, and "vertical integration" of the beef industry due to USDA inspection mandates that make it all but impossible for small producers to slaughter meat affordably. All three of these drive up costs for independent producers operating on a largely grass-fed model.

Grain-finished beef is never going to disappear because most Americans like the taste. However, it does not need to be as inhumane and polluting (i.e. violating of property rights) as it is. Nor does it need to be providing as low quality meat as it is providing. Unleash the free market, and we will see the success of grass-fed beef here in the United States. It's already been shown in New Zealand.

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At April 28, 2009 at 2:44 PM , Blogger Carrie Oliver said...

How fun to see this post. I love the Elliott & Ferris team at Colorado's Best Beef and they're beef is simply outstanding. I include it almost every artisan steak tasting I conduct (as part of The Artisan Beef Institute's education programs). There are a number of things that qualify them as artisan quality, including their focus on a specific breed/cross-breed appropriate for their growing region, the fact that they don't use artificial growth stimulants, etc. They also age their beef, which adds depth of flavor and tenderness.

At May 2, 2010 at 9:33 AM , Blogger Cheryl said...

Love your article. It so important for us to be discussing the benefits of Grass Fed Beef
, it is by far healthier than Corn Fed, better for the animal and better for the enviornment. I work with La Cense Beef, they are a Grass Fed Beef ranch located in Montana. They have been around for years and really know what they are doing. They have some very tasty aged cuts of beef.

At May 2, 2011 at 5:38 PM , Blogger Steve said...

Interesting article, but comparing the cost per lb at Costco, where you can buy just a few pounds at a time, with buying a 1/2 a cow is not quite fair. A more appropriate comparison would be to compare the prices with how much it would cost to buy just a few pounds of grass-fed beef.


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