Higher beef prices will revive finely textured product

Jul 27, 2012
by DTN

Tight beef supplies and increased food prices will bring lean finely textured beef (LFTB), labeled as “pink slime” by the media, back to consumers’ plates, according to “LFTB: Beef’s Latest Battleground for Survival,” a report released last Wednesday by researchers at Rabobank’s Food and Agribusiness Research and Advisory.

As prices increase due to tightening supply, it will ultimately cause consumers to be more receptive or open-minded to alternatives to cheapen up their protein costs, said Don Close, report author and vice president of Food and Agribusiness Research and Advisory, Animal Protein.

The U.S. is facing the tightest beef supplies in modern history because of lower production levels, expected to be exacerbated by drought and increased global demand.

“We don’t have the luxury to waste 2 percent of our beef supply,” Close said in an interview with DTN. He noted the draw down in available beef supplies, slaughter capacity utilization issues, total supply and higher prices overall will slowly allow LFTB back on the market.

More than 50 percent of Americans’ beef consumption is in the form of ground beef, and over time, American demand has shifted to leaner blends. Lean ground beef supplies historically come from cull cows and bulls, and that sector of the herd has contracted 31 percent since the mid-1970s.

Imports of lean trimmings and LFTB made up the difference, according to the report.

In 2011, the U.S. reached its long-term objective to become a net beef exporter. However, the U.S. will likely return to being a net beef importer in 2012 due to the decline in lean beef availability.

Once dubbed “pink slime,” the product was removed from a number of restaurant chain menus and supermarket shelves. USDA let schools ‘opt out’ of LFTB’s inclusion in their school lunch program.

“We had a smoldering of this issue building up and industry really wasn’t sure how to approach it,” Close said. “The thing blew totally out of proportion before industry really had a good response.”

Rabobank estimated total U.S. beef supplies decreased an additional 2 percent as a result of the LFTB crisis.

The use of LFTB had already fallen to 50 percent of its maximum use when the term “pink slime” swarmed news media outlets and social media in March. Now, it’s less than 25 percent of its capacity, Close said.

This caused beef packers and processors to lose efficiency through reduced total carcass yields and the ability to enhance the value of an otherwise low-revenue salvage product.

The report notes the longterm success and return of LFTB to the food chain will require dropping associations to the existing product, changing the formulation of the product, and coupling the changes with a promotional campaign for the reintroduction of the product in a different form.

The return of LFTB to the U.S. school lunch program is also needed to send the message to consumers that the product is safe and nutritious, according to the report.

But ultimately, consumers and end users will determine the fate of LFTB, not the industry.

“It is going to take some more time to let this story get further away from the front page,” Close said. —

Lindsay Calvert, DTN