3.0 TRANSFORMATION
OF LIVE
ANIMALS TO
RETAIL PACK
A detailed understanding of the transformation
of live animals to retail pack will provide a more solid platform
for discussion—this should throw a light on key issues such
as time frames, resources and pricing.
3.1.1 The processes required to transform
the live animal to finished retail meat packs are the determinants
of the final cost of product to the retailer, and ultimately to
the retail price charged to the consumer.
From the starting point of the cost of the live
animal (the selling price by the farmer to the abattoir), various
costs are incurred as the animal progresses through the slaughter
process to the point of preparation into retail packs.
3.1.2 As the meat industry undergoes significant
change, the preparation of retail packs is moving from in-store
preparation to centrally packed at key supplier locations.
3.1.3 The level of on-costs incurred by
each animal are dependent on species, slaughtering costs associated
with that species, efficiency of the processing plant and the
level of preparation required by the retailer, ie primals (large
cuts) for in-store butchery or finished centrally prepared meat
(CPM) pack.
3.1.4 Co-operative is presently in the transition
phase of moving from the prepacking of meat in-store to the full
preparation of retail meat packs by large, central meat packing
plants.
For the purpose of the information being provided,
it should be noted that the preparation of lamb retail packs is
performed centrally and that beef retail packs are largely prepared
in-store with the change over to central packing being a continuous
process throughout the first half of 1998. This roll out phase
has a significant impact on the total cost base of the Co-operative
meat operation.
3.1.5 The process of transforming a lamb
to a retail pack is illustrated overleaf.
| From Sheep to Retail Pack
|
| LIVE LAMB |
| ' |
| SLAUGHTER COST |
| ' |
| TRANSPORT TO PACKING PLANT
|
| ' |
| CARCASS TO PRIMALS |
| ' |
| CUT FOR RETAIL PACKS |
| ' |
| PACKAGING COSTS |
| ' |
| TRANSPORT TO DISTRIBUTION |
| ' |
| COST TO RETAILER |
| ' |
| STORE DELIVERY COSTS |
| ' |
| TRUE COST TO RETAILER |
3.2 Cost Implications
The total associated costs inevitably vary from lamb to lamb
as kill out percentages may vary. In addition, the percentage
yield of meat from carcass to retail pack may vary according to
skills of the butchery operative and the conformation of the individual
lamb. Also, the variation in the skin price realisation is an
important factor. For example, (sample weight and prices):
| An average lamb, standard conformation: |
| |
| Live weight | —
| 43kgs |
| Value of lamb to farmer | —
| £34.58 |
| This equates to | —
| 80p per live kilo |
| Deadweight of carcass | —
| 19kg |
| This equates to a kill out percentage of |
— | 44% |
| | |
| Total revenue to abattoir from sale of |
| |
| carcass and skin | —
| £43.53 |
| Less abattoir expenses | —
| £8.53 |
| Profit from the lamb carcass | —
| £0.44 |
The process of cutting the carcass into primals gives a yield
of 96 per cent of the carcass value whilst incurring labour costs.
Further cutting gives a yield from the primals of 75 per
cent, ie 25 per cent of the primals is not used for retail packs,
(ie bones, fat, blood trim, knuckles etc).
The yielded meat is then packed, incurring costs associated
with modern packaging techniques, processor profit and transport
to retail distribution centre.
The retail price structure is then required to recover the
cost of the raw material and the costs incurred for generating
the final sale to the consumer.
3.2.1. These costs are, for example:
— cost of store distribution
— cost of promotional activity, ie price cuts
— reduction costs to clear
— investment policy and other costs
— marketing and advertising
3.2.2. The same underlying principles apply to the beef
process as they do for lamb. As illustrated, cattle that conform
to the retail specification, are slaughtered and de-boned in preparation
for packing as either:
(a) primals for retail preparation in-store; or
(b) primals for central preparation into retail meat packs
Using the example below to illustrate the process of beast
to retail pack.
| From Beast to Retail Pack
|
|
| LIVE BEAST |
| ' |
| SLAUGHTER COST |
| ' |
| MHS/SRM COST |
| ' |
| DEADWEIGHT |
| ' |
| DE-BONED |
| ' |
| COST TO DE-BONE |
| ' |
| COST TO REMOVE BONES |
| ' |
| COST OF BONELESS BEEF |
| ' |
| CUT FOR RETAIL PACKS |
| ' |
| COST OF CUTTING & PACKAGING COSTS
|
| ' |
| TRANSPORT TO DISTRIBUTION |
| ' |
| COST TO RETAILER |
| ' |
| STORE DELIVERY COSTS |
| ' |
| TRUE COST TO RETAILER |
| Selling value of Beast to abattoir | £469
|
| Liveweight | 507kg |
| Deadweight | 284kg |
| Kill out percentage | 56% |
| Abattoir costs | £56 |
| Total Cost of Carcass | £525
|
| Less hide and offal sale | (32)
|
| Price of carcass to packing plant | £497
|
| Weight of carcass into packing plant | 284kg
|
| Weight of boneless beef | 213kg
|
| Yield | 75% |
| Boning cost, packaging costs and associated costs
| £53.37 |
| TOTAL COST OF BONELESS PACKED PRIMALS | £550.37
|
The boneless primals are then prepared and cut for retail
packs. This stage of preparation, as with lamb, incurs costs associated
with modern packaging techniques, processor profit and transport
to retail distribution.
It should be noted that the volume of meat trays required
to pack a body of beef is considerable. This generates a high
packaging cost.
| Total retail packing costs | £216
|
| TOTAL COST OF RETAIL PACKS TO RETAILER |
£766 |
The butchering of the primals into retail meat packs involves
a high level of craft skill. Attached is detailed the retail meat
packs derived from lamb primals, the average weights achieved
and the average on pack price.
The variability of lamb standards and butchery skills create
problems of establishing definitives of pack weights and pack
prices. Therefore it is essential to understand that due to the
variability factors, difficulties arise in establishing absolutes
that can be applied to all lambs processed.
This problem of not being able to establish absolute values
is more apparent when processing beef. The attached detail of
beef retail packs simplifies the complex process of transforming
a live animal to retail packs.
For example, a rump of beef does not yield 100 per cent of
rump steak. Braising steak and mince are derived from a rump.
The top of beef is not all top meat, and so it goes on. This degree
of complexity creates the ideal environment for confusion.
LAMB RETAIL
PACKS
