Pink Slime Economics: A Local Cattleman on How Beef Prices will Rise, and Why That's OK

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Yesterday the farming trade publication Farm Futures carried a story on the potential rise in beef prices after the recent uproar over pink slime, or LFTB (lean finely textured beef). CattleFax, a beef industry research group, estimates the pink slime news cycle "is costing the U.S. beef industry $15 to $20 per head in lost value," the story reports, and "the rejection of LFTB could contribute to the demise of the dollar menu at fast food hamburger chains."

This in mind, I spoke with Matthew Hamilton of Genesis Beef in McKinney, to break down the processes of an industrialized cattle production and to pinpoint the costs compared to small business like his. Because when it comes down to it, cost is what drives it all.

Hamilton has been in the cattle business all his life. He manages a small herd and processes whole carcasses (of his own cattle) in a butcher shop in downtown McKinney. Everything is cut in-house and he sells directly to consumers.

"I got into the butchering business so I could stay in the cattle business," Hamilton says. "That was the only way there was any light at the end of the tunnel to make a real living in the cattle business. Small ranchers can get pushed completely out by large-scale vertically integrated systems. I just wanted to bring real food to people."

Hamilton speaks emphatically to every point and will go toe-to-toe with any procurer of dollar-menu burgers.

"There's a lot of trim off cattle that's just not good at all," Hamilton says. "They can mechanically separate the beef with the use of feather machines that will wire brush off every little morsel of meat."

Hamilton explains that when working on a huge scale, say butchering hundreds of cattle a day, these small amounts add up to a lot of money. But the meat is low-quality and often connected to the vertebrae, where disease can grow, which is why it's sprayed with ammonia.

"They get their surge of meats that's low quality and they emulsify it and ammonia treat it to kill anything in it," he says. "Then they freeze it either in tubes, trays or rolls. And because it's emulsified, there's no air in it and it's very dense and storable."

Then the LTFB, which Hamilton says has a market value of about a dollar a pound, makes its way to the local store, where it is added into the actual beef. A package of beef can contain up to 20 percent LFTB, and it can also contain up to 12 percent water. Hamilton explained that adding those two is highly cost-efficient for large-scale beef producers (and dollar menus).

"Let's say you buy 80/20 beef, and the fat tolerance can be plus or minus 3 percent, so let's say they push the fat to the max, you're at 77 percent beef. Then, they add 12 percent water and 20 percent pink slime and now you're at 45 percent meat. But, if you add salt to the water, you can go up to 18 percent water, so you can lose more there too. If you add 'seasoning' you can push (the water content) up to 20 percent."

Hamilton agrees that the efficiency and economics of the system is impressive, "These large companies don't waste anything. They use everything. That's partly why it's so cheap. It's a super efficient system."

He goes on to point out that he personally doesn't want to eat any of the meat attached to the vertebrae of an animal that's been mechanically separated because if there's any neurological breakdown or disease in the cow, that's where it will be.

Hamilton is obviously biased, since his beef is void of steroids, hormone supplements, water and pink slime. That's why customers so often balk at his prices, as they do any organic meat.

Farm Futures warns that dissolving LFTB from the food chain will result in higher prices for beef, as demonstrated above, because they're essentially cutting the beef with a very cheap product (and water). In the article, Oklahoma State University Livestock Market Economist Dr. Derrell Peel predicts the affect on dollar menus "We must use beef products in the most efficient manner possible." To avoid these consequences, Peel says consumers need to look at the science and get past the distasteful name for a "perfectly healthy product."

But, Hamilton says, "I think it's important for people to finally begin to understand why the price of my beef is so high. ... Because when you look around, we're the sickest country in the world."

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