Bord Bia’s annual export review this week revealed that beef offal exports increased by 9% last year to €230m.
Of particular interest to farmers is that this product is harvested by the factory before the animal is weighed and is therefore does not cost the factory anything to purchase.
In industry jargon this is referred to as the fifth quarter, because when the animal moves through the slaughter hall it is split into two sides and each side is in turn split across the middle when it enters the boning room.
That means that the original animal is now divided into four quarters, while the left over parts removed during the process are described as the fifth quarter.
When this product is then shown to have an export value equating to €135 per animal slaughtered, it looks like a win-win for the factory.
How it works
Offal is an important source of revenue for meat factories but they argue that it is oversimplification to suggest this figure is an automatic profit.
There is a cost to harvesting, storing and selling offal, just as there is with prime beef cuts.
Beef being served on this table in China includes tongue, testicles, offal and brisket.
Also, in practice, meat factories reflect the value of offal in what they decide to pay for beef carcases, which is what remains of the animal once the hide and internal organs have been removed.
Hides deliver another substantial revenue for meat factories, worth €40 to €45 for steers and heifers and €25 to €28 for cows at present.
Disassembly line
Meat processing is the reverse of the normal assembly line process, with the animal that arrives at the factory broken up into more than 100 component parts between prime cuts of beef and offal.
In deciding the value of a beef animal, the factory will know the yield or weight of each of these component parts and the price they expect to get for each in the marketplace.
Costings are typically produced on each batch of carcases going through the cutting plant in which the weight and yield of the batch across the cuts are captured.
At the end of each batch, the expected value of the prime cuts, plus a value for the fat and bones, are added up.
Offal is harvested in the slaughter hall and packed or transported to a separate site for further processing.
Beef hearts on sale in Europe.
Hides are removed early in the process and taken immediately out of the slaughter hall, as there is a high risk of contamination of the beef carcase.
They are taken outside into a non-food production area, for either onward dispatch to a hide merchant or, in many cases, companies prepare their own for selling into the leather tanning industry.
What is offal worth?
When all of these separate operations are complete in the meat factory, they will be able to calculate the amount and market value of each product they have.
It is usual practice that this is carried out on a weekly basis by way of management accounts.
The expected value of the beef from the carcase that was weighed is added to the offal, hides and other byproducts to establish the overall value of the animal to the factory.
This will then dictate what the factory intends to pay for its next intake of cattle, so the value of offal becomes part of the total value.
Transparency
Of course all of this is carried out by factory owners out of sight of farmers.
The EU has a fantastic price reporting system that publishes accurate weekly values of beef carcases across each member state.
Unfortunately, that is where the information ends until whenever the meat reaches either the butcher’s counter, supermarket shelf or restaurant when the price at which the product is offered to the consumer becomes known.
The bit in the middle is the great unknown but it need not be.
Currently the European Commission is exploring how to bring greater transparency to what happens in the factory and wholesale sectors of the industry.
An off-the-shelf solution is available by copying what happens in the US. There, the USDA publishes daily information of stocks and values of all component parts of the animal, including offal.
Irish farmers deserve the same knowledge and information on what happens their livestock after they drop them off at the factory lairage.
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