BEEF trimmings used for burger pattie and ground beef production were once the most generic of commodity products, but over time clear price distinctions and demand patterns have emerged for raw material offering different attributes and production claims.

And with 30 percent of the red meat harvested from a typical carcase made up of trimmings, there’s a lot at stake in getting the price-point right.

Trimmings were once traded largely on a single trait – the meat to fat ratio (chemical lean percentage in the carton, mostly measured these days with DEXA X-ray equipment at each plant).

But today, the list of attributes that can impact price on a carton of  trimmings is enormous. Here’s a few examples:

• Breed type: ie Wagyu or Angus, where premiums apply
• Grainfed, or Certified Grassfed Vs generic
• HGP-free
• Certified Organic
• Halal
• ‘Never ever’ programs (eg antibiotics, GMOs)
• Frozen versus chilled
• Methane claims.

Premiums

So how big (or small) are the premiums attached to certain beef trimmings programs?

We asked the question of some of the nation’s biggest export meat traders, especially those specialising in manufacturing beef.

While we provide some ‘indicative’ figures on price points below, it’s important to appreciate that the global trimmings market is a complex, moving feast. Premiums on certain trimmings can be seasonal, and the ebbs and flows in export trade out of Australia can have a significant bearing, Beef Central was told.

Also, with weekly kills in Australia now back above 140,000 head – levels not seen since 2020 – there is plenty of trim about.

In fact we were warned by traders about being too ‘prescriptive’ in reporting the trim market for this report. Much depended on specific trading relationships between each processor and their specific end-users. Plants with access to the US are clearly at an advantage over others at present, when it comes to trim prices.

But equally, it’s not uncommon at different times for a consignment of trimmings with special attributes to be simply tipped back into the ‘generic’ bin, simply because of fluctuations in demand. Some premiums exist for perhaps 12 weeks a year only, one trader told Beef Central.

A prime example is the influence that the China market has on demand (and hence, price) for HGP-free beef trimmings. China insists on HGP-free imported product only, and the degree of vigour with which China is buying Australian beef (from those certified to supply the market) can impact any market premium for HGP-free trimmings.

Last month, for example, China took only 13,200t of Australian beef – down 34pc on the same month last year. That takes a substantial demand component out of the HGP-free trimmings segment.

Premiums tend to be erratic, seasonal

However any premiums are often less than what many people may suspect, and tend to be seasonally erratic.

One experienced, large export trader said price distinctions between trim quality and type was not new, but had certainly grown over the past ten years.

“Price differences tend to get more attention when the market is going up, rather than down,” he said. “When the markets are strong, sellers tend to chase extra value for certain product with a story. But when the market turns and overseas customers don’t want beef, it tends to get commoditised again,” he said.

Click here to view earlier related story: ICMJ: Not all beef trimmings are created equal, which spells opportunity for Australia

In Australia, those price distinctions were clearly evident back in the 2014-15 period, again in 2018-19. In 2023-24, many were busy ‘dicing and slicing’ trimmings, wherever they could.

“Often it comes down to market access rules, but it can also depend on marketing claims,” he said.

Different segments, and how they compare, price-wise

Here’s a brief summary on each different beef trimmings segment:

HGP-free:

A small price distinction – perhaps 5c/kg – often exists between HGP-free and generic beef, partly linked to the productivity sacrifice in HGP-free cattle, which added cost in the livestock procurement phase.

For those plants that can do a chilled (not frozen) HGP-free domestic trim pack, larger premiums as much as 30-40c/kg were possible at times, over chilled non-HGP.

“Secondly, if a processor is going to go to the trouble of separating production, managing the break, creating separate product codes, storing additional inventory until it builds to saleable volumes and other extra work, they have to get more for a separate beef product, like an HGP-free trim,” an export trader said.

Again, while circumstances and demand can vary considerably, HGP-free trimmings are at times worth ten percent above generic trim price, he said.

Domestic retailer Coles occasionally supplements its own supply chain-produced trimmings with product purchased out of the general market, which must also meet the company’s HGP-free requirement. Again, that business occurs for perhaps only three months each year over summer demand periods. But conversely, if China is out of the market for imported beef, HGP-free trimmings premiums could quickly drop to 5pc.

One domestic wholesaler said he also sold surprising quantities of chilled HGP-free trim to independent retail butchers, across the eastern states.

Certified Organic:

Margins vary, but Certified Organic trimmings sold at wholesale level are typically no more than 15pc more than a base trimmings price. Small volume of production, and the seasonality of Organic beef production, plays a part in that.

Wagyu:

Wagyu is another segment where a clear market premium has quickly emerged. Surprisingly, several traders suggested Wagyu trimmings premiums were now possibly as much, if not more than Certified Organic trim in the market – especially for fattier trim descriptions.

“Point to lean, Wagyu trim is probably now worth more than Organic,” one large independent wholesaler said.

There are no clear price distinctions evident between Fullblood Wagyu trimmings and more modest F1, in any significant volume, Beef Central was told. One large trader suggested a premium of 10-12pc often existed for 50-75CL Wagyu beef trimmings, worth around 60-90c/kg over everyday grainfed trim of the same fatness – and perhaps 15pc over generic beef trim.

However that price advantage was often erratic, and depended on things like China market access. Back when China was buying large volumes of Australian Wagyu beef in 2018-22, premiums on Wagyu trimmings were in fact a lot stronger than they are today.

But he agreed that Wagyu trimmings premiums were currently as large, if not larger than those for Certified Organic.

“That’s a demand thing,” he said. “There’s only a certain segment of the consumer market looking for Certified Organic, but everybody loves a good Wagyu pattie,” he said.

By nature of the product, leaner Wagyu trimmings were often harder to find, and if the market called for an 83CL Wagyu trim product to produce patties, for example, it required the inclusion of some leaner sub-primal muscles in the grind to achieve it.

Some Wagyu trimmings market segments are also using value-adding as a means of extracting higher prices for the raw material.

An example is companies like Kilcoy Global Foods and Harmony Agriculture and Food Co, both of which are producing popular and convenient single-serve Wagyu beef patties in vacuum-seal pouches, at considerable mark-ups over bulk trimmings.

Grainfed:

Premiums for grainfed trimmings are often market-specific, and quite thin. Japan, and to a lesser extent, Korea, are prepared to pay a small premium for grainfed trim, while some other large markets are not. Japanese customers, who have always aligned ‘grainfed’ with ‘quality’, have in fact paid a small premium for grainfed trimmings since the 1990s.

Grainfed trim can be worth 5-10c/kg more than generic, to the right customer. But just this current week, for example, Australia was struggling to sell any grainfed trimmings to Japan, because the Japanese Yen has shot to Y162 to the Aussie dollar.

One exporter said his business was “lucky to get another 5c/kg” for grainfed trimmings over a generic trim product. “That’s mostly a symptom of volume,” he said. “Australia now produces a lot of grainfed meat.”

Certified Grassfed:

Remembering that most Certified Grassfed beef brands in Australia also have a no-HGP policy, Certified Grassfed beef trimmings are typically worth perhaps 5-10pc above equivalent generic trim.

Angus:

Premiums for Angus trimmings are evident at certain times, but again can soften or disappear altogether. Current premiums for Angus trim (grain or grassfed) are only around 4-5pc, the trader said. “Even for a large Angus trim user like McDonald’s Angus burger, it’s small volume, in the context of the company’s overall grinding beef requirements,” he said.

“When the McAngus burger was first launched, volumes were huge, attracting good premiums, but that’s now declined, and its only a small percentage of what McDonald’s now does.”

“They may grind Angus for only a couple of hours, across an entire week. And there is a lot of Angus trimmings now available across the Australian industry, under the various dedicated Angus programs being run by supply chains. Almost everybody has one, from JBS to Teys, Kilcoy, NH Foods and TFI, Mort, plus a host of smaller ones.”

Given the above, the question arises: Should beef producers be better rewarded, if processors are extracting premiums above the baseline for specialist trim lines?

Many would argue its already happening. Some processors already offer 10c/kg carcase weight on HGP-free cattle. All of them offer significant livestock price premiums for Angus, Wagyu, Organic etc if they operate in those market segments.

And importantly, those livestock price premiums appear, even when ‘special’ trim gets tipped back into the generic commodity bin through fluctuating demand.

“Let’s say the international and domestic meat demand equation rises and falls twice, over a typical 52-week year,” one large meat trader said.

“It means that maybe 12 or 14 weeks of that year, you might be getting good premiums on some specialised lines of trim. But for a lot more of the year, those premiums are in fact small, or virtually non-existent,” he said.

“The only exception to that is a segment like Organic, which because it is produced in such small volumes, and are a class of cattle in themselves, it means premiums for trim are reasonably consistent across the year. But event they might swing between 5pc and maybe 15pc.”

Domestic retailer pricing

To provide some context further down the production chain, national retailer Woolworths is this week offering Certified Organic lean (90CL) beef mince at $28/kg, and Certified Organic extra lean (95CL) at $30/kg.

The company’s same 500g packs of everyday lean and extra lean mince are priced at $18/kg and $20/kg, representing a retail premium of 36pc on lean Organic mince, and an incredible 50pc on extra lean.

Even Woolworths premium ‘Selected Cuts’ minced chuck and brisket, and Certified Grassfed lean mince are priced only at $20/kg and $22/kg respectively – representing premiums of 11pc and 22pc – far short of the Organic options.

So are wholesale trimmings values for Certified Organic product over everyday trimmings as large as these retail examples? Nothing like it, our numbers published above suggest, with 15pc quoted above as the upper limit of wholesale price premium for Organic trim.

That suggests there are some very large retail mark-ups being made on trays of Organic mince in Australian supermarket shelves.