– Dr. Andrew Griffith, Assistant Professor, Livestock Marketing Specialist, Department of Agricultural and Resource Economics, University of Tennessee
Is ground beef a loss leader for more valuable cuts?
A couple of comments concerning the packing industry were made at a meeting last week. These comments resulted in a good discussion with several questions concerning beef prices and more specifically ground beef prices.
President Trump stated the need of reducing beef prices. Whether stated or not stated, he was speaking towards the price of ground beef, and he has been making decisions regarding lowering import tariff rates on beef to increase the availability of lean grinding beef. There are also discussions concerning the Mexican border being reopened to cattle imports. This information has done little to reduce beef prices, but it has effectively reduced cattle prices.
However, back to the point of ground beef prices, the discussion at the meeting was that ground beef price is less than the cost of production for that ground beef. In this instance, ground beef may be acting as a loss leader in the meat case in order to bring customers in the doors so other profitable items will be purchased. This may be a widely used marketing scheme.