Beef prices to rise after company cuts back on filler production

With cattle prices already sky-high and supplies of beef filler reduced, thanks to a cut back on production of so-called “pink slime,” how will the meat industry react?

Whether by “people power” or by a sensational ride in social media, Beef Products International on Monday announced that it would close three of its four plants that produce what it calls “lean beef trimmings,” but what its critics call “pink slime.”

By Tuesday morning, beef prices were up on the Chicago Board of Trade and industry experts speculated that consumers would soon feel the pinch. And a Tyson Foods executive told the Wall Street Journal that the market reduction of the additive will hurt beef demand in the short term.

The Des Moines Register quoted commodity trader Dennis Smith of Archer Financial Services in Chicago as saying that the many negative stories about “pink slime” and its impact on production will make beef supplies tighter and drive up the cost of beef.

“The consumer back lash from the pink slime story seems to be having a larger impact than what I’d expected,” Smith said. “It seems that foodservice orders have dropped severely due to consumer back lash.”

Beef Products International made the move after admitting that the public uproar caused significant damage to its business. Many large retail chains – including Wal Mart, Hy Vee and Kroger – recently announced that they would not buy the product for use in their ground beef after main stream and social media jumped on “pink slime” and drove it by what even a trade publication called “the ick factor.”

The USDA last week announced that it would give school districts the option to serve the product and many districts announced they would not.

What the industry calls “lean finely-textured beef” is the trimmings from larger, better pieces of beef that are warmed up and run through a processor that removes the fat. It is then gassed with ammonia to remove any bacteria, and the USDA and many scientists have said it is a safe product. (The ammonium hydroxide process is described here.)

Beef industry response to the uproar has sounded angry, noting the loss of jobs at the National Beef plants, a possible rise in prices and adding that an extra 1.5 million head of cattle will need to be slaughtered to make up for the loss of the filler.  National Beef took out a full-page ad in the Wall Street Journal last week assuring that its product is safe and calling the outcry “pink slime libel.”

But celebrity chef Jamie Oliver, who started a website “Stop Pink Slime,” was elated at the news Monday of National Beef’s cutback, saying “people power” was behind the move.

"I hope the U.S. government is also listening because it's partly responsible for lying to the public for allowing this cheap, low-quality meat filler to be used for so long without having to legally state its presence on packaging," Oliver said in a statement to the Associated Press.

What's next for the "pink slime" debate? Click here to share your experience with the Harvest Network, where we are asking if the product should be labeled.