B-t 163 March 1976 5st Q .19 7 Q. The Texas Wholesale Mea Distribution Industry ---- Structure, Operational Characteristics and Competitive Practices The Texas Agricultural Experiment Station - J. E. Miller, Director - College Station, Texas - The Texas A8¢M University System [Blank Page in Original Bulletin] The Texas Wholesale Meat Distribution Industry —-§ i Structure, Operational Characteristics; and Competitive Practices Mention of a traderhark or a proprietary product does not constitute a guarantee or warranty of the product by The Texas Agricultural Experiment Station and does not imply its approval to the exclusion of other products that also may be suitable. All programs and information of The Texas Agricultural Experiment Station are available to everyone without regard to race, color, religion, sex, age, or national origin. [Blank Page in Original Bulletin] CONTENTS Page .9IOOQIOIOIIIIOIOCOIQQQIOIOQOQIIIQQIQIOIOOQQOOIOQIIIIii IIIQTOIOIQOIQOQQOCQQIQIIUQQQQII‘UIIIIOQQIOOIUIIIII. l Structural Characteristics of the U. S. and Texas Wholesale IQIIQOIIOIIIQOIIQOQQQQQIOIQOIQIlloouoocuolqoooot 2 Meat Purchasing Practices ...........................,. . . . . . . . .. 8 Volume and Quality of Meat Purchased ......................... 8 Source of Meat Purchases .....................................lO Form of Meat Purchased ........................... . . . . ........l4 Meat Processing Practices .. . . . . . ........... . . . . . . . . . . . . . . . . . . ..l7 Sales and Distribution Practices ......... . . . . . . ... . . . . . . . . . . . ..l7 Packaging, Grading,and Transportation Practices .* . . . . . . . . . . . . . ..25 Packaging Practices . . . . . . . . . ... . . . . . . ........................25 Grading Practices .. . . . . ........ . . . . ... . . . . . . . . . . . . . . . . . . . . . ..32 Transportation Practices ........ . . . . . . . ....... . . . . . . . . . . . . . ..34 Buying and Selling Practices ........ . . . . . . . . . . . . . . . . . . . . . . . . . ..34 summary . . . . . . . . . . . . . . . . . . . . . . . .............. . . . . . . . . . . . . . . . . . ..36 Literature Cited ...............................................43 ACKNOWLEDGMENT The author gratefully acknowledges helpful comments and suggestions by Agricultural Economics Departmental review committee members Edward Uvacek, Donald E. Farris, and Ernest D. Davis and Gary C. Smith and Norman Marriott of the Animal Science Department. ii HIGHLIGHTS The wholesale meat distribution industry has undergone a dramatic change in the United States and Texas during the last decade.% The numr ber of establishments declined slightly, while industry sales and sales per firm increased sharply. Increases in sales were especially signi- ficant for merchant wholesalers and sausage and prepared meat plants. Packer branch house numbers continued their 1ong—time decline, but total and average sales of these firms also increased substantially. This study is the third in a series of studies designed to analyze the market structure, performance, and competitive practices of the Texas meat industry at the retail, wholesale, and slaughter levels. Data for this study were obtained through personal interviews with wholesale meat distributors (merchant wholesalers and sausage and prepared meat plants) and owners or managers of packer branch houses in Texas for 1974. Responder were selected on a stratified random sample basis to represent every segmenz of the wholesale meat distribution industry. Texas wholesale meat distributors and packer branch houses handled approximately 1.5 billion pounds of fresh and processed meat items during 1974. Wholesale meat distributors accounted for 85 percent of this total. Cow and bull beef represented more than one—ha1f of the meat volume handledéé by wholesale meat distributors, followed by steer beef with 36 percent of the total. Fresh and cured pork represented more than 60 percent of the total meat items handled by packer branch houses. Wholesale meat distributors and packer branch houses were dependent primarily on Texas suppliers for fresh beef in 1974. However, geographic sources of supply for other types of meat items varied considerably. L ‘M iii With the exception of veal, packers were the predominant suppliers for all types of fresh and processed meat items merchandised by wholesale meat distributors and packer branch houses. Although wholesale meat distributors purchased steer and heifer beef predominantly in the form of carcasses or quarters, less than l0 percent of the steer and heifer beef was merchandised in these forms. Steer and heifer beef were merchandised mostly as boneless beef, retail cuts, primals, or ground meat. Similarly, cow and bull beef were pur- chased mostly in the form of carcasses or quarters but merchandised primarily as ground meat or boneless beef. The form of steer, heifer, and fresh pork sales by packer branch houses were generally similar to the form in which they were purchased. Most of the cow and bull beef handled by packer branch houses was fabri- cated into ground meat before sale. Wholesale meat distributors merchandised fresh and cured meat prod- ucts to all types of clients in contrast to packer branch houses who were dependent predominantly on retail and hotel, restaurant, and insti- tutional (HR&I) outlets. Major outlets for wholesale meat distributors were HR&I, followed by retailers, processors, other wholesale meat dis- tributors, and government agencies. Packer branch houses sold almost all of their fresh and cured meat products to Texas customers in l974. Wholesale meat distributors were also strongly dependent on Texas outlets but sold substantial propor- tions of their beef, calf, or veal to customers in other states, pri- marily in the Southeast and on the West Coast. Grading practices varied considerably among wholesale meat distri- butors and packer branch houses. Wholesale meat distributors marked iv almost all of their steer and heifer beef with U. S. grades, while packer branch houses marked less than one—half of these items with U. S. grades. Fresh and cured pork items were marked primarily with packer“bgands by branch houses and wholesale meat distributors. Approximately 50 percent of the wholesale meat distributors and packer branch houses used a predetermined markup or gross margin goal in establishing prices for their fresh and cured meat products. Gross mar- gins ranged from about 15 to 35 percent and were generally highest for those products requiring more processing and labor inputs. THE TEXAS WHOLESALE MEAT DISTRIBUTION INDUSTRY -- STRUCTURE, OPERATIONAL CHARACTERISTICS AND COMPETITIVE PRACTICES * Raymond A. Dietrich The wholesale meat distribution industry has undergone numerous changes in structure, operational characteristics, and competitive prac- tices during the last 3 decades. During this period, the livestock and meat industry witnessed the advent and rapid expansion of a concentrated commercial livestock feeding sector, the establishment of specialized livestock slaughtering facilities near concentrated livestock feeding areas, the construction of increased fabrication facilities, and the establishment of centralized warehousing and fabrication facilities by large retail firms. These factors, along with the enactment of the Wholesome Meat Act in 1967, and the continued technological improvements in handling and distribution systems available to firms in the meat in- dustry have had an effect upon the structure and competitive practices of firms in the wholesale meat distribution industry. Meat merchant wholesalers, for example, have declined in numbers, while total sales and average sales per firm have increased substantially. Packer branch houses, a major generator of revenue for parent packing firms in the 1920's and 1930's, have declined sharply within the meat industry. Sausage and pre- ? pared meat plants, similar to meat merchant wholesalers, have declined in numbers but increased in total sales and average sales per firm. * ‘ Associate professor, The Texas Agricultural Experiment Station (Depart- ment of Agricultural Economics). This study is designed to analyze some of the structural changes occurring in the wholesale meat distribution industry with special emphasis on the marketing and buying practices and competitivé strate- gies employed by the Texas wholesale meat distribution industry. This is the third in a series of studies designed to analyze the market structure, performance, and competitive practices of the Texas meat in- dustry at the retail, slaughter, and wholesale meat distribution levels. The first two studies in the series focused on the Texas retail and the Texas slaughter industries (l, 2). Data for this study were obtained through personal interviews with managers and owners of wholesale meat distribution firms in Texas for 1974. Respondents were selected on a stratified random sample basis to represent 40 percent of the federally inspected meat merchant whole- salers and processors and 50 percent of the packer branch houses (Table 1). Completed questionnaires represented approximately 25 percent of the federally inspected meat merchant wholesalers and processors and almost 50 percent of the packer branch houses. State inspected whole- salers and processors are generally low—volume operations and a small proportion of these firms were also sampled. Structural Characteristics of the U. S. and Texas Wholesale Meat Industries Wholesale meat distributors, which are defined to include meat mer- chant wholesalerslj and sausage and prepared meat plants, and packer l/Nonslaughtering firms which are primarily buyers of fresh carcasses, quarters, and primals and sellers of primals, subprimals and retail cuts. These firms are often referred to as jobbers, breakers, or hotel and restaurant supply houses. ‘ _.|.c.‘z...s..,.u.x..-.... . .. . _ . branch housesgj all declined in numbers in the United States during l963— 72, while total sales and average sales per firm increased (Tables 2 and 3). Regional data were not available for packer branch houses for 1972. However, the U. S. Census of Wholesale Trade reported 464 branch houses in the United States during 1972, down almost 20 percent from 1963. Total and average sales of branch houses, however, increased approXi+ mately 27 and 58 percent, respectively, during 1963-72. Table l. Meat merchant wholesaler, processor and packer branch house population, sampling rates by type of inspection, and percent of population represented by completed questionnaires, Texas, 1974 Population repre- sented by com- Total population Sampling rate pleted questionnaires Under federal Under federal Under federal Item inspection Other inspection Other inspection Other Number Number , Percent Percent Percent Percent Wholesalers and processors 95 244 40 l0 24.2 6.1 Packer branch houses l5 lf 50 l/ 46.7 lf 1/Included with federally inspected plants. Total meat and meat product sales by all types of wholesalers and sausage and prepared meat plants totaled about 23 billion dollars in the ;United States during 1972. Wholesalers accounted for 55 percent of this total, followed by sausage and prepared meat plants with 20 percent, packer branch houses with almost l9 percent, and merchandise agents and brokers with 6 percent. 2/ —-Nonslaughtering establishments which process and distribute fresh and processed meat and are generally affiliated with national packers. gvyrwrwIfiF""!'"'vr1"' --- w ‘ -- ' s‘ Table 2. Number of meat merchant wholesalers, total and average sales, by census reg Texas, 1972 and percentage changes, 1963-721 Number of plants Total salesgj Average sf Percentage I Percentage Pe{ Region and change, change, . § state 1972 1963-72 1972 1963-72 31 1972 1i 1,000 1,000 1 ~Number Percent Dollars Percent Dollars PQ Northeastern states 1,702 -10.8 4,687,755 47.2 2,754 §. New Englandg/ 5/ 364 -10.3 1,109,159 4/ 3,047 Middle At1antic— 1,338 -11.0 3,578,596 4/ 2,675 North Central states 1,187 — 9.2 3,511,702 75.3 2,958 East North Centra1§§ 883 -11.0 2,773,021 61.4 3,140 West North Centra1— 304 - 3.5 738,681 159.2 2,430 The South 1,112 3.4 2,092,670 114.3 1,882 1 South Atlantic-Ev / 495 5.1 1,048,687 121.2 2,119 I East South Centra1—-/ 191 3.2 316,109 144.0 1,655 f West South Central-—— 426 1.7 727,874 95.2 1,709 a Texas 253 — 2.4 532,342 122.7 2,104 § The West 846 - 3.8 2,319,024 97.6 2,741 Mountain-é-fij 165 - 8.8 297,466 83.3 1,803 Pacific—— 681 — 2.4 2,021,558 99.9 2,969 United States 4,847 — 6.2 12,611,151 71.8 " 2,602 1/ —-Meat merchant wholesalers are generally referred to by the meat trade as jobbers, hg trestaurant supply houses, breakers, or frozen meat handlers. * 2/ —-The 1963 sales were adjusted to represent 1972 prices by the Consumer Price Index, 3/ — New Hampshire and Massachusetts. 2/Not available. 5/ — New York, New Jersey, and Pennsylvania. '§/Ohio, Indiana, Illinois, Michigan, and Wisconsin. Z/Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, and Kansas. 8/ — Maryland, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Flog 2/Kentucky, Tennessee, Alabama, and Mississippi. 10/ ——-Arkansas, Louisiana, Oklahoma, and Texas. ll/Montana, Idaho, Wyoming, Colorado, New Mexico, Arizona, and Utah. lg/Washington, Oregon, California, and Hawaii. Source: Census of Business, Wholesale Trade, and Census of Wholesale Trade, Departmes Commerce. “ 5 0 ‘e 3. Number of sausage and prepared meat plants, total and average sales, by Census ons and Texas, 1972, and percentage changes, 1963-72 f 1 Number of plants Total sa1esg/ Average sa1esg/ t Percentage Percentage Percentage in and change, ' change, change, ;te_. 1972 1963-72 1972 ~1963—72 1972 1963-72 i“ 1,000 1,000 E Number Percent Dollars Percent Dollars Percent yeastern States 394 -13.6 1,438,900 38.6 3,652 60.4 England 106 - 8.6 372,500 25.5 3,514 37.4 idle Atlantic 288 -15.3 1,066,400 43.8 3,703 69.8 A Central States 403 - 5.6 1,675,100 64.4 4,157 74.2 t North Central 30s -11.7 1,274,700 52.7 4,139 73.1 21 North Central 95 21.8 400,400 117.2 4,215 78.4 buth 325 19.5 775,100 97.7 2,385 65.5 ih Atlantic 167 19.3 465,500 105.2 2,787 71.9_, L South Central 69 43.8 _§/ 2] 72/ Q] Q South Central 89 6.0 éj 2/ 2/ 3/ 2 59 7.3 2/ Q] éj éj 189 5.0 743,300 76.0 3,933 67.6 32 28.0 g 50,300 108.7 1,572 63.1 157 1.3 693,000 74.0 4,414 73.0 '?:States v 1,311 — 1.8 4,632,400 61.3 3,533 64.2 egions are defined in footnote 2, Table 2. %963 sales were adjusted to represent 1972 prices by the Consumer Price Index. 1967 = 101 geld to avoid disclosure. Census of Manufacturers, U. S. Department of Commerce, Bureau of Census. The number of meat merchant wholesalers reached an a11—time high in the United States at about 5,200 firms during 1963 but declined more than 6 percent by 1972 (Table 2). Meat merchant wholesalers declined in all regions of the United States except the South during 1963-72. Decreases in terms of numbers and percentages were most prevalent in the areas where merchant wholesalers were most concentrated, in the Northeastern, and North Central states. However, total and average sales per firm increased substantially in all regions with the largest increases occur- ring in the West North Central and East South Central regions and also in Texas. Processed meat plants were most prominent in the North Central and w», Northeastern states during 1972 in terms of the number of plants and total sales (Table 3). Although processed meat plants peaked in the United States at almost 1,500 firms by l958, they have shown a gradual decline since that time. Numbers of processed meat plants declined primarily in the Northeastern and East North Central states during 1963- 72, while increasing in all other regions of the United States. Total and average sales of processed meat plants, similar to merchant whole- salers, increased substantially in all regions of the United States dur- ing l963-72 (Table 3). The largest increases in total sales occurred in the West North Central, the Mountain and South Atlantic regions. In Texas, processed meat plant numbers increased slightly during 1963-72, but total sales were not reported for l972. Packer branch houses continued their decline in the United States from 577 in 1963 to 464 by 1972. During this period, total sales by packer branch houses increased more than 27 percent, and average sales increased more than 58 percent. Regional and state statistics were not available for packer branch houses for 1972. The declining importance of packer branch houses is also indicated by the proportion of packer branch house sales to total packing house — packer branch house sales which decreased from more than 21 percent of the total in l954 to almost 16 percent by 1972. Legal forms of ownership varied by type of wholesalers in Texas during 1974 (Table 4). A11 packer branch houses were incorporated, compared with about 60 percent for wholesale meat distributors. The single proprietor form of ownership accounted for almost all of the remaining wholesale meat distributors. Table 4“ Legal forms of ownership, wholesale meat distributors, meat distributors, and packer branch houses, Texas, 1974 1 Type of ownership Single Item proprietor Partnership Corporation V Cooperative Other Total ————————————————————————— ——Percent—————-———————————————————————————— Wholesale meat I distributors 28.9 5.9 60.5 1/ 4.7 100:0 Packer branch houses 1/ 1/ 100.0 1/ 1/ 100.0 l/None reported by respondents interviewed. The proportion of the labor force allocated to a particular function or job varied considerably between wholesale meat distributors and packer branch houses (Table 5). Since a principal function of wholesale meat distributors consists of fabrication and processing, wholesale meat dis- tributors allocated a higher proportion of their labor force to this function than did packer branch houses. Conversely, since packer branch houses receive a higher proportion of their meat products in processed or fabricated form, primarily from their parent plant, they often assign a higher percent of their labor force to sales than do wholesale meat distri— butors. Additionally, packer branch houses assigned more than twice the proportion of their labor force to administrative duties than did whole- sale meat distributors in 1974. Table 5. Type of employment, by function performed, Texas wholesale meat distrihp tors and packer branch houses, 1974 Function or job performed y. Fabrication or Distri— Adminis— ; Item processing Sales bution tration Other T09 --------------------------- --PerQent--——-——--——————--—-——--—-- ‘:- Wholesale meat 3 distributor 64.5 7.8 14.0 10.5 3.2 10f Packer branch 3 house 47.3 14.0 12.8 23.4 2.5 lf Meat Purchasing Practices Volume and Quality of Meat Purchased Texas wholesale meat distributors and packer branch houses handled approximately 1.5 billion pounds of fresh and processed meat items during 1974 (Table 6). Wholesale meat distributors accounted for about 85 percent of this total. Cow and bull beef accounted for more than one—half of the meat volume handled by wholesale meat distributors, followed by steer beef with another 36 percent of the total (Table 6). The large proportion of cow and bull beef handled by wholesale meat distributors reflects the production of portion control meat items, such as patties, and other meat items by many wholesale meat distributors. Additionally, wholesale meat distributors also include jobbers and hotel, restaurant, and institutional (HR&I) suppliers who often fabricate meat items, such as steer beef, into specialty cuts for Table 6. Volume of meat handled, by kind of meat, Texas wholesale meat distributors and packer branch houses, 1974 Type of meat distributor Kind of Wholesale meat Packer branch meat distributors houses ——————— ——l,OOO pounds——-—--——-———— Beef Steer 475,203 38,974 Heifer 35,261 9,254 Cow and bull 708,944 11,331 Calf 8,741 77 Veal 12,011 28 Lamb and mutton 9,123 287 Fresh pork 34,456 98,734 Smoked and cured pork 8,118 37,692 Sausage, variety, and other 34,306 26,473 l0 dining and restaurant establishments and other firms that require specialty cuts. Historically, packer branch houses have handled relativelyilarge pro- portions of fresh and cured pork items in Texas since Texas is a pork- deficit area. During 1974, fresh and cured pork represented more than 60 percent of the total meat items handled by packer branch houses in Texas, compared with 52 percent in 1959 (3). Fresh pork accounted for 44 per- cent of the packer branch house volume in 1974. The next most important fresh meat item was steer beef, followed by cow and bull beef. Grades of fresh meat items handled by wholesale meat distributors and branch houses were generally similar in l974 (Table 7). The majority of the steer beef handled by both types of wholesalers was U. S. Choice, although some variation existed in the grades of heifer beef merchandised. Cow and bull beef, which is used primarily for further manufacturing and processing, consisted almost entirely of U. S. Comercial and lower grades. Calf was U. S. Good and U. S. Standard, while lamb was U. S. Choice. Source of Meat Purchases Wholesale meat distributors and packer branch houses were dependent primarily on Texas suppliers for fresh beef in 1974 (Table 8). However, geographic sources of supply for other types of meat items varied consid- erably. Wholesale meat distributors obtained about equal quantities of fresh pork, more than 40 percent, from both Texas and Iowa (Figure l). Packer branch houses, in contrast, obtained about 90 percent of their fresh pork from suppliers in the Lake states. Wholesale meat distributors relied mostly on Texas sources for smoked and cured pork, although sub- 11 Table 7. U. S. grade equivalents of dressed meat purchased, by kind of meat, Texas wholesale meat distributors and packer branch houses, 1974 U. S. grade equivalents Type of distributor Commercial . and . . 1/ and 2/ ___k1nd of meat Prime Choice Good Standard— 1ower— Total ——————————————————————— ——Percent—————————~———————————~— Wholesale meat distributors Beef Steer .5 78.8 20.6 .1 _§/ 100. Heifer Qf 18.0 80.5 1.0 .5 100. Cow and bull 3/ 3/ .8 .6 98.6 100. Calf g] 29.9 70.1 _3_/ _3_/ 100. Veal Q] 2/ §/ 86.0 14.0 100. Lamb and mutton _3/ 98.7 3/ 3/ 1.3 100. Packer branch houses Beef Steer g/ 64.1 35.9 g/ g/ 100.0 Heifer _§/ 64.7 35.3 §/ §_ 100.0 Cow and bull 3/ 3/ 3/ 3/ 100.0 100.0 Calf _3_/ g/ 50.0 50.0 _3_/ 100.0 Veal _§/ _§/ 100.0 Q] §/ 100.0 Lamb and mutton 3/ 100.0 _3/ _3/ 3/ 100.0 OQOCJOO l/The lamb and mutton is U. S. Utility. 2/ —-The lamb and mutton is U. S. Cull. There is no Commercial grade for calf or veal. Q/None reported by respondents interviewed. 5/Less than .05 percent. F Table 8. sale meat distributors and packer branch houses, 1974 Geographic sources of dressed meat purchased, by kind of meat, Texas w Geographic source Type of distributor and Ok1a— New Kansas— Colo— - i Other kind of meat Texas homa Mexico Nebraska rado Iowa states —————————————————————— ——Percent—-———-————————————-——- 5 Wholesale meat distributors V Beef Steer and heifer 77.0 y 2.0 11.7 .5 7.2 1.6 Cow and bull 88.4 4.0 1.6 3.2 1.5 .1 1.2 Calf 100.0 y y y y y y Veal 1/ 1/ 1/ 1/ 1/ 1/ 100.0 Lamb and mutton 86.0 .8 .8 .5 10.9 Fresh pork 41.8 1/ 9.0 1/ 45.9 3.0 Smoked and cured pork 71.5 6.4 1/ 47.2 1/ 7.6 7.3 Sausage, variety, and other 28.7 8.7 3.6 34.2 3.6 17.7 3.5 Packer branch houses Beef Steer and heifer 65.4 1/ 1/ 33.7 1] .9 1/ Cow and bull 89.0 1/ 1/ 3.6 1/ 1/ 7.4 Calf 100.0 _1_/ y _1_/ y y y Veal y y y 100.0 y y y Lamb and mutton 10.4 1] 1] 89.6 1/ 1/ 1/ Fresh pork 3.5 1/ if 5.1 1] 1.6 89.82 Smoked and cured pork .5 1/ 1/ 1/ 1/ 99.5 _1/ Sausage, variety, and other 81.8 1/ 1/ 7 7 1/ 1/ 10.5 1 » . . —/None reported by respondents interviewed. Z/Primarily Lake states. 13 Jtoa n23 ucm uwxoEm new vzoa £8; v5 wucson cozzE mw .6 $058 QwmCOBLOQOLQ m5 mpcmwfinm; 2mm 2t *0 5mg 2C. 4R2 fowsntpmmu “$8 @_@ww_o;>> wmxwk _mc$t.ma Hcwrcmtsuohn vtoa v9.30 ucw bmxoEm ncm vtoa 52m A wSmE l4 stantial quantities were also obtained from Iowa, Kansas—Nebraska, and Oklahoma. Iowa supplied almost all of the smoked and cured pork handled by packer branch houses. Although Texas is a major producer éf lamb, both wholesale meat distributors and packer branch houses relied almost entirely on out—of—state sources for lamb supplies. g3 Packers were the predominant suppliers for all types of fresh and processed meat items, with the exception of veal, merchandised by whole- sale meat distributors and packer branch houses (Table 9). The small volume of veal handled by wholesale meat distributors and packer branch houses was obtained from other wholesale meat distributors. In addition, the small proportions of fresh and processed meat items not obtained from packers by both types of wholesalers were supplied almost entirely by other wholesale meat distributors. Form of Meat Purchased Wholesale meat distributors purchased steer and heifer beef primarily as carcasses or quarters, whereas packer branch houses obtained steer and / (Table lO).i heifer beef mostly in carcass form followed by primal cuts; Cow and bull beef, reflecting the processing activities of numerous whole- sale meat distributors, were purchased primarily as carcasses and quarters. Packer branch houses, in contrast, purchased cow and bull beef as boneless cuts. 3/ —-Primal or wholesale cuts are generally used synonymously throughout the industry. Beef wholesale (primal) cuts include chuck, rib, shank, plate, short loin, sirloin, round, and flank, as identified in Uniform Retail Meat Identity Standards, National Livestock and Meat Board, Chicago, Illinois. Names of some wholesale cuts for veal, lamb, and pork differ slightly from those of beef. 15 Table 9, Source of meat purchases, by type of supplier and kind of meat, Texas wholesale meat distributors and packer branch houses, 1974 Type of distributor Type of Supplier and Packer branch Wholesale meat kind of meat Packers houses distributors Other Total ———————————————————— ——Percent——————————————————————— Wholesale meat distributors Beef Steer and heifer 99,6 y 0 .4 _1_/r 100.0 Cow and bull 94,0 lf 5.4 .6 100.0 Calf 100.0 lj lj lj 100.0 Veal lj lj 100.0 lj 100.0 Lamb and mutton 100.0 lj lf l] 100.0 Fresh pork 100.0 if _l/ lf 100.0 Smoked and cured pork 96,9 lj 3.1 lf 100.0 Sausage, variety, and other 92.8 l/ 7,2 lj 100.0 Packer branch houses Beef Steer and heifer 100.0 lj 1/ lf 100.0 Cow and bull 100.0 _1_/ _1_/ y 100.0 Calf 100,0 lj lj lj 100.0 Veal lj lj 100.0 lj l00.0 Lamb and mutton 100.0 lj lj l] 100.0 Fresh pork 96.6 lj 3.4 lf 100.0 Smoked and cured pork 100.0 lf 1/ lf 100.0 Sausage, variety, and other 100.0 l/ l] lj 100.0 A/None reported by respondents interviewed. 16 ,¢.o¢H Q.“ \~ @.~m \m \m \m \m . in . umsuo cam wfim .%umwum> .mwmm:mw o.oQH o.@H \~. \w \m Q.¢w \m \m -¢@ wmgsu wam wmxoam o.¢QH Q.“ \w \~ \~ ¢.m@ \w \w xgog nwmwm ¢.¢QH 1»W \~ \~ \~ \~ o.QQH \m. \w. ¢Q-:e wan gang Q.¢oH 7 ¢.¢oH \w \m \w \w % \w \~ H@@> Q52 m a. m m Qé: a a. E8 ¢.¢QH Q.¢oH \w \w \w \w \w \w Hfisp wcm sou o.QoH m.¢ \m \w \w w.m~ H.N @.@@ uwwfiws wgm Hwwum Mwwm mmmsos sucmun umxomm o.¢QH @.m@ \w H.@ \w \w \w \~ ~@@~Q wfim .>umwum> .mwmm:mm o.Q¢H m.w~ \w m.m~ w.~H @.mm \~ \~ x~o@ wwuno wam wwxaaw ¢.QQH ~.~H \m \w m.H< m.H< \w \w xuom £m@~m ¢.QQH ~.m@ \~ \w w.¢ m.H \w ¢.¢ =¢-=a wzm @a~A o.o¢H w.w@ \w \~ @.w \M. @.w @.¢H H@@> ¢.oQH ~.~¢ \m \~ \w \~ N.“ H.~< MHQQ o.ooH ~.HH w.~ \w H. \m. w.mm m.¢m HH=@ @=@ sou Q.@¢H ~.@ N. \~ @.QH ~.< @.m~ m.~¢ Hwwfiwn @=@ Hwwum mmmm muounnwuuwww UQUE UHQMUHOQB |||||||||||||||||||||||||||||||||||| ||~=@U»@@|;|||||||||||||||||||||||||¢|||= .wMuoH \mumsuo ummfi muse mamfiwumé mfiwiwnm wuouumso mmmoumo . ummfi mo wcwx UCDOHU HHWUUM lflfim UGQ QUMGSUHDQ mo EHOW HOHD£fiHHwH@ %O U@%P qwma .mmm:os sucmun umxomm wcm muounnwuumww ummfi mHmmwHon3 mmxma “ummfi we wcwx hm .mwmm:uu:m ummfi mo Euom .oH mfinmw J l7 Calf purchases by wholesale meat distributors were about equally split between carcass and boneless meat, while veal was purchased pri- marily as boneless meat (Table lO). Wholesale meat distributors also acquired most of their lamb as boneless cuts, while fresh pork was re- ceived primarily as primals or subprimals.é/ Packer branch houses acquired all of their calf and lamb and almost all of their pork as pri- mals. Veal items were obtained as boneless meat by branch houses. Meat Processing Practices Wholesale meat distributors were not heavily engaged in the produc- tion of cured meat items in 1974 (Table ll). However, packer branch houses used almost 80 percent of their cow and bull beef for producing sausage items. In addition, packer branch houses used about 40 percent of their fresh pork for producing smoked and cured pork and another 40 per- cent for sausage items. Only small proportions of steer and heifer beef were used for producing sausage or variety meat items by both types of wholesalers. Sales and Distribution Practices Although wholesale meat distributors purchased almost 80 percent of their steer and heifer beef as carcasses or quarters, less than l0 percent of their steer and heifer beef was merchandised in these forms (Tables ,lO and 12). The highest proportion of the steer and heifer beef was sold as boneless beef, followed by retail cuts, primals, and ground meat. Calf, veal, and lamb were merchandised in about the same proportions relative to 4/ —-Subprimals are further breakdowns of primals, including bone—in or bone- less cuts, but do not include retail cuts. l8 Table ll. Percent of fresh meat items transferred to smoked and cured pork or to sausage and variety meat, Texas wholesale meat distributors and packer branch houses, 1974 W Type of distributor Transferred to: and kind Smoked and Sausage and 3 of meat cured pork variety meats Total 5 ———————————— ——Percent————————————----— Wholesale meat distributors Beef Steer —— 5.9 5.9 Heifer —- 3.6 3.6 Cow and bull —— 3.9 3.9 Calf —- if 1/ Veal -- _1_/ _1_/ Lamb and mutton —— if if Fresh pork 2,5 12.5 15.0 Packer branch houses Beef Steer —— 4.6 Heifer —— 4.8 4.8 Cow and bull —— 78.7 78.7 Calf —— 1/ if Veal ~— if if Lamb and mutton —— if if Fresh pork 39.4 40.2 79.6 A/None reported by respondents interviewed. 19 .mHnmuHHmmm uoz.| .Uw3®H>M®uGH mucmwcomwmu >@ wmuuommu mcoz@% .wEmuH Hmwwo no .ummE mmw~mco@ .mwcwEEHuu >HHumEwum\w o.@¢H N.m~ \m. @.@~ \~ \m. \m. \m. uwsuo wcm .>umHum> .mwmm:mm Q.Q¢H @.~ \m. @.¢¢ \m. N.~¢ \m. \m. -@@ wwusu wcm wwxoew @.@oH \w \w @. \w ¢.@@ \m. \m. xpam Qwwgm o.@@H \w \w ¢.@H \m @.@w \w \w =@-=a wgm pamg @.¢@H \w \w @.@@H \m. \m. \m. \w H@@> @.@@H \w @,m @.m@ \w \~ \w \w mfimu o.@QH @.N¢ ¢.Nm \m. \w. \w. \w \~ HHDQ @¢m sou o.QQH ~.@H Q. m.@ ¢. m.@H @.< @.@m Hwmfims wan Mwmum 7 wmwm mwmsos sucmun umxumm Q.¢@H m.¢@ \w m.mm \m \w \w \w pwsuo wcm .%umwum> .mwmm:mm Q.@@H w.@~ \w ¢.@m Q.mH @.@N \w \w x~Q@ wmusu wgm wwxoam @.@@H @.~H \m. ~.m w.Nm @.m~ \m \~ xuog Qwmgm @.QQH H.@w \m. \m. w~¢ m. H.H m.¢ nouuue waw Qemg Q.Q¢H w.w@ \w \~ @.w \m. @.w @.¢H Hm@> ¢.@QH Q.mm \w H.@ m.~ \~ m.m @.Hm wfimu @.@¢H ¢.Q¢ ~.@¢ w.q \m. ~.m \w \w Hfisn wgm sou Q.¢QH m.~m @.HH @.m~ N.m @.¢H m.~ ~.@ Mwwfimp @¢w¢m@@um i mwwm WHOUDQHHUWHU UMUE QHMWUHOQB ‘ll ||||||||||||||||||||||||||||||| ||u¢@U~@~ |||||||||||||||||||||||||||||| -| HQUOH. IJMQSUO HQUE muflu wHQEHHQ wamewum wHQUMWDU MMQUHMU HMQE wO UGHM \H wnpouu Hflmumm Qgnm L ; wan umusnwnumww mo @@>H mwfimw mo EHOM 20 the forms they were purchased as by wholesale meat distributors. This was also generally true for fresh and cured pork items, although some of the fresh pork purchased as primals was fabricated into subprimals be- fore sale. In addition, wholesale meat distributors also fabricated some of their smoked and cured pork into retail cuts before sale. Q The forms of steer and heifer beef sales by packer branch houses, in contrast to wholesale meat distributors, was generally very similar to the 5 form in which it was purchased (Tables 10 and 12). Almost 60 percent of the cow and bull beef, which was bought as boneless meat, was fabricated into ground meat prior to sale by branch houses. Calf and veal, which were% purchased as primals and boneless meat, respectively, were fabricated into $ mostly retail cuts before delivery. Fresh pork merchandised by branch houses was sold almost entirely as primals. Wholesale meat distributors merchandised fresh and cured meat productsi to all types of clients in contrast to packer branch houses who were de- pendent almost entirely on retail and HR&I outlets (Tables l3 and 14). Major outlets for wholesale meat distributors were HR&I, followed by re- tailers, processors, other wholesale meat distributors, and government agencies. Retailers accounted for more than 76 percent of the total meat products sold by packer branch houses. _ Primary sales outlets for steer and heifer beef by wholesale meat dis—@ tributors during l§74 included the HR&I trade, followed by government agencies and retailers (Table 13). Cow and bull beef sales were about equally divided among retailers, processors, and the HR&I trade. Major outlets for calf were processors and retailers, while veal and lamb were distributed almost entirely to processors. Fresh pork went primarily to retailers and the HR&I outlets, Smoked and cured pork, in contrast, was 21 >le 13. Sales by type of buyer and kind of meat, Texas wholesale meat distributors, 74 Type of buyer Wholesalers gov- 1d of 1/ or Pro— ern_ aat Consumers Retailers HR&L— jobbers cessors menu, Other Total ———————————————————————————— —-Percent—————————-—————————-————-—————-— E keer and heifer 1.0 11.4 44.3 7.0 4.9 26.3 5.1 100.0 low and bull 7.6 30.9 22.1 13.7 25.6 g/ .1 100.0 .f 4.0 35.4 7.6 4.7 48.3 2/ 2/ 100.0 ll 2/ 2/ Z] 2] 86.0 3] 14.0 100.0 lb and mutton .2 2.5 1.7 2/ 95.6 _g/ 2/ 100.0 ash pork 1.2 56.4 29.2 .7 7.8 2] 4.7 100.0 Jked and cured pork 6.3 17.0 54.5 1.3 4.6 .8 15.5 100.0 usage, variety, and gher 6.2 4.0 31.5 12.6 41.9 2.1 1.7 100.0 Total 4.8 22.7 31.0 10.6 18.4 10.1 2.4 100.0 iotel, restaurant, and institutional outlets. lone reported by respondents interviewed. Less than .05 percent. 22 Table 14. Sales by type of buyer and kind of meat, Texas packer branehihouses, 1974 K Type of buyer Wholesalers Gov— gr Kind of or Pro— erflr Q meat Consumers Retailers HR&I—/ jobbers cessors meflt Other 7 —————————————————————————— ——Percent———————————————-—-—————————-f Beef Steer and heifer Z] 59.4 40.2 .4 Z] 2/ 2/ Cow and bull _2_/ 42.6 57.4 _2_/ 2/ _2_/ g/ Calf 2/ y 100.0 _2_/ _2_/ g/ g/ Veal _Z_/ 3/ 100. 0 g] _2_/ _2_/ g/ Lamb and mutton Z] 89.6 10.4 Z] Z] 2/ 2/ Fresh pork g/ 77.2 21.7 1.1 g] _2_/ g/ Smoked and cured pork Z] 77.3 22.7 Z] Z] Z] 2/ Sausage, variety and other g/ 85.7 11.9 2.4 g/ 2/ 2/ Total . 3/ 76.1 22,9 1.0 12/ 2/ 2/ 1/ — Hotel, restaurant, and institutional outlets. 2/None reported by respondents interviewed. 23 sold primarily to the HR&l trade, followed by retailers, Processors and HR&I were primary outlets for sausage and variety meat merchandised by wholesale meat distributors. Major sales outlets by type of meat item for packer branch houses were retailers, with the exception of calf, veal, and much of the cow and bull beef which was distributed to the HR&1 trade (Table 14). The HR&I trade also accounted for more than 40 percent of the steer and heifer beef merchandised by branch houses during 1974. Chain retailers accounted for more than 80 percent of the fresh and processed meat items sold to retailers by wholesale meat distributors (Table 15). Further, national chains accounted for more than 80 percent of the purchases by chains. However, when cow and bull beef were deleted from retail sales, chain sales comprised about two—thirds of the retail sales, and national chain sales made up about one—third of the chain sales by wholesale meat distributors. With the exception of cow and bull beef, this latter sales pattern was generally true for all fresh and processed meat items. Percent of retail sales accounted for by chains were somewhat more varied by type of meat item for packer branch houses than for wholesale meat distributors (Table 15). Although chains accounted for almost all of the cow and bull beef purchases from wholesale meat distributors by re- tailers, they accounted for only 5 percent of the retail cow and bull beef purchases from packer branch houses. Branch houses also merchandised most of their fresh pork, smoked and cured pork, and sausage items to independent retailers rather than chains. National chains accounted for either all or the majority of the chain purchases from branch houses with the exception 24 Table 15, Chain store sales as a percentage of total retail sales? and natio: chain store sales as a percentage of total chain store sales, by kind of meatf wholesale meat distributors and packer branch houses, 1974 Beef Smoked Sau=9 Lamb and varii Steer and Cow and and Fresh cured aw Item heifer bull Calf mutton pork pork othf —————————————————————— —-Percent-—----————————————---—1 Wholesale meat distri- butors Percentage of retail § sales to chains 68.2 92.5 70.0 70.0 68.4 47.9 43Q Percentage of chain sales E? national F chains—- 37.5 97.2 30.0 30.0 30.0 29.9 275 Packer branch houses Percentage of retail f sales to chains 67.4 5.0 2/ 100.0 18.5 48.0 47.* Percentage of chain sales to national chainslz/ 12.6 100.0 _2_/ 100.0 56.5 52.3 5e. y a . -A/Respondents were asked to delineate between national chains versus regional G local chains. 2 Z/None reported by respondents interviewed. __ _ "ww-7‘=m'v1~:'w*c\~v a ~ "z" ' '"'" - * 25 of steer and heifer beef, Local and regional chains accounted for almost all of the chain purchases of steer and heifer beef from branch houses. Geographic area of sales varied considerably between wholesale meat distributors and packer branch houses, Packer branch houses relied al— most entirely on Texas outlets for their fresh and processed meat products, while wholesale meat distributors merchandised a substantial proportion of some fresh meat items to out-of—state customers (Tables l6 and 17), Al- though wholesale meat distributors sold an average of more than 70 percent of fresh and processed meat items to Texas customers in 1974, substantial proportions of beef, calf, and veal were sold to customers in other states (Table l6), For example, more than 40 percent of the steer and heifer beef merchandised by wholesale meat distributors was sold to out—of— state customers, with shipments to the Southeastern states accounting for one—half of this volume (Figure 2). Oklahoma was a primary out—of-state customer for cow and bull beef and calf. However, the West Coast area was the major out—of—state market for calf in 1974, The Southeastern states received two—thirds of the veal sold by wholesale distributors, and that area also accounted for almost all of the lamb sold to non—Texas customers, Packaging, Grading, and Transportation Practices Packaging Practices Most of the steer and heifer beef carcasses and quarters sold by wholesale meat distributors were packaged in plastic wrap, while the re- mainder were sold primarily without packaging or wrapping material (Table 18). All of the calf carcasses and quarters were sold unwrapped by whole- sale distributors, while the lamb carcasses were sold in stockinettes. Table 16. 26 Texas wholesale meat distributors, 1974 Geographic sales areas for fresh and processed meat, by kind of meat, Sales area South— North- Kind of Ok1a— New West eastern eastern é _meat Texas homa Mexico Coast states states Other TotaL.§ ——————————————————————— --Percent———-------————-——————————-;--5 Beef Steer and heifer 57.6 2.0 .3 2.4 20.8 2.3 14. 100.0 Cow and bull 77.7 12.4 1/ 2 1.5 .4 7. 100.0 Calf 67.2 15.6 _1/ 16.1 1/ 1/ 1. 100.0 Veal 22.4 1/ .7 10.3 65.9 1/ 100.0 Lamb and mutton 80.9 1/ 1/ 1/ 19.1 1/ 1/ 100.0 Fresh pork 96.6 1.6 .2 1/ .5 1/ 1. 100.0 Smoked and cured pork 95.6 .2 .6 1 1.4 .3 1. 100.0 Sausage, variety, and other 80.3 .6 1] 10.5 1.2 .1 7. 100.0 l/None reported by respondents interviewed. 27 Table 17. Geographic sales areas for fresh and processed meat, by kind of meat, Texas packer branch houses, 1974 Sales area Okla- New West Swth" Nwth" Kind of Texas homa Mexico Coast easternd eastern 4 meat states states Other Total ¥ —————————————————————— ——Percent ——————————————————————————— -- Beef Steer and heifer 100.0 T] T] T] T] T] T] 100.0 Cow and bull 100.0 T] T] T] T] T] _T/ 100.0 Calf 100.0 T] T] T] T] T] T] 100.0 Veal 100 . 0 y y y a _1_/ y y 100. 0 Lamb and mutton 100.0 T] T] T] T] T] T] 100.0 Fresh pork 9s. 3 1/ y y 1. 7 ‘ 1/ y 100.0 Smoked and cured pork 92.0 4.0 2.0 2.0 y _1_/ y 100.0 Sausage, variety, and other 82.3 6.5 2.8 2.8 5.6 T] T] 100.0 1/None reported by respondents interviewed. ¢wmn 3+6; ncw Em? .6 wvcsoa c258 Pww .6 combat“ in mGcocLoQEQ m5 5:32am: $3 2t U6 52E 2E. 4R2 ;to§n_bm_n SQE @_~wm_o;>> wmxmk Qtwtba cozbntwau “Sun 6:2 can 68m N QSmI 29 sable 18. Packaging or wrapping materials used for fresh meat, by kind of meat }nd type of cut, Texas wholesale meat distributors, 1974 lype of cut and Beef _ I packaging Steer and Cow and Lamb and Fresh material heifer bull Calf mutton pork —————————————————— ——Percent————-————————--——-———-——-—— iarcass and quarters l 4 Naked 36.9 y 100.0 _1_/ _1_/ Stockinette 5.6 y y a 100.0 y Plastic wrap 55.7 y y y _1_/ Other-y 1.8 1/ 1/ 1/ 1/ L Total 100.0 1/ 100.0 100.0 1/ frimals and sub—primals Naked 14.0 95.8 y y 5.2 $§Stockinette 24.4 lj 1/ 8.8 l] %Plastic wrap -3 1/ 1/ 91-2 12-9 §iVacuum pack l.7 lj if if 12.7 other-Z] 52.6 a 4.2 1/ 1/ 69.2 4 Total _ 100.0 100.0 y 100.0 100.0 ‘iNone reported by respondents interviewed. v§Paper bag or boxed and wrapped in paper. 30 Wholesale meat distributors‘packaged steer and heifer beef primals and subprimals mostly in paper bag materials, while stockinettes were also used for about one—fourth of the primals and subprimals %Table 18). Less than one percent of the cow and bull beef was merchandised as subprimals and was generally sold without any packaging and wrapping materials. The lamb and mutton primals and subprimals were sold pre- dominantly in plastic wrap. The fresh pork was shipped mostly in paper wraps, although vacuum packaging and plastic wraps were also used by wholesale distributors. -Packer branch houses reported that almost all steer and heifer beef carcasses and quarters were sold in paper or polyethylene bags, while paper bags or boxes were the predominant packaging method for primals and subprimals. Packer branch houses also shipped almost all of their fresh pork primals and subprimals in boxes wrapped with white parchment paper. With the exception of lamb and fresh pork, wholesale meat distribu- tors and packer branch houses merchandised relatively small proportions of their fresh meat as boxed meat during 1974 (Table 19). Wholesale distri- butors sold almost 22 percent of their steer and heifer primals as boxed meat, but this was less than 4 percent of the steer and heifer beef they sold. Although the packer branch houses merchandised 90 percent of their steer and heifer subprimals as boxed beef, this was less than one percent - I of the branch house steer and beef sales during 1974. However, almost all of the cow and bull beef sold by wholesale distributors was merchandised T as boxed meat. Packer branch houses sold all of their lamb primals, about 90 percent of the total, as prefabricated meat in l974 (Table l9). Branch houses also 31 Table 19. Percent of primals and subprimals sold as boxed meat by kind of meat? Texas wholesale meat distributors and packer branch houses, 1974 Beef Type of Steer and Cow and Lamb and Fresh distributor heifer bull Calf mutton pork —————————————————— ——Percent————————————————————--- Wholesale meat distributors Primals 21.9 99.8 lj lj 39.7 Subprimals lj if 10.0 if 83,4 é Packer branch houses Primals y y y 100.0 99.2 Subprimals 90.0 lj 1/ lj lf :1/None reported by respondents interviewed. sold more than 99 percent of their fresh pork primals, comprising more than 98 percent of the fresh pork sales by branch houses, as boxed meat. Wholesale distributors also sold substantial proportions of their fresh pork primals as boxed meat and more than 80 percent of their pork sub- primals as boxed meat. Almost one-half of the steer and heifer beef merchandised as boxed beef by wholesale meat distributors during 1974 were equivalent to U. S. »fyield grade 3, with the remainder almost equally split between yield grades l and 2 (Table 20). Steer and heifer beef in the packer branch house boxed beef programs were predominantly U, S, yield grade 3. 32 Grading Practices More than 86 percent of the steer and heifer beef sold by wholesale meat distributors in 1974 was marked with U. S. (federal) grades (Table 21). This was not surprising since wholesale distributors merchandised steer and heifer beef primarily to the HR&I trade, government agencies and retailers, The majority of the calf was also rolled with federal grades, while cow and bull beef was generally sold without U. S. grades or packer brands. Veal and lamb sold by wholesale distributors were gen- erally marked with both U. S. grades and packer brands, Most of the pork 5 items and sausage products were marked with packer brands, although sub- stantial proportions of the fresh pork and smoked and cured pork was sold without grades or brands. Packer branch house grading practices differed considerably from those of the wholesale meat distributors (Table 21). Less than one—half of the steer and heifer beef sold by branch houses was U. S. graded, Table 20. U. S. yield grade equivalents of steer and heifer beef in boxed beefi program, Texas wholesale meat distributors and packer branch houses, 1974 U. S. yield grade equivalents Item 1 2 3 4 5 Tot ———————————————————————— ——Percent~——-—————~————-——-—--g Wholesale meat distri- 4 5 butors 27.5 24.8 45.0 1.4 ‘ 1.3 100.? Packer branch house l/ 35.0 65.0 1/ lj 100.{ 1/ —-None reported by respondents interviewed. 33 Table 21. Grades or brands used for fresh and processed meat, by kind of meat, Texas wholesale meat distributors and packer branch houses, 1974 Grade or brand Type of distributor U. S. graded and U. S. Packer and Not graded _ kind of meat graded branded packer branded or branded Total —————————————————— ——Percent———-——-—————-—-—————-~— Wholesale meat distributors Beef Steer 86.0 8 12.7 .5 100.0 Heifer 91.4 _l/ 8.5 .1 100.0 Cow and bull 13.5 7 8 .9 75.8 100.0 Calf 88.9 1/ 7.6 3.5 100.0 Veal 8.6 14.0 77.4 1/ 100.0 Lamb and mutton 22.4 1/ 76.5 l.l 100.0 Fresh pork 2/ 61.5 2/ 38.5 100.0 Smoked and cured pork 2/ 73.3 2/ 26.7 100.0 Sausage, variety, and other 1 Z] 96.2 Z] 3.8 100.0 Packer branch housas Beef Steer 44.1 18.2 .8 36.9 100.0 Heifer 39.6 21.0 2.8 36.6 100.0 Cow and bull 42.6 1/ 1/ 57.4 100.0 Calf 90.0 _l_/ y 10.0 100.0 Veal _1_/ y y 100 . 0 100. 0 ALamb and mutton 100.0 1/ 1/ 1/ 100.0 Fresh pork 2/ 97.0 2/ 3.0 100.0 Smoked and cured pork 2/ 59.6 2/ 40.4 100.0 Sausage, variety, and other 2/ 99.8 2/ .2 100.0 JNone reported by respondents interviewed. JThere are no U. S. grades for pork or sausage items. while a substantial proportion was neither U. S, graded nor packer branded and another one5fifth was merchandised with packer brands. Packer branch houses also rolled higher proportions of cow and bull beef with U. S. grades than did wholesale distributors. Almost all of the calf and lamb handled by branch houses were marked with federal grades, while the fresh pork and sausage items were marked with packer brands. Most of the smoked and cured pork sold by packer branch houses was also marked with packer brands. The smoked and cured pork not graded or branded generally reflected custom services provided by some branch houses for clients. Transportation Practices Wholesale meat distributors relied almost entirely on trucks for trans; porting fresh and processed meat items (Table 22). More than one—half of these trucks were owned or leased by wholesale distributors. Packer branchw houses shipped all of their fresh meat and processed products in trucks which were also owned or leased by the parent company. Buying and Selling Practices Almost two—thirds of the wholesale meat distributors and about one- half of the packer branch houses relied on 5 to 10 suppliers for their fresh meat and cured meat requirements. Most wholesalers stated that this number of suppliers was necessary to assure consistent quantity and quality? and a competitive pricing atmosphere among suppliers. Most of the remain- ing wholesale meat distributors and branch houses were dependent on more than l0 suppliers to assure consistent supplies and competitive prices plus diversity of products. 35 Table 22. Transportation facilities used for distributing fresh and processed meat and percent of meat items transported in company owned or leased facilities, Texas wholesale meat distributors, 1974 ‘u Fresh Smoked and Sausage, variety Item meat cured meat ' and other —————————————— ——Percent———————---—----——--- Transportation facilities utilized Truck 99.4 93.7 95.4 Rail .6 lj 3.5 Air 1/ .7 .l Other l/ 5.6 1.0 Total 100.0 100.0 100.0 Meat shipped in company or leased facilities Truck 54.7 88.1 59.4 Rail 1/ 1/ 1/ Air 1/ 1/ 1/ Other 1/ lj lj 1/None reported by respondents interviewed. 36 More than one—half of the wholesale meat distributors and packer branch houses determined prices charged for fresh and processed meat products by relying on costs of the various products along with a pre+ determined markup for attaining a desired profit. Almost 20 percent used the National Provisioner "Yellow Sheet" as a guideline and the re- mainder stated that competition was the major determining factor in establishing prices. Wholesale meat distribution and branch houses using a predetermined markup or gross margin goal, about 50 percent of the total, stated that gross margins varied with the type of product and especially the degree of processing and labor involved in producing the product. Gross margins were normally highest for those products requiring more processing and labor inputs. Both wholesale meat distributors and branch houses re- ported gross margins ranging from about l5 to 35 percent during 1974.», Approximately one—third of the wholesale meat distributors, compared, to two—thirds of the packer branch houses forwarded weekly price lists to potential customers. Price lists were normally forwarded on Thursday and were in effect for the following week. Summary Dramatic changes have occurred in the livestock and meat industry during the last two decades. These include a rapidly growing and shifting cattle feeding industry, the construction of large specialized slaughter- ing establishments within or near concentrated feeding areas (along with meat fabrication facilities and technological improvements in handling and storing meats including the development of boxed meat programs), and the continued expansion and growth of large, diversified supermarkets which feature mass selling techniques in meat retailing. " u 37 One of the major developments in the meat industry during the 1954- 72 period was the increasing proportion of meat industry sales accounted for by merchant wholesalers and sausage and prepared meat plants rela- tive to other major sectors of the meat industry, including slaughter- ing firms. The change in the proportion of meat industry sales accounted for by slaughtering firms, meat merchant wholesalers, sausage and pre- pared meat plants, packer branch houses, and merchandise agents and brokers from 1954 to 1972 were (1) wholesalers' proportionate shares of the meat industry sales increased from 16.5 to 27.4 percent, (2) sausage and prepared meat plants‘ shares increased from 8.1 to 10.1 percent, (3) merchandise agents and brokers' shares increased from 3.0 to 3.2 percent, (4) slaughter firms‘ shares decreased from 56.9 to 50.1 percent, and (5) packer branch houses‘ shares decreased from 15.5 to 9.2 percent of the total. Total meat and meat product sales by all types of wholesalers and sausage and prepared meat plants totaled about $23 billion in the United States during 1972. Merchant wholesalers accounted for 55 percent of this total, followed by sausage and prepared meat plants with 20 percent, packer branch houses with almost 19 percent, and merchandise agents and brokers with 6 percent. Meat merchant wholesalers declined in all regions of the United States during 1963-72 except the South. However, total and average sales per firm increased substantially in all regions with the largest increases pccurring in the West North Central and East South Central regions and also in Texas. Numbers of prepared meat and sausage plants declined slightly in the United States during 1963-72 with the declines taking place primarily 38 in the Northeastern and East North Central states, while numbers in- creased in all other regions of the United States. Total and average sales of prepared meat plants, similar to the trend established among merchant wholesalers, increased substantially in all regions of the United States. Packer branch house numbers continued their long—time decline in the United States during 1963-72. However, total sales by packer branch houses during this period increased more than 27 percent, and average sales increased more than 58 percent. Texas wholesale meat distributors (merchant wholesalers and sausage and prepared meat plants) and packer branch houses handled approxi- mately l.5 billion pounds of fresh and processed meat items during 1974. Wholesale meat distributors accounted for about 85 percent of this total. Cow and bull beef represented more than one—half of the meat volume handled by wholesale meat distributors, followed by steer beef with 36 percent of the.total. Fresh and cured pork represented more than 60 percent of the total meat items handled by packer branch houses in Texas during l974. Fresh pork alone accounted for 44 percent of the total, The next most im- portant fresh meat items were steer beef, followed by cow and bull beef. ’Wholesale meat distributors and packer branch houses were dependent primarily on Texas suppliers for fresh beef in 1974. However, geographic sources of supply for other types of meat items varied considerably. Wholesale meat distributors obtained their pork supplies primarily from Texas, Iowa, Kansas—Nebraska, and Oklahoma. Packer branch houses, in contrast, obtained their fresh pork supplies predominantly from the Lake 39 States and almost all of the smoked and cured pork from Iowa. Although Texas is a major producer of lamb, both wholesale meat distributors and packer branch houses relied almost entirely on out—of—state sources for lamb supplies. Packers were the predominant suppliers for all types of fresh and processed meat items (except veal) merchandised by wholesale meat dis- tributors and packer branch houses. Veal items were generally pur- chased from other wholesale meat distributors. Wholesale meat distributors purchased steer and heifer beef pri— marily as carcasses or quarters, while packer branch houses obtained steer and heifer beef mostly in carcass form. Cow and bull beef pur- chases, which reflected the processing activities of numerous wholesale meat distributors, were mostly in the form of carcasses and quarters. Packer branch houses, in contrast, purchased cow and bull beef as bone- less cuts. Although wholesale meat distributors purchased almost 80 percent of their steer and heifer beef as carcasses or quarters, less than l0 percent of the steer and heifer beef was merchandised in these forms. Wholesale meat distributors merchandised the highest proportion of their steer and heifer beef as boneless beef followed by retail cuts, primals, and ground meat. Calf, veal, and lamb, and generally also fresh and cured pork, were merchandised in about the same proportions relative to form as they were purchased by wholesale meat distributors. The form of steer, heifer and fresh pork sales by packer branch houses, in contrast to wholesale meat distributors, was generally very similar to the form in which they were purchased. The cow and bull 40 beef was generally fabricated into ground meat. Calf and veal, which were purchased as primals, were fabricated into retail cuts before delivery. 3 Wholesale meat distributors merchandised fresh and cured meat products to all types of clients and contrasted with packer branch houses who were dependent almost entirely on retail and HR&I outlets. Major outlets for wholesale meat distributors were HR&I, followed by retailers, processors, other wholesale meat distributors, and govern- ment agencies. Retailers accounted for more than 76 percent of the total meat products sold by packer branch houses. The geographic area of sales varied considerably between wholesale meat distributors and packer branch houses. Packer branch houses re- lied almost entirely on Texas outlets, while wholesale meat distribu- tors merchandised two-thirds or more of all meat items, with the excep- tion of veal, to Texas customers. However, wholesale meat distributors sold substantial proportions of beef, calf, and lamb to customers in other states. For example, more than 40 percent of the steer and heifer beef was sold to out-of—state customers with shipments to the Southeastern states, accounting for one—half of this volume. Further, the West Coast area was a major out-of—state market for calf in 1974. 'With the exception of lamb and fresh pork, wholesale meat distri- butors and packer branch houses merchandised relatively small propor- tions of their fresh meat as boxed meat during 1974. Wholesale meat distributors sold less than 4 percent of their steer and heifer beef as boxed meat. Packer branch houses sold all of their lamb primals, about 90 percent of the lamb, as boxed meat in addition to almost all of the fresh pork as boxed primals. 41 More than 86 percent of the steer and heifer beef sold by wholee sale meat distributors was marked or "rolled" with U, S, grades. Most of the calf was also rolled with federal grades, while the cow and bull beef was generally sold without U. S. grades or packer brands. Veal and lamb were often marked with both U. S. grades and packer brands, while pork items were generally marked with packer brands, Packer branch house grading practices differed considerably from those of the wholesale meat distributors, For example, less than one- half of the steer and heifer beef sold by branch houses was U. S. graded, and branch houses also rolled higher proportions of cow and bull beef with U. S. grades than did wholesale distributors. In addition, the calf and lamb handled by branch houses were marked with federal grades, while the fresh pork and sausage items were marked with packer brands. Almost two—thirds of the wholesale meat distributors and about one- half of the packer branch houses relied on 5 to 10 suppliers for their fresh meat and cured meat requirements. Most wholesalers stated that this number of suppliers was necessary to assure consistent quantity and quality and also to assure a competitive pricing atmosphere among sup- pliers. Approximately 50 percent of the wholesale meat distributors and packer branch houses used a predetermined markup or gross margin_goal but stated that gross margins varied with the type of product and espe- cially the degree of processing and labor involved in producing the product. Qross margins ranged from about 15 to 35 percent during 1974 and were generally highest for those products requiring more process- ing and labor inputs. 42 Meat merchant wholesalers will likely continue declining in num- bers, with most of the decrease taking place among the smaller volume firms. Sausage and prepared meat plants, who are dependent upon pork and other processing meat supplies such as cow and bull beef, may con- tinue to increase in some areas of the South. However, the processing industry will continue to be located predominantly in the North Central and Northeastern states. Packer branch house data are sketchy, but indications are that they will continue their long—time downward trend in numbers, with increasing sales per firm as smaller branch houses cease operations. With a continued declining trend in numbers by wholesale meat distributors and an increase in sales per establishment, competition for market outlets may become increasingly dependent upon price and service. Service competition has been and will be of prime consideration for the HR&I wholesalers who are facing increased competi- tion from slaughtering firms with fabrication and boxed beef facilities. '" w; 43 Literature Cited Dietrich, R. A. 1976. The Texas Retail Meat Industry —— Struc- ture, Operational Characteristics, and Competitive Practices. Texas Agricultural Experiment Station B—ll60. Dietrich, R. A., and D. E. Farris. 1976. The Texas Meat Packing Industry —- Structure, Operational Characteristics and Competitive Practices. Texas Agricultural Experiment Station B—ll64. Dietrich, R. A., W. F. Williams, and J. E. Miller. 1963. The Texas- Oklahoma Meat Industry —- Structure and Marketing Practices. U. S. Department of Agriculture, ERS, Marketing Economics Division AER No. 39.