We suspect many cattle producers have walked into a grocery store, seen a CAB® brand filet mignon priced at $25/lb., and were tempted to call the police to report that the grocer was committing highway robbery.
Myth: Retailers are ripping us off with those high-priced tenderloins, based on our steer prices
Fact: Cutting demonstrations and math show how the high-quality but tiny muscle pricing adds up correctly.
CAB® brand filet mignon at $25/lb. — How can that possibly be when fat cattle are bringing $1.25/lb.? A little math reminds us how that premium cut of filet mignon, the most desired cut on the beef carcass, gets priced so high.
First we need to remember that the $1.25/lb. price is for the live weight of the finished steer. Most fed steers will produce a carcass that is about 63% of their live weight, so that $1.25 divided by 63% gets us to $2/lb. carcass
weight. Now for the tenderloin: in an 850-lb. carcass, we would typically only get 12 lb. of tenderloin (1 per side weighing about 6 lb. each). This week, CAB tenderloins were bringing about $10/lb. So a cut that represents about 1.4% of the weight of the carcass actually accounts for about 7% of the value.
Now, suppose you bought those two 6-lb. tenderloins and starting cutting steaks. You might be disappointed to learn that those 12 lb. actually yield 3 lb. of trim (think hamburger), 5 lb. of medallions (not big enough for a true center-cut filet mignon), and 4 lb. of those beautiful center-cut filet mignons. You paid $120 for the 2 tenderloins.
The 3 lb. of trim is worth about $2/lb. and the 5 lb. of medallions are worth about $6/lb. Add those up and you only have back $36 of the $120 you spent. That leaves $84 worth of center-cut steaks weighing 4 lb., or about $21/lb. (!!!)