Quality pays

CAB premiums reach $300 million in 2009

Cumulative grid premium rewards for hitting the Certified Angus Beef ^® (CAB^®) brand target stood at nearly $300 million at the end of 2009, and they keep growing at an annual rate of about $25 million paid to producers.

That’s the five-year average according to a January 2010 survey; the second highest total for that span was 2008, with $25.5 million in premiums reported. Over the last two years, CAB product sales by some 15,000 licensees worldwide have increased by more than 110 million pounds.

In the biennial survey, leading CAB-licensed packers shared figures on condition that no individual company numbers would be reported. Tyson, Cargill, JBS-USA and National Beef checked actual CAB premiums paid in 2007 and reported totals for the next two calendar years.

These figures do not include the related premiums for Yield Grades, USDA Choice over Select, Prime over Choice, source- and age-verified, nor the cash live bonuses often paid for expected CAB acceptance.

Through the years, licensed packers have been the source of funding for the branded beef program based on fees that average two cents per pound of CAB product sold. That’s a cumulative $167 million in commissions on 8.3 billion pounds.

Widespread grid premiums for CAB-accepted cattle appeared in the mid-1990s. By 1998, all the major packers featured CAB premiums in their grid or formula pricing.