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Certified Angus Beef Grid Premiums Reach $75 Million Annually
USAgNet - 03/14/2018

Angus producers can increase supply for the world's leading premium beef brand in just two years-and still earn 44% more premium dollars for the greater supply. It seems to go against the laws of market economics, but that's what happened from the start of 2016 through last December.

After a long string of sales records that reached 1.14 billion pounds last calendar year, many wondered if Certified Angus Beef (CAB) brand premiums would keep fostering profitability for producers.

A biennial survey of licensed packers, including Cargill, JBS-USA, National and Tyson backs up the brand's trademark, "the brand that pays."

At a rate of $8,500 per hour, 24-7, that was $75 million for 2017, up from the $52 million paid in 2015; the linking year came in at $63 million. That brings the 20-year total for CAB premiums to $688 million (see figures 1 and 2), more than half of it paid in the last seven years.

"It started with the believers 40 years ago, but this is how it's supposed to work," says John Stika, president of the brand founded as a subsidiary of the American Angus Association in 1978. A foreshadowing of the USDA-reported $14 per hundredweight (cwt.) premium for CAB in one extreme week last year came 30 years earlier, when USDA reported a Colorado packer had bid an extra 50 cents.

Ten years after that, with some 1.5 million head accepted for the brand in 1998, packers were paying $4.4 million per year in specific CAB premiums at $2 to $3 per cwt. on each accepted carcass.

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