FOB stands for "Free On Board." In the context of U.S. wholesale meat reporting, FOB plant means that the price quoted is the price at which the product changes hands at the loading dock of the packing plant. The buyer is responsible for everything that happens to the product after that point: freight, insurance, customs, and any other landed cost.
Every USDA boxed beef and pork carcass cutout report quotes prices on an FOB plant basis. The Choice cutout of $310/cwt is the price a buyer would pay if they took delivery at the packer's loading dock in, say, Greeley, Colorado or Tama, Iowa. A buyer in Toronto receiving the same product is paying $310/cwt plus freight from the plant to the border, plus brokerage, plus duty and any applicable tariff, plus any excise or value-added tax in their jurisdiction, plus the FX adjustment from USD into their home currency. The landed cost in Toronto is materially higher than the FOB plant cost.
Why USDA reports FOB plant
The reporting basis is FOB plant because that is the cleanest economic point in the supply chain to capture transactional value. Once the product is on the truck, the price gets buried under freight rates, broker margin, and customer-specific delivery terms, all of which vary widely. The packer's selling price at the loading dock, by contrast, is a single transparent number that all buyers can reconcile against.
The Livestock Mandatory Reporting program is also designed to capture price discovery at the wholesale-to-wholesale boundary, which in U.S. supply chains is the packer's gate. Once product moves into a distributor's network, prices reflect distribution and value-added margin rather than wholesale market clearing levels. FOB plant is the right unit for the question USDA reports answer.
What FOB plant excludes
FOB plant prices exclude freight, insurance during transit, customs and brokerage fees, duties and tariffs, currency conversion costs, and any taxes or surcharges that apply at the buyer's location. They also exclude any value-added processing the buyer arranges (further cutting, packaging, labeling) and any retail margin the product carries before it reaches the consumer.
For a U.S. buyer near a major packing region, the gap between FOB plant and delivered cost is small (often under $0.05 per pound, or roughly $5/cwt). For a U.S. buyer on the East or West Coast, the gap is larger because freight from Midwestern packing plants is meaningful. For a Canadian, Mexican, or international buyer, the gap is large enough that ignoring it leads to material errors in cost projections.
How a Canadian buyer adjusts
A Canadian buyer reading the Choice cutout at $310/cwt USD typically does the following adjustments to land at a delivered cost in CAD per pound or per kilogram. First, convert the USD price into CAD using the prevailing FX rate (USD/CAD): $310/cwt at 1.36 USD/CAD is approximately $421.60 CAD/cwt. Second, divide by 100 to get CAD/lb: $4.216 CAD/lb. Third, convert lb to kg if working in metric: $4.216 / 0.4536 (kg/lb conversion) is approximately $9.30 CAD/kg. Fourth, add freight to the receiving point (typically $0.10 to $0.30 CAD/kg from a Midwestern plant to Eastern Canada by truck). Fifth, add brokerage and any duty applicable. Sixth, add any other landed-cost adjustments specific to the lane.
The math is mechanical but easy to get wrong if any single step is omitted. The most common mistake is comparing a USD FOB plant cutout number to a CAD delivered quote from a domestic supplier and concluding the U.S. number is cheaper than it actually is, on a true landed basis.
Why FOB plant matters in negotiation
A buyer using FOB plant cutout values as the anchor for a negotiation needs to keep the basis explicit in their thinking. A packer offering a CAD-priced delivered quote that looks high relative to the USD cutout might be quoting on the same level after the freight, FX, and duty adjustments are applied. A retail buyer reconciling formula contracts that reference the cutout needs to know whether the formula is FOB plant or delivered, because the basis is the difference between a workable contract and one that quietly transfers risk.
Most professional buyer dashboards and analytics platforms present USDA cutout values in their native FOB plant basis (because that is what the data actually represents) and let the buyer apply their own freight, FX, and landed-cost adjustments separately. That separation is the cleanest way to keep the underlying market read honest.