By: Ken Olson, Associate Professor & Beef Specialist, SDSU Extension
Beef cattle producers that braved the weather to attend the Range Beef Cow Symposium had the opportunity to listen to top-notch speakers. A common theme across many of these speakers, and especially from the producers, was the importance of capturing added value in the cattle they sell.
A key is that modern pricing grids differentiate among individual cattle at harvest based on how well they grade. In brief, grids reward premiums to carcass characteristics such as high quality grades and lean yield grades, and conversely discount low quality grades, yield grades that indicate reduced cutability, dark cutters, underweight or overweight carcasses, etc. An animal that grades prime, yield grade 1 or 2 (remember, lower yield grade numbers indicate higher cutability) can be worth hundreds of dollars more than an average animal.
Additionally, animals that gain at faster rates and more efficiently are worth more in the feedlot phase. Again, an animal that gains at 5 lb. per day and converts at a rate of 5.5 lb. of feed per lb. of gain will be worth hundreds of dollars more than animals that gain at average or below average rates and conversions.
Imagine the value of an animal that combines fast and efficient gain in the feedlot with superior carcass traits. These are the kind of cattle that were making money even when costs of gain were extremely high during much of 2012.
So how does a cow-calf producer capture some of this added value if his or her calves have these superior capabilities during post-weaning performance? First, that producer needs to be able to document the performance capacity of their cattle. Measuring performance is key; a person can’t manage these traits if they don't measure them.
This involves developing relationships and communicating with feeding and packing sectors to get feedlot and carcass data on their cattle. There are a variety of mechanisms to accomplish this. One is to enroll calves in a calf-feeding program like the Calf Value Discovery Program conducted by SDSU. Another option is to discuss this with your seedstock producer. Many seedstock producers buy back calves or create relationships with feedlots so they and their bull-buying customers can get data back on the progeny of their bulls. With the declining number of cattle to feed in the U.S., many custom feedlots will provide a lot of data and services to attract customer cattle, including providing feedlot and carcass data.
Another element of capturing added value is using the data to increase the capability and value of the cattle. Once feedlot and carcass performance on an individual basis is known, genetic capacity in any herd can be improved by buying bulls or semen that improve deficient traits and culling cows that transmit deficient performance to their calves. Because growth and carcass traits are moderately to highly heritable, genetic progress can be fairly rapid. Knowing who the best cows in a herd are based on the performance and profitability of their calves will go a long way toward selecting for the most profitable and culling the least.
Critical to making this work is communication. Conversations with your seedstock producers will be important to genetic improvement and possibly marketing the future offspring. Communication with feedlot management will be critical to capturing feedlot performance and also probably carcass data. Working with a branding program, which may include joining or investing in the organization or company, may be key to collecting data and also providing the channel to market cattle with high performance. The bottom line is that communication across sectors plays multiple roles, including providing opportunity to measure and improve performance, streamline production and reduce costs, capture performance data, and share in the increased market value of the cattle.
Many cow-calf producers have heard the horror stories of feedlots that won’t share feedlot performance data or the premiums that they receive, and packers that don't return carcass data. Fortunately, there are plenty of cow-calf producers, feeders, and packers that have seen the value of communication and cooperation to improve the value of the cattle and that share in the rewards. Those that want to work together can find each other and ignore those that aren’t interested in cooperating.
There will be great opportunity for profitability in beef cattle production for the foreseeable future, and those that work hard to capture more value with have the opportunity to maximize that profit potential.
Closing Market Commentary -- February 5, 2014
Livestock Analysis (VIP) -- February 5, 2014