Profitability for commercial ranch is top priority

News
Feb 8, 2013
by WLJ

—Beef Profit Alliance challenged producers to add value throughout supply chain.

Just as crossbreeding adds growth, fertility and longevity to hybrid cattle, the joint collaboration of two beef cattle breed associations yielded information, ideas and networking opportunities surpassing what either could have accomplished alone.

Profitability was the common theme at the first-ever, dual-breed Beef Profit Alliance seminar, and more specifically, profitability for the commercial rancher. The seminar, held at Kansas State University (KSU) last summer, was a joint effort of the Red Angus Association of America (RAAA) and American Simmental Association (ASA).

While ASA and RAAA worked closely together to educate stakeholders, each maintained its own breed identity. “We are here to learn what is relevant to serve the beef industry and our commercial customers,” said Greg Comstock, RAAA CEO. “We want to continue the ‘coopetition’ between our two breeds. It makes us each work harder for market share.”

The future of EPDs

Drs. Jennifer Bormann and Dan Moser, both of KSU, reflected on the historical process of understanding genetic selection. “The basic problem with genotype,” said Bormann, “is that it is unknown. Our goal, through DNA, is to increase the reliability with which we predict genetic merit.”

Expected progeny differences (EPDs) are the best prediction of an animal’s genotype. Through advancements in technology, breed associations are capable of combining pedigree information with genomics and phenotype, those traits that can be measured, into a more reliable EPD with increased accuracy in younger cattle.

Larry Keenan, RAAA director of breed improvement, and Dr. Lauren Hyde, ASA genetic evaluation programming specialist, expounded on the DNA process from a breed association perspective. “DNA test results are just another piece of information, it doesn’t describe the entire genotype of an animal,” said Hyde. “But it works with the other data to bring producers more accurate EPDs earlier in an animal’s life.” Incorporating DNA information into EPD calculations will provide producers with additional information, in a language they already understand, to assist in breeding decisions.

Starting with this fall’s National Cattle Evaluation run of EPDs, producers will also be able to evaluate growth and carcass traits on all Red Angus and Simmental cattle on the same multi-breed EPD base and scale.

“Our collaboration has resulted in the world’s largest multi-breed dataset with over 10 million animals,” said Keenan. “Commercial customers will be able to directly compare EPDs across the two breeds as well as registered hybrid seedstock.”

“I am proud of how these two associations are working together for the common good of their members,” said attendee John Callaway, Callaway Cattle Co., Hogansville, GA. “Both breeds are indeed science based and industry focused with profit potential in mind.”

Do selection indexes work?

Dr. Wade Shafer, ASA COO and director of performance programs, reminded attendees that the goal and purpose of Beef Profit Alliance was to improve the profit of their customer, the commercial cattle producer. “Selection indexes are basically genetic accounting,” said Shafer. “We combine the values of a suite of complementary traits to give commercial ranchers a simplified number to assist them in bull selection.”

A lot of science goes into developing an economic index, which is measured as a dollar value. ASA currently provides two indexes, All-Purpose Index and Terminal Index, to offer customers a simplified number on which to base their seedstock selection.

Jim Butcher, Gateway Simmentals, Lewistown, MT, uses indexes to make his genetic selections and reinforces their value to his customers. “Indexes are just one of the tools we use, and encourage our customers to use, to be successful. They’re not perfect, but they’re the best selection tool we’ve ever had,” stated Butcher. His customers appreciate the simplicity of indexes in their seedstockbuying decisions and, if they want to place more selection pressure on a specific area, Butcher encourages them to study individual EPDs.

Heterosis = Efficiency, Fertility and Profitability

Patsy Houghton, Heartland Cattle Co., of McCook, NE, has expansive research and experience rooted in developing over 80,000 beef heifers in the past two decades.

“Crossbred cows’ first-service conception rates and pregnancy retention rates are 7 percent higher than straight-bred cows,” said Houghton, “and they will remain productive an average of one year longer.”

She continued by saying, however, there is a compromise. “Heterosis will increase birth weight by 4 percent, but the upside is that weaning weight also increases by a considerable average of 15 percent.”

Dr. Bob Weaber, KSU cow/ calf extension specialist, simplified the cow/calf production objective, grow grass for the cows to harvest, converting that grass into pounds of weaned calf. The result is not only profitability for the producer, but a desirable lifestyle and an improved environment.

He stressed that for maximum profitability, each operation must adapt its cow type and size to best fit the range and forage conditions. “The key is to optimize the cow’s size and her lactation ability to fit the environment, producing the most pounds, and number of calves, delivered, at the lowest possible production cost,” said Weaber. “Lowcost producers are generally more profitable.”

Profit drivers in feeding

As seedstock producers, it’s important to have a solid understanding of the feeding industry. Tom Brink, JBS Five Rivers Cattle Feeding, LLC, the nation´s largest feeder with a 960,000-head capacity at 12 yards in seven states, markets 1.7 million cattle a year, most on a pricing grid. “You are in the beef business,” said Brink. “Feed yards buy your customers’ cattle, making us your customers’ customer.”

He challenged seedstock producers to be diligent in selecting genetics that will leave a good fingerprint on the industry. “Genetically speaking, we need cattle that will grow and grade. Your genetics are going out there in the industry and having an impact in my world. Make sure it’s a good one.”

Brink also stressed the importance of receiving healthy cattle that grow and grade. “Health is an old problem but we still identify it as the No. 1 production problem. Many cattle still need stronger immunity when they leave home. If not, they de-value their penmates.”

Branded beef programs add value

Branded beef programs are designed to add value to cattle that fill a specific niche in the market. Top genetics enable producers to garner those extra dollars, according to Brian Bertelson of U.S. Premium Beef, John Butler of Beef Marketing Group, and Blake Angell of Meyer Natural Angus.

The panel of speakers also stressed better communication from their producers. “If we have previous feedlot and grid data, we have a better idea of how these cattle will perform and how we can maximize added value,” said Butler.

The panel emphasized ranchers can implement strong health and nutritional programs on the ranch that will create more profit margin at harvest time, as well as utilize added-value tag programs. The Red Angus Feeder Calf Certification Program (FCCP) verifies genetics, source and age, and the newly released Allied Access program verifies source and age without genetic restrictions.

To understand the importance of carcass merit, attendees were able to evaluate three live Simmental and three live Red Angus steers at the beginning of the conference, then view the six carcasses on the last day. Dr.

Michael Dikeman, KSU professor of meat science, presented the official quality and yield grades, carcass weights, ribeye areas, dressing percentages and carcass dollar values, and explained what characteristics contributed to profitability.

“It is important for each beef producer to understand what they deliver to the consumer,” said Kevin Miller, Croissant Red Angus, Briggsdale, CO. “The genetics that each one of us provides makes an impact on value and quality all the way through the system. We all need to understand that value does not stop at the point where we market our cattle.”

We are all beef advocates

Seventy-five percent of Americans have a favorable view of farmers and ranchers, but only 42 percent have a positive attitude toward the way food is grown. This disconnect, according to Daren Williams, executive director of communications for the National Cattlemen’s Beef Association, is a challenge to all beef producers to share their story with consumers.

“We are continually improving our methods and practices,” said Williams, “and we need to tell consumers. In the end, they just want to know that their food is safe and healthy.”

Williams stated that the world population will double in the next 40 years. Currently, 7 percent of the world’s cattle are producing 20 percent of the beef, a testament to good management and production practices.

“Ranchers are the most trusted source to tell beef’s good story,” he said. “You are the original stewards of the land and the best caretakers of your animals. Tell your story, talk the walk!” Sarah Jones, Red Hill Farm, Scottsville, KY, agreed with Williams. “We are truly in the business of producing beef for consumers, not just live cattle on the hoof. Whether Red Angus or Simmental breeders, we must all be advocates for the beef industry, the industry that puts money in our pockets and food on our tables.”

The seedstock supplier’s role

Even with the advancements in technology and evaluation tools such as EPDs and indexes, Lorna Marshall, Genex/CRI, of Burlington, CO, believes form follows function and conformation traits still play a role in selection decisions.

Stature, body capacity, structural soundness and udder quality all contribute to a cow’s longevity, and therefore profitability. “Body traits are highly heritable at 31 to 42 percent,” said Marshall.

She encouraged seedstock producers to discern conformation traits within their own herds, recording foot and leg structure, udder quality, disposition and body condition scores. “I’m not sure we want to publish more EPDs, but I foresee incorporating conformation traits into new or existing indexes.”

Ryan Ludvigson, Ludvigson Stock Farm, Park City, MT, and Mike Henderson, HRM Simmentals, of Anita, IA, shared their perspectives as seedstock suppliers.

Ludvigson believes commercial marketing tag programs help his customers add value to their calf crops. Ninety percent of his customers sell at weaning, but the feeders and packers need the carcass traits. “The Red Angus FCCP tag gives them the confidence to purchase those calves knowing they are not only source and age verified, but have the genetics to perform in the feedlot and on the grid.”

Customer service, according to Henderson, is an important aspect of their operation.

“Time is our most limiting factor,” he said, “but we try to stay connected with our customers and understand their needs through phone calls, ranch visits and social media.”

The future

Cattle production is a resource-intensive industry, according to Dr. Ronnie Green, University of Nebraska vice president and vice chancellor for the Institute of Agriculture and Natural Resources. But farmers and ranchers are producing more food with less of these resources than ever before.

He predicts a rapid decline in land-grant universities relevant to beef production in the next 10 years. “We absolutely need to be encouraging the best and brightest students into agriculture,” said Green. “From production all the way up through the value chain in all fields of study.”

He also challenged beef producers to be students of the new genetic evaluation tools to become more accurate in assessing an animal’s worth.

Dr. Ken Odde, KSU professor and department head of animal sciences and industry, reinforced Green’s concern. “We will not be successful as a supplier of beef to this growing population if we are not competitive,” he stated at the conclusion of the conference. “We must invest in research to become, and remain, globally competitive.”

“In this business, everything is about margin,” said Kevin Unger, manager, Decatur Co. Feed Yard, Oberlin, KS. “The things that affect margin, health, feed efficiency, hot carcass weight and grade, are all driven by genetics. It’s exciting to see tools like indexes and DNA technology added to EPD models, as well as joint efforts such as the RAAA and ASA combined databases.”

Unger continued, “The ability to take the information available and move quickly and decisively will become more and more important in this industry. Those that know their product will be better equipped to take these new advances and implement them into their operations to affect their bottom line.” — WLJ

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