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Cattle Industry Misconceptions; Chip Hines.

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Big Muddy rancher

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Good read. :D

CATTLE INDUSTRY MISCONCEPTION

Why, after 40 years of following the university decreed mandate of high animal performance as the savior of the industry, is low profitability still the key word in articles and conversation. WHY? Because declaring vastly increased animal performance as being profitable was only a surmise that was never tested for anything other than how to push performance. Sure, animals could be genetically designed and fed to grow faster and bigger, but was it profitable? Profitability was never investigated in the intervening years and still is not.

Our university and federal research systems only pull out one little thing to test to prove or disprove it with no understanding of fallibility or success at the rancher level. Case in point. Saturday the 10th of March, I read an article from a university research farm director. After reading this I decided to say what needs to be said, diplomatic or not. The only way to bring attention to the mounting problems in our industry is to confront the situation directly and make waves.

I will first explain what set me off and my refutation of the research that is pointless, off base, and leading producers farther into a manure pit of unsustainability.

An article written by Kris Ringwall of North Dakota State University Extension was printed in the Cattle Range Weekly. The overall purpose of Mr. Ringwall’s article (titled, Carcass Evaluation Ramblings) was to discuss the difference between”maximizing the value per hundred weight of carcass or maximizing the total value of the carcass?”

Mr. Ringwall was using individual animals in this research. The judgment criteria he used to determine the big (pun) winner in his off-base test, had a high choice, visual yield grade 3 carcass and hot carcass weight of 977 pounds. He did have a selling price listed although that is not important in my denouncement of his conclusions. Think about the live weight this steer would have, which was not given. Other than the steer being black all I had to go on was the above information. That was enough though to let me bring this animal to ground level. In other words on the ranch. This is where all evaluation must begin, not at the end of the steer’s life. The costs generated to raise the big steer must be part of the evaluation. Ignoring this makes the end value a big lie. This happens regularly. When reading research papers think about not only what is being said, but also what it is not saying.

Accepting that the steer was huge (do your own calculation on his live weight) the next step is determining his mom’s size. I called Mr. Ringwall, but he was out of town for three days. I then asked a couple friends what they thought the cow would weigh. They both said at least 1600 pounds and quite possibly much heavier. I then began putting together figures to compare a herd of 1600 pound cows, with the final numbers mentioned above, and a herd of smaller cows.

Last April (2011) Gary and Bobby Rhoades of Burlington, CO sold their steer calves to a feedlot at Yuma, CO. When the cattle were killed (2-3-2012) the feedlot gave Gary the closeout sheet on the steers. I will be using these numbers and their cow herd to illustrate the method we must use to gauge profitability.

Judging profit with only one animal is useless, actually ridiculous. This must be done in the context of a herd. Only with extended numbers is there any chance of wrapping your mind around comparing differing cow sizes and values.

In measuring the difference between the two herds I had to use my knowledge of the research herd. They are winter calved and since weaning weight is part of their performance program, I put them down as medium milk production cows. They were probably higher milking, but I don’t want to put too much load on them.

The Rhoades steers are out of 1,100 pound, low milking, summer calved cows. I went through the closeout sheet furnished by the feedlot and found some high choice cattle (126 head on feed, not a lone individual), with a yield grade 3. Their average (once again, not a cherry picked individual) carcass weight (pay weight) was 792 pounds. I can hear you naysayers groaning that the little ones don’t have a chance. Are you sure?

Using National Research Council calculations of dry matter intake (DMI) of differing weight and milk production cows, we find that a 1600 pound cow at a medium level of milk (20 pounds peak lactation) requires 12,154.5 pounds per year. For a 100 head cow herd that is 1,215,450 total pounds. A 1,100 pound low milking cow (10 pounds peak lactation) only needs 8523.5 pounds per year. Dividing that into the total yearly consumption for the big cows leads to the fact that 143 small cows can be run on the same amount of forage as 100 of the 1,600 pound cows. Surprising?

Next we will assume the winter calved cows have a death loss of 6%. That leaves 94 head. Next 15% are deducted for heifer replacements. We’ll call that 80 head remaining to go to the feedlot. With the summer called cows a 2% death loss leaves 140 calves. With a 15% heifer replacement deduction there are 119 for the feedlot. Since we only have steers to work with, pretend the remaining calves were all born bulls. This means39 more small steers are going to the feedlot! Is this important?

80 Big steers at 977 pounds dressed weight is 78,160 pounds. 119 little steers at 792 pounds dressed weight total 94,248 pounds total. Do you big cattle folks feel something slipping? How about a difference of 16,088 pounds? Getting a little worried? And this ain’t all.

What about the DMI cost? It ain’t free and the big steer has to pay his welfare mama’s feed bill before there is a profit. In my, “A Slantwise Guide to Prosperity”, workbook I used a figure of $250 to run the standard 1,000 pound, low milking cow unit on her level of forage for a year. This gave a value of .0316 per pound of DMI. The big cows yearly cost was $384.08 or $38,408 for 100 cows. Since the big cows were winter calved I gave them an extra $100 dollar hay bill (I kept this low, will be higher in practice) over what the summer calved cows may have needed, if any. That increased their total forage cost to $48,408. The little gals cost was $269.34 per year for a total of $38,515. With a little fourth grade math it is determined that the little cows produced 16,088 pounds more hanging weight at a lower cost of $9893.

Now who still wants the big cows? Let’s take this a little further. The big question is always, “but how do the little cattle feed?” The Rhoades cattle have twice won the Red Angus Gridmaster award. The last time was in 2008. The requirements for the Gridmaster Program are:

Minimum 30 head lot size

Minimum 85% choice or higher

Minimum 15% yield grade 4’S

Minimum grade score of 100.

The grid score balances achieving high percentages of premium products, yield grade 1’s and 2’s, and USDA choice grade cattle with a minimum of yield grade 4’s.

The Rhoades steers were 100% choice or higher, and only had 2.7% yield grade 4’s.Their grid score was 135.09. Of the 12 groups that won this award, these steers had the highest % choice, highest premium product and the third highest overall grid score. And this was accomplished with frame score 4 cows.

Big cows support feeding industry profits.

Small cows support rancher profit and still benefit the feeding industry. How can it be better?

Which herd do you prefer?

Quotes from Mr. Ringwall’s article. “All the money that comes into the beef industry ultimately comes from the product hanging on the rail.” ….”beef producers only have one gauge of income, which is value on the rail.” “The money exchange is fueled by the dollars that come from the finished product.” Mr. Ringwall is correct in his postulating and it was fortunate that I was afforded the opportunity prove what size animal actually brings the most profit back to the ranching industry.

Why cannot researchers see what people on the land see? I don’t know so I will continue exposing the ignorance of those who don’t know they don’t know.

Chip Hines

Author of the books, Time To Change, How Did We Get It So Wrong, and a workbook, A Slantwise Guide To Prosperity. For ordering information go to chiphines.com
March 14, 2012 at 3:16 PM
 

Big Muddy rancher

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More from Kris.

BeefTalk 600: The World of Genetic Marketing

Producers that are successful in raising livestock in balance with their own lives understand when things are not right

Which calf was the most profitable? Was it a calf with a carcass value of $211.48, carcass weight of 680 pounds and a total value of $1,438.06 or a calf with a carcass value of $185.48, carcass weight of 1,017 pounds and a total value of $1,886.33?

Perhaps that statement is a little bold. However, to the typical cow-calf producer and the feedlot operator, to some extent, cattle marketing is challenging. The impact of those markets and the actual payout in relation to genetic plans is difficult to evaluate. However, markets work and the free market is still the best available.

The real complications on marketing involve cattle producers who are trying to produce for the market. Production decisions impact market timing and, at the root of all cow herds, are genetics.

The geneticist spends a lot of time evaluating traits that can be recorded directly or indirectly. The direct traits, such as weight or skeletal size, are easy to understand even if the calculation of expected progeny differences seems a bit distant at times.

The indirect traits, such as milk production and disposition, are likewise included with some buffering. The new concepts involving DNA technology also are available and offer further refinement to the selection of breeding stock.

With these tools, the breeder and cattle producer establish a cow herd. This cow herd then can be utilized to produce calves for a desired market. The desired market really is the discussion today.

As one reviews carcass data sheets and scans them for useful information, the complexity of this business is what really stands out. For any given set of calves, regardless of where they came from, there is a market. That market will differentiate the positives and negatives on the rail but will not always coincide with the goals of the producer who raised the calves.

In the process of marketing, cattle are evaluated for many criteria. As was noted earlier, some observations of a feeder calf, stocker, yearling or finished steer may directly relate to the anticipated value on the rail. However, most do not. Most traits give a perceived plus or minus response. Through the eyes of the buyer, the plus and minus responses are summed up to create a purchase offer.

The base bid generally is a regional supply and demand offer. Occasionally, a particular offering of cattle may be outside the normal range of acceptable finished cattle, but the base bid still reflects supply and demand.

The base bid is fairly predictable, at least in the short and midterm. The base bid is market dependent and generally does not reflect the merits of individual cattle but rather the merits of the entire pen.

Of course, anyone buying the cattle will aggressively seek cattle that will hang more positives than negatives on the rail and will speculate with a higher bid if there are enough records to justify speculated rail performance. Once the base bid is established and accepted, the real carcass value slowly unfolds.

For those who know their cattle, they will speculate on bringing more positives than negative additional value on the rail. For most cattle producers, this phase of the industry is passed by. Why? The market is complicated.

Let’s review a typical offering. A recent set of steers offered by the Dickinson Research Extension Center had a choice yield grade 3 price of $205.48 per hundredweight of carcass on the rail. Therefore, those producers who are shooting for choice yield grade 3 cattle have a base value. On that day, the choice/select spread was a discount of $7.64 for select carcasses. Beside the $7.64 discount for select cattle, the actual value of each carcass is dependent on other plus and minus factors.

On the positive side, three additional market programs, quality grade prime and yield grade 1and 2, all offered positive price adjustments. On the potential discount side, quality grade standard, utility, hard bone and no roll were all discounted. Other possible discounts included dark cutter, callus, damaged, stag, yield grades 4 and 5, carcass weight below 550 pounds or in excess of 999 pounds and 30 month or more carcass age.

In this set of 24 carcasses, 15 carcasses had a carcass value per hundredweight equal to or more than the choice yield grade 3 value. The highest valued carcass per hundredweight came in at $211.48. However, the carcass also had the lowest total value at $1,438.06.

In stark contrast, the carcass with the most discounted value ($185.48) was the fifth most valuable carcass in terms of total value at $1,886.33.

Translating those numbers back to the feedlot and cow-calf producer needs some more thinking.

More on that later.

May you find all your ear tags.

Your comments are always welcome at http://www.BeefTalk.com. For more information, contact the NDBCIA Office, 1041 State Ave., Dickinson, ND 58601, or go to http://www.CHAPS2000.com on the Internet.
Ipsum



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WVGenetics

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As a person involved in university level research and as a beef producer, I understand both sides to this equation. However, everyone must understand a couple things from the university side. First, as this article indicates, you must discern the poorly designed research from the good and then understand that each conclusion is only a very small piece of a very big and complex puzzle. Secondly, university systems are mired in political bureaucracy at all levels. In most cases, they are dependent on grants and donations for research funding and believe me no one will fund anything practical that isn't flashy or has a direct application to human health. It is very hard to do the right research financially and the faculty population is no different than our society. The large majority, even in animal science departments, are several generations removed from the farm and some have very little if any practical or actual experience. Those that do are likely nearing retirement so they can do their own thing on their own ranch! I'm not saying it is right but that's the way it is. There is still a lot of great practical and applied research being done though. The job is to find it.
 

andybob

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WVGenetics said:
As a person involved in university level research and as a beef producer, I understand both sides to this equation. However, everyone must understand a couple things from the university side. First, as this article indicates, you must discern the poorly designed research from the good and then understand that each conclusion is only a very small piece of a very big and complex puzzle. Secondly, university systems are mired in political bureaucracy at all levels. In most cases, they are dependent on grants and donations for research funding and believe me no one will fund anything practical that isn't flashy or has a direct application to human health. It is very hard to do the right research financially and the faculty population is no different than our society. The large majority, even in animal science departments, are several generations removed from the farm and some have very little if any practical or actual experience. Those that do are likely nearing retirement so they can do their own thing on their own ranch! I'm not saying it is right but that's the way it is. There is still a lot of great practical and applied research being done though. The job is to find it.
I have posted this link before but I believe Johann has both the academic and private experience, and has had to make a living as a rancher using the policies he now lectures and consults in. (He lost his ranch during the Zimbabwe land grab). He has been approached to give some lectures in the USA; http://sangacattle.webs.com/apps/forums/topics/show/3169124-grass-feeding-a-whole-new-ballgame-
 

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