Animal ID Touted As Mechanism
For Determining Market Value
By David Bowser
MANHATTAN, Kan. — Dr. Brad White with Kansas State University's veterinary school says he thinks a national animal identification program will improve the nation's herds and will make more money for producers, but they will have to put forth the effort to realize the rewards.
"We're changing the way we get information on animals, the way we manage that information, and what we do with it," White says. "For a long period of time, we didn't see a lot of changes in the amount of information we collected."
The national identification system, he says, doesn't change the data that cattlemen can get back from their cowherds.
"It does change the way that we can manage it," White says. "We're still pretty traditional. I would contend that in a lot of areas we have a lot of traditional things which are not bad, but we have more opportunities that we could take advantage of."
The consumer will dictate a lot of the value of the product being produced.
"They're going to tell us what specific prices mean or what amounts of money and how we can fit those products in to make the best value, get the most money back from our product," White says.
He says cattlemen influence the attributes of the final product at each stage of the production chain.
"The cow-calf producer makes the genetic decision," White notes. "The stockers and feeders determine how long and what type of feed should be given those animals and when they're going to be harvested. The consumer determines the value. We need to have some way to communicate up and down the chain, and this is one of the great potentials of animal ID, for the individual producer to make better decisions to put their product in the hands of the right people where they're worth the most."
The two critical things to look at right now, he says, is to consider the knowledge each producer has about his cattle and the type of market he's selling into.
"We can get knowledge of our product," White says. "We can do this now, but where are we? What type of calves are we producing, and how do we best put those into the right hands to get the most money or the most income from those animals? What am I producing? What are my calves worth? What's their value? Are all these calves worth the same amount of money? Do we need to look at them as a group? Do we need to look at them as individuals?"
For a long time, White says, the industry looked at group data and made decisions based on averages.
"On the average," White shrugs, "averages are right."
He says, however, that today producers need to start thinking about individuals within a group.
"We now have the capability to capture that data and use it to make decisions."
That's important, White says, because there's a lot of variability between individual animals.
Looking at calves in the sale ring, a cattle buyer will base his decision on past experiences. A good calf or a bad calf depends upon whether that calf makes money or not. It's not whether it's pretty. It's not whether it shows well.
"It can be blue and red with pink polkadots, but if it makes money, most producers will be happy with it," White says.
Two calves that are herdmates, he says, may begin to show differences when they go on feed. One gains more weight than the other.
"If we're marketing them on a liveweight basis," White says, "it's a pretty simple equation."
If the producer is marketing the calves on a grid or some type of value-based marketing system, it may make a difference in how those calves fed out.
He cites a study in which two calves from the same ranch had been managed the same, but the difference in value between the two animals was $175 as they went to slaughter.
"The question is, would anybody have paid $175 more for one of the calves when they went to the sale barn weighing within four pounds of each other?" White says. "We have a large amount of variability in our individual animals, and we can't estimate it by visual appraisal. We have to get back to a way to determine what the values of those individuals are and how to capitalize on that value. This is one of the most important things we can do with ID."
Disease management and health programs are important, White says, but this is the way the producer can put money back in his pockets and pay for health programs.
Records are key.
"We have to know what the herd looks like," he says.
It's not unusual to have a $200 to $400 swing in value from the top calf in a pen to the bottom calf.
Citing a pen of cattle in another study, White says some of the calves lost $75 while others made $225.
"The average profit for this owner was $91," White says, "but the average doesn't tell the whole story. We see a large amount of variation in this herd, and our question becomes 'What do I do with this information? How can I use it to help me make money?'"
To make money off this information, White says the cattleman needs a system to manage the knowledge that he can get out of animal ID.
"We have to have a decision-making process," White says. "Unless this information helps me make a decision to produce a better calf or get paid more for the calf that I produce, the information itself is worthless."
Data and numbers have no inherent value, he points out.
"The only value we get is by using them to make a better decision," White says. "We can spend a lot of time simply collecting numbers and using all of our efforts to try to get numbers on paper for cow records and calf records. It doesn't help us unless we can make a better decision."
White thinks the National Animal Identification System will help.
"One of the first things we can do is have compliance with national programs. We can do these things, and we should do them for the good of the industry so we can have some decent traceback, so we can manage animal health, so we can open markets that we're not currently involved in."
White says such a system would have some big benefits.
"We can improve the product that we produce," White says. "I think this is a great thing we can do with our numbers. We can actually improve the quality and quantity of the product that we're putting on the market."
He says cattlemen can also improve their marketing, or risk management. Knowing what that calf is worth means a lot.
"Having that information, you can improve how you sell or how you buy those animals," he says.
White says he thinks compliance has great value, but when everybody does it, it's not going to be great value in the long run. When everybody individually identifies their calves, those calves aren't going to bring any premium just for having a tag in them, he admits.
"The premium that we're going to get is from differentiating, from moving those calves into a separate place, just like branding," White says. "When we have a brand on something, we can separate, isolate, pay more for it and give it some value."
The goal is to improve the product, not just change the labeling.
"If we improve the product, we can add great value in that back to the farm," White says.
He says that information, the knowledge of those individual calves, is the key.
If a cattleman knows that his calves come from different sires and one sire's calf made money and the other sire's calf lost money, that's information the cattleman can use.
"Bull selection gets pretty easy at this point," White says. "I know which one I don't want to have on my farm next year, and I know which one I want to mimic."
If there's a $100 difference between the calves sired by the different bulls, he says that would go a long way to paying for a bull.
"How often do I pay off a big percentage of my bull in the first year that I own him?" White asks. "That's the opportunity that we have."
Again, he says information, not data, is the important message.
"I make a big deal out of collecting individual animal data," White says, "and I think we need to, because there's a lot of variability, but we do not collect individual animal data to manage individuals. We collect individual animal data so that we can sort it and manage the appropriate sub-groups."
Individual animal data can be used to manage things like groups of cows. Too often, he says, the mother of a calf that didn't do well is culled.
"I don't know that's necessarily the right decision, because we have variations from year to year," White says.
Knowing what kind of cattle he's producing will also help a rancher market his calf crop better, White says.
If a rancher spends time and money improving his herd, White says he should be paid for it, but to get that extra money for the extra work, the rancher needs to be able to differentiate between marketing opportunities.
There are such things to consider as preconditioning.
White says he thinks preconditioning is the greatest gamble in the beef industry today.
"Does preconditioning help calves?" he asks. "If we vaccinate calves, if we manage them correctly, are they less likely to get sick? Yes, that's absolutely true. Do we get paid enough for those calves to justify preconditioning?"
Everybody probably has a different answer to that question, he says.
"It depends upon your past experiences," White says. "Sometimes we do. Sometimes we don't."
Sometimes preconditioning is great, he says. Sometimes it isn't because of different management. There's very little differentiation when it comes to all the preconditioning programs that are on the market.
"We need to look at ways to capture the value of those healthy animals," White says.
To do that, producers need to understand how the marketplace determines value.
"We can look at the grocery store, and we can talk about all the things that we do to pick out our meat," White says. "What's the primary driver? Price. What's the biggest thing when you take a picture of the grocery case? They've got the price."
He translates that to the sale of feeder cattle.
"When we sell feeder calves at an auction, what's the primary value?" he says. "Price. There are other variables, all kinds of things that play into it that affect the price, but it's a price driven market."
The price signal is what needs to be sent back to the cow-calf producer as to what is a valuable product and what is not a valuable product, he says.
"If we have more information, we have to have a different way to talk about our product besides just price," White says. "We need to look at what's under the hide and what the true value is and a have a way to document that. ID provides a mechanism that we can use to collect the data and find out where we fit."
It comes back to information, and in this case, information that can be documented.
"At the grocery store, we talk about different brands on our meat and people are willing to pay different things for those because of the specific need for that product," White says. "It's desirable to them. That's not saying that one product is better than another in the long run. It's saying to me that this is what I value."
There are different marketing programs that place values on different types of calves.
"We need to find out exactly what we produce," White says. "We don't necessarily have to change, because it may fit in somewhere else. What we have to do is when we get the product knowledge, we have the opportunity to place that animal in the appropriate marketing chain."
Using this knowledge, White says, can determine if and what kind of alliance the producer may want to go to in order to market his calves.
"These are specific marketing channels," White explains. "This is where my feedyard is marketing to. Those are the types of things that we need to know, but you have to know where your calves are to do that."
For Determining Market Value
By David Bowser
MANHATTAN, Kan. — Dr. Brad White with Kansas State University's veterinary school says he thinks a national animal identification program will improve the nation's herds and will make more money for producers, but they will have to put forth the effort to realize the rewards.
"We're changing the way we get information on animals, the way we manage that information, and what we do with it," White says. "For a long period of time, we didn't see a lot of changes in the amount of information we collected."
The national identification system, he says, doesn't change the data that cattlemen can get back from their cowherds.
"It does change the way that we can manage it," White says. "We're still pretty traditional. I would contend that in a lot of areas we have a lot of traditional things which are not bad, but we have more opportunities that we could take advantage of."
The consumer will dictate a lot of the value of the product being produced.
"They're going to tell us what specific prices mean or what amounts of money and how we can fit those products in to make the best value, get the most money back from our product," White says.
He says cattlemen influence the attributes of the final product at each stage of the production chain.
"The cow-calf producer makes the genetic decision," White notes. "The stockers and feeders determine how long and what type of feed should be given those animals and when they're going to be harvested. The consumer determines the value. We need to have some way to communicate up and down the chain, and this is one of the great potentials of animal ID, for the individual producer to make better decisions to put their product in the hands of the right people where they're worth the most."
The two critical things to look at right now, he says, is to consider the knowledge each producer has about his cattle and the type of market he's selling into.
"We can get knowledge of our product," White says. "We can do this now, but where are we? What type of calves are we producing, and how do we best put those into the right hands to get the most money or the most income from those animals? What am I producing? What are my calves worth? What's their value? Are all these calves worth the same amount of money? Do we need to look at them as a group? Do we need to look at them as individuals?"
For a long time, White says, the industry looked at group data and made decisions based on averages.
"On the average," White shrugs, "averages are right."
He says, however, that today producers need to start thinking about individuals within a group.
"We now have the capability to capture that data and use it to make decisions."
That's important, White says, because there's a lot of variability between individual animals.
Looking at calves in the sale ring, a cattle buyer will base his decision on past experiences. A good calf or a bad calf depends upon whether that calf makes money or not. It's not whether it's pretty. It's not whether it shows well.
"It can be blue and red with pink polkadots, but if it makes money, most producers will be happy with it," White says.
Two calves that are herdmates, he says, may begin to show differences when they go on feed. One gains more weight than the other.
"If we're marketing them on a liveweight basis," White says, "it's a pretty simple equation."
If the producer is marketing the calves on a grid or some type of value-based marketing system, it may make a difference in how those calves fed out.
He cites a study in which two calves from the same ranch had been managed the same, but the difference in value between the two animals was $175 as they went to slaughter.
"The question is, would anybody have paid $175 more for one of the calves when they went to the sale barn weighing within four pounds of each other?" White says. "We have a large amount of variability in our individual animals, and we can't estimate it by visual appraisal. We have to get back to a way to determine what the values of those individuals are and how to capitalize on that value. This is one of the most important things we can do with ID."
Disease management and health programs are important, White says, but this is the way the producer can put money back in his pockets and pay for health programs.
Records are key.
"We have to know what the herd looks like," he says.
It's not unusual to have a $200 to $400 swing in value from the top calf in a pen to the bottom calf.
Citing a pen of cattle in another study, White says some of the calves lost $75 while others made $225.
"The average profit for this owner was $91," White says, "but the average doesn't tell the whole story. We see a large amount of variation in this herd, and our question becomes 'What do I do with this information? How can I use it to help me make money?'"
To make money off this information, White says the cattleman needs a system to manage the knowledge that he can get out of animal ID.
"We have to have a decision-making process," White says. "Unless this information helps me make a decision to produce a better calf or get paid more for the calf that I produce, the information itself is worthless."
Data and numbers have no inherent value, he points out.
"The only value we get is by using them to make a better decision," White says. "We can spend a lot of time simply collecting numbers and using all of our efforts to try to get numbers on paper for cow records and calf records. It doesn't help us unless we can make a better decision."
White thinks the National Animal Identification System will help.
"One of the first things we can do is have compliance with national programs. We can do these things, and we should do them for the good of the industry so we can have some decent traceback, so we can manage animal health, so we can open markets that we're not currently involved in."
White says such a system would have some big benefits.
"We can improve the product that we produce," White says. "I think this is a great thing we can do with our numbers. We can actually improve the quality and quantity of the product that we're putting on the market."
He says cattlemen can also improve their marketing, or risk management. Knowing what that calf is worth means a lot.
"Having that information, you can improve how you sell or how you buy those animals," he says.
White says he thinks compliance has great value, but when everybody does it, it's not going to be great value in the long run. When everybody individually identifies their calves, those calves aren't going to bring any premium just for having a tag in them, he admits.
"The premium that we're going to get is from differentiating, from moving those calves into a separate place, just like branding," White says. "When we have a brand on something, we can separate, isolate, pay more for it and give it some value."
The goal is to improve the product, not just change the labeling.
"If we improve the product, we can add great value in that back to the farm," White says.
He says that information, the knowledge of those individual calves, is the key.
If a cattleman knows that his calves come from different sires and one sire's calf made money and the other sire's calf lost money, that's information the cattleman can use.
"Bull selection gets pretty easy at this point," White says. "I know which one I don't want to have on my farm next year, and I know which one I want to mimic."
If there's a $100 difference between the calves sired by the different bulls, he says that would go a long way to paying for a bull.
"How often do I pay off a big percentage of my bull in the first year that I own him?" White asks. "That's the opportunity that we have."
Again, he says information, not data, is the important message.
"I make a big deal out of collecting individual animal data," White says, "and I think we need to, because there's a lot of variability, but we do not collect individual animal data to manage individuals. We collect individual animal data so that we can sort it and manage the appropriate sub-groups."
Individual animal data can be used to manage things like groups of cows. Too often, he says, the mother of a calf that didn't do well is culled.
"I don't know that's necessarily the right decision, because we have variations from year to year," White says.
Knowing what kind of cattle he's producing will also help a rancher market his calf crop better, White says.
If a rancher spends time and money improving his herd, White says he should be paid for it, but to get that extra money for the extra work, the rancher needs to be able to differentiate between marketing opportunities.
There are such things to consider as preconditioning.
White says he thinks preconditioning is the greatest gamble in the beef industry today.
"Does preconditioning help calves?" he asks. "If we vaccinate calves, if we manage them correctly, are they less likely to get sick? Yes, that's absolutely true. Do we get paid enough for those calves to justify preconditioning?"
Everybody probably has a different answer to that question, he says.
"It depends upon your past experiences," White says. "Sometimes we do. Sometimes we don't."
Sometimes preconditioning is great, he says. Sometimes it isn't because of different management. There's very little differentiation when it comes to all the preconditioning programs that are on the market.
"We need to look at ways to capture the value of those healthy animals," White says.
To do that, producers need to understand how the marketplace determines value.
"We can look at the grocery store, and we can talk about all the things that we do to pick out our meat," White says. "What's the primary driver? Price. What's the biggest thing when you take a picture of the grocery case? They've got the price."
He translates that to the sale of feeder cattle.
"When we sell feeder calves at an auction, what's the primary value?" he says. "Price. There are other variables, all kinds of things that play into it that affect the price, but it's a price driven market."
The price signal is what needs to be sent back to the cow-calf producer as to what is a valuable product and what is not a valuable product, he says.
"If we have more information, we have to have a different way to talk about our product besides just price," White says. "We need to look at what's under the hide and what the true value is and a have a way to document that. ID provides a mechanism that we can use to collect the data and find out where we fit."
It comes back to information, and in this case, information that can be documented.
"At the grocery store, we talk about different brands on our meat and people are willing to pay different things for those because of the specific need for that product," White says. "It's desirable to them. That's not saying that one product is better than another in the long run. It's saying to me that this is what I value."
There are different marketing programs that place values on different types of calves.
"We need to find out exactly what we produce," White says. "We don't necessarily have to change, because it may fit in somewhere else. What we have to do is when we get the product knowledge, we have the opportunity to place that animal in the appropriate marketing chain."
Using this knowledge, White says, can determine if and what kind of alliance the producer may want to go to in order to market his calves.
"These are specific marketing channels," White explains. "This is where my feedyard is marketing to. Those are the types of things that we need to know, but you have to know where your calves are to do that."
