Table of Contents:
- There Is No Magical Cow Size That Guarantees Profitability
- Economic efficiency vs. biological efficiency
Efficiency is a relatively simple thing that just happens to be complicated.
Economic efficiency is related to biological efficiency, but it isn’t a 1:1 relationship. Gross profit and gross margins fluctuate depending on input prices and the prices received for the product. If feed is cheap and prices high, then almost any gain in production can be economically justified. Conversely, when feed is high and prices low, the value of production declines.
Economic efficiency also changes based on whether you take a segment approach or a total systems approach. One of the great debates is how to interpret the failures of the marketplace in assigning value, when evaluating the economics.
There are more than 1,600 feedyards in the U.S. that feed a significant number of cattle, and thousands of smaller feeders. That represents quite a pool of potential buyers for a set of calves. Meanwhile, our local sale barn has probably 10+ potential buyers for a given set of cattle. On smaller sets, cattle still lose their identity as they are commingled, so the feedback mechanism isn’t nearly as perfect as it could be.
It’s getting better every day, and we are seeing larger and larger differences in value across similar weights and condition, but the reality is that the more profitable cattle still are significantly subsidizing the poorer cattle. And with today’s tight supplies and the economics of capacity utilization, this trend will remain in place for the foreseeable future. The exciting thing is that the tools to make good genetic and management decisions are becoming more sophisticated, and we’re better able to measure and assess value.
As is often the case, the simple answers are turning out to not be so simple. Many factors come into play, but in the end we can say a couple of things for certain. There is no magical cow size that will guarantee profitability. In fact, producers in the desert of Arizona and producers in the lush pastures of Iowa will likely have significantly different ideal cow sizes. Even then, the ideal will vary with market conditions and marketing targets. In the end, it will come down to finding the proper balance between avoiding extremes and selecting those animals that defy the genetic antagonisms that exist to improve overall efficiency and profitability.
While it is about finding the optimum, the optimum won’t remain constant, either. Constant incremental improvement across a balance of traits should mean that the “ideal” cow today will be, at best, an average cow down the road. Single-trait selection is, and likely always will be, a tremendous mistake; that doesn’t matter if it’s for mature size, growth, or end carcass merit. What is exciting is that today you can make significant progress in all of these areas simultaneously.
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