Cattle Economics

Opinion: Growing Amid Contraction

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At least 20 years ago, I heard Dave Nichols of Nichols Superior Beef Genetics in Bridgewater, IA, tell a group of cattle producers that the nation’s cowherd at that time was the largest in our lifetimes.
History has proven his foresight. He told me recently that for all practical purposes the same statement can be made today.

While that reality has implications for everyone in the cattle business, it may shine brightest on seedstock producers.

Fewer cows needing to be bred by fewer bulls suggest the need for fewer but larger seedstock entities operating alone or cooperatively.

Such consolidation prompts some to ponder whether the seedstock sector will go the way of those in crops, pork and poultry, where a handful of entities generate proprietary genetic lines that rule the market.

Ask Nichols the most expensive components of his corn operation and he’ll tell you that behind the cost of land, it is seed costs. The corn seed he uses these days is shorter-season, drought-tolerant, and resistant to all sorts of diseases. In short, the seed is worth more to him because it does so much to decrease other input costs and increase the odds of a successful crop.

“We’ll (the industry) pay almost anything to avoid problems, rather than to improve something,” Nichols says.

Think of that. For all of the genetic progress made in the past three decades, based on breed genetic trends, arguably, much of it has been squandered at the commercial level in the name of avoiding problems.

Consider complementary crossbreeding and exploiting maternal heterosis.

The most recent scientific documentation of the worth of complementary crossbreeding comes with the recently completed multi-year study conducted by the American Hereford Association. The study was conducted in cooperation with Lacey Livestock of California, Harris Cattle Feeding, Harris Ranch Beef Co., and California State University-Chico (CSU).

According to the final report, crossbred Hereford X Angus calves had a $30/head documented advantage in feedlot profitability and 7% advantage in fertility when compared to calves that were predominately straight-bred Angus.

“For the majority of cow-calf producers, the effect of maternal heterosis is critical to overall profitability,” says Dave Daley, CSU associate dean and farm administrator.

“The baldie females are the biggest pay off for all of us participating in the project,” says Mark Lacey of Lacey Livestock – the operation was mostly Angus before the study. “It has allowed us to get some heterosis back in our cowherd. In the cattle business, fertility and longevity are what makes us money.”

Other than a few rebellious souls willing to risk their neighbors’ ridicule, though, few commercial producers tried crossbreeding before the arrival of the Continental breeds in the 1960s. The results were astounding. Unfortunately, so were some of the problems as folks learned the inherent strengths and weaknesses of the new breeds.

In the name of correcting problems born from the wrecks of hodgepodge crossbreeding, many commercial producers turned to Angus.

As Jim Butcher of Gateway Simmental and Lucky Cross at Lewistown, MT, explains, “During the 1980s and 1990s, the Angus breed was doing a great job of providing and promoting an option that complimented the genetics generated from the previous multi-Continental breed cycle.”

In other words, it was at least as much about defense as it was offense. It was about solving problems.

“It was the second time in 20 years that an unplanned crossbreeding program, promoted by an organization that discouraged crossbreeding, generated substantial profits for U.S. commercial producers,” Butcher notes.

Interestingly, as herds become more straight-bred once again, Butcher sees commercial producers looking for solutions that include the chance to exploit maternal heterosis.

Incidentally, the steeply vertically integrated seed giants Dupont and Monsanto own little crop ground or farming equipment. On their own or via companies they’ve since acquired, both companies have past experience trying to develop composite beef seedstock.

What's Cattle Economics?

Wes Ishmael provides tightly focused analysis and commentary on specific beef quality and marketing issues of practical importance to beef producers.

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Wes Ishmael

Among the industry’s most insightful thinkers, Wes Ishmael concentrates on industry price and market perspectives for BEEF magazine. Along with his monthly “Cattle Economics” column...

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