In the past four decades in this industry, we've selected for short and fat, then lean and tall. Chasing fads proved to be no guarantee of profitability.
Finally, there's a commitment in our industry to produce a product our end consumers demand. Grid pricing is rewarding producers based on the future value and acceptance of their product. And, a growing number of marketing alliances are coordinating relationships between seedstock producers, commercial producers, feeders and packers.
This commitment to consumer needs is required if we're going to move forward in the marketplace. But, beef producers must remember that the pork and poultry industries also have a business plan that is based on the same consumer value premise, with one additional caveat — they serve the consumer at a profit.
This profit premise is the driving force behind consolidation and is a result of three factors — improved efficiencies, lowered costs of production and market share.
The pork and poultry industries' advantage over beef is that they can replicate factories and standardize inputs from factory to factory. Managing genetics and heterosis to produce a more consistent product, which responds to cheaper and more consistent inputs, is the meat of their plan, no pun intended.
The beef industry, however, can really only standardize inputs at the genetic, feeding and packer levels. From North to South, East to West, environmental conditions and costs vary drastically.
In Arizona, for example, we have a difference of 20ÞF in mean temperature and a 300% difference in rainfall across the state. These differences demand different genetics and result in varying management costs.
The cow/calf producer's challenge is to find genetics that will complement his cowherd and environment, while maintaining or reducing his costs. Those genetics must also add value to the calf crop.
It sounds simple. Making it happen depends on forging a relationship with a seedstock producer committed to helping his customers reduce cost, add value to their product and increase their marketing opportunities while producing a quality product for the end consumer.
The Profit's In The Pasture
According to the American Gelbvieh Association, almost two-thirds of the profit to be made in the beef industry is at the cow/calf level (Figure 1). Research proves that through cattle price cycles, being a low-cost producer ensures profitability.
Cattle-Fax and Standardized Performance Analysis (SPA) data also show that producers who practice wreck-avoidance by being aggressive in using sound health and effective nutrition programs avoid economic losses.
This same effort must be applied to reproductive performance and the production of more saleable pounds at a reduced cost. Unfortunately, there are no expected progeny differences (EPDs) for reproductive performance, although some attempts are being made. As yet, there just isn't enough information available.
Demand The Data
But cow/calf producers must use the performance EPDs that are available — birth weight, weaning weight, yearling weight, milking ability, etc., — in genetic selection. Furthermore, the time has come for commercial producers to demand their seedstock suppliers provide data that will enable them to improve their:
- reproductive performance,
- feed efficiency,
- morbidity and mortality and
- profit up to the kill floor.
Full-service genetic providers, both large and small, will have this information and have it relative to the different environments of their customers.
These genetic suppliers also should be fully committed to the cow/calf producer's needs from a cost of production standpoint and adding value to the calf crop. They must do this while supplying an array of genetics that complements the diverse cowherds that exist across the country.
Hybrid vigor is the catalyst. It provides a cost-effective way to blend the needs of the producer and the consumer, while capitalizing on efficiencies that lead to net profit for producers. That's what this column will explore in more depth next month.
Bob and Judy Prosser own and manage the Bar T Bar Ranch near Winslow, AZ. Their family-owned operation began in 1924 and includes a commercial cowherd and cattle feeding, as well as seedstock herds producing Gelbvieh, Angus and Balancer (Gelbvieh X Angus) bulls and females. Contact them at 520/477-2458 or 520/289-2916 or visit www.bartbar.com.