Most of you have some black cows, or at least you know somebody who does. You have probably seen black calves selling for what seemed like a premium to other hide colors that day, when all you knew was what you could see. Maybe some buyers had inside information, or maybe somebody just bid more than the facts could justify.
Some breeders have discovered black hides make a set of cattle look more uniform, and uniformity is a marketable commodity — even if it is only skin deep. Those who trade in “blacks” may tip their hats in thanks to Certified Angus Beef LLC (CAB), but CAB is working to end idle speculation on all things black.
If you feel taken by having bid up a set of black calves that later disappointed you, don't buy them again without more information. And if black hide is all your calves have to offer, be worried about market value in the future.
That's not to say there's anything wrong with a black hide. It just doesn't say enough — like a rectangular slip of paper that appears to be green. If it has what it takes to meet eight carcass specifications at a finished weight, then we'll see what kind of dollars we're talking about.
Last year, it was a share of $23 million, just for the CAB component of grid-marketed cattle. That doesn't include the Choice premium, or those for CAB Prime, which is now identified at plants owned by National, Smithfield and IBP.
One common challenge we face in the transition from a commodity-based industry to the focus on individual carcass value is maintaining identity. The market offers incentives right now — knowing is the only way to avoid paying too much for calves that only look like they might hit a grid target.
If you're a cattle feeder, you're taking action to avoid more of the red ink that has been shed over the last several years. You may still take chances on improving the put-together pens of odd singles and culls because the procurement cost is relatively lower. What you can't stand is another round of what only appear to be “good black cattle” purchased at a speculative premium.
If you're an order buyer, you may be playing the color game. It's a time-proven means of profit, but things are changing. This is a great time to start adding information to go with cattle of apparent quality.
Tomorrow's premiums will be on keeping known genetics together and becoming a trusted part of the information chain so that sources can improve their offerings. Sure, that means you have to pay a little more, but only when you know it's worth it.
If you're a backgrounder or stocker operator, consider forging business links to both feedlots and cow-calf producers. You may be able to reduce the risk of owning unknown cattle by sharing ownership and participating in the information loop so you do know what's coming in.
If you're a cow-calf producer, and if you don't yet know, find out what's under those black hides. It isn't enough to learn that they're ½- to ¾-Angus with the rest in Hereford and/or Gelbvieh.
You have to characterize the genetic potential in those cows. You may never know the actual breed makeup, but you can learn what they will do.
Breed them to registered Angus bulls with the industry's most accurate expected progeny differences (EPDs) to produce calves that can hit the premium CAB target. Then, watch to see if your cows have what it takes to carry those bloodlines to fruition.
If you sell enough uniform calves to fill a pen, check with the buyer to see if you can follow their progress in a feedlot. Even though you don't own them, most CAB-licensed feedlots will provide information on their performance and grade. This route is a little less bumpy in the case of “special feeder calf sales,” where buyers are shopping for known quality and not just black hides.
The way to make sure you know about your calves' post-weaning performance is to retain a share of ownership. A lower risk, but less accurate option may be to select a few “representative” steers for an association- or university-sponsored value discovery project pen.
Eventually, you'll see feedlot and carcass information on calves born on your ranch. If you like what you see, you're in a strong position to use data for future sales and to continue improving. Don't blame the bulls if you don't like what you see. The fault is more likely in your cow genetics.
There are many roads you can take when you get bad news. Keep quiet and, for a few more years, sell the weanling calves that look good, even if they aren't. Step up heifer replacements with progeny from your top cows in post-weaning value. Purchase some foundation heifers of known performance and work with a seedstock supplier to develop calves good enough that anyone would be glad to partner on.
Steve Suther is the director of industry information for Certified Angus Beef LLC.