As efficient as beef is, there are plenty of freeloaders stealing the industry's opportunity to compete harder with pork and poultry.
“There's no factor more important in determining the nation's cowherd productivity than weaning rate, and it has not been improving,” says James McGrann, an economist at Texas A&M University and regarded by many to be the heart and soul of standardized performance analysis (SPA).
McGrann says the rule of thumb — 90% of cows being bred and 90% of those weaning a calf or an 81% calf crop based on cows exposed — is too close to reality.
“This means that 20 percent of the exposed cows and heifers are not weaning calves,” he says.
In fact, McGrann analyzed 20 years worth of USDA inventory data and discovered that the implied calving rate — calves born divided by the total cow inventory — served up an average calving rate of 90.2% (a range of 88% to 91.5%). For the last decade, calving rate has averaged 90% (a range of 89% to 91.5%).
Unfortunately, there's no USDA data available for exposed cows, weaning percentage or weaning weights. Looking at Southwest SPA data as an example though, across 363 herds and 241,884 cows between 1991 and 2000, McGrann says the weighted average weaning rate (weighted by size of herd) is 79.5%. So if anything, the 80% weaning rate used as a rule of thumb is in line with SPA data and may be industry conservative.
|Net income||Weaning percent||Average weaning weight (lb.)||Pounds weaned/cow||Cost of prod./** cow exposed||Net income ($/cow)**|
|**Cost of production is full financial pre-tax cost, including depreciation per breeding cow and weaned calf.|
|Source: National SPA data/James McGrann, Texas A&M University|
Think of that. In a herd of 100 breeding cows and heifers at a cost of $317/year (the average annual cost of SPA's top 25% for net income — 1991-2000), an 80% weaning rate means $6,340 that would do as much good stuffed down a rat hole. It means an average added annual cost per cow of $63.40 across the entire herd. In a breakeven business, plenty of cow-calf producers would be elated to pencil in a $60/cow profit each year.
“The most complete measure of cow productive efficiency, which is provided by SPA, is pounds weaned per cow exposed,” emphasizes McGrann. “This is the weaned calf rate based on exposed cows multiplied by the weaning weight.”
Of course, these weaning facts run counter to common perception in an industry that continues to churn out record tonnage with fewer cows.
Rather than increased cow productivity, though, McGrann points out most of the added tonnage is coming through increased average carcass weights (about 1 lb./year) due in part to both genetics and cheap feed. To a lesser degree, he adds that the industry extraction rate — cattle slaughter divided by total calf and cow inventory or heifers and cows sent packing rather than retained for breeding — has also added to the tonnage.
Moreover, McGrann's cow productivity analysis speaks to a larger issue. One way or another, unless domestic or export demand increases substantially, heavier carcass weights, heavy extraction rates or even increased cow productive efficiency means fewer cows are needed to produce the same amount of beef. So, at least in part, it's up to producers to decide how much a reduced number of cows are returning.
“An increase in carcass weight of 1 lb. on 35 million head of slaughter cattle produces the same amount of beef as increasing the harvest by 50,000 head of cattle producing a 700-lb. carcass,” explains McGrann.
At an average 80% weaned calf crop based on exposed cows, 62,500 fewer cows are needed to produce the same amount of beef, he says. Thus, higher carcass weights mean fewer cows are needed.
“Improved cow reproduction will have a similar consequence,” says McGrann. “However, improved efficiency would mean beef could be provided to consumers at a lower cost, making it more competitive.”
Of course, improved cow production efficiency in the future also means, like today, the cows left in the cowherd could be more profitable.
“SPA data confirms that the top 25 percent of producers based on net income per cow have higher weaning percentages, more pounds weaned per cow exposed and more control of their production costs,” says McGrann.
Specifically, SPA data for 1991 to 2000 indicates the top 25% of herds for net income wean 4% more calves and wean 47 lbs. more/cow exposed. Overall, the annual cost/breeding cow in these herds is 70% less ($222 less) than the bottom 25% of herds for net income (Table 1). The top 25% netted $139/cow, versus the $216/cow lost by the bottom 25%.
“For producers wishing to operate their cow-calf operations as profitable businesses, controlling costs and achieving high rates of reproduction must be the focus of attention,” says McGrann. “Using performance measuring tools like SPA helps establish goals and measure achievement. Producing calves that meet desired markets can't come at the expense of these reproduction and cost control goals.”