It seems every segment of the business is changing in the face of current challenges, and embracing opportunities that few even had contemplated just a decade ago. But, the seedstock industry may actually be experiencing as much upheaval as any segment of the business today.
Part of it may be temporary. After all, the high-end, investor female market was rocked with the perfect storm of a global recession, genetic defects and structural changes to the industry. Perhaps that market will return with a vengeance as the economy recovers, and as producers adjust their perspective to understanding that modern technology has provided us with the tools to deal with such things quite effectively and without needless financial harm. Perhaps an improving economy will lead to a resurgence of the hobby producer who has a few registered cows and simply enjoys the challenges of the seedstock business.
I believe all those things will happen to some extent, but I also believe the seedstock industry will continue to be more commercially focused. I also believe that things like exclusivity will always add value, and that valuations will become more based upon real-world industry economics.
Certainly, it can be persuasively argued that the opposite is occurring – that the shifting of priorities and the changes in our economic structure have left the seedstock industry without a clear direction. Rising input costs, ethanol subsidies, and improved management and genetics have forever shifted some of the economic drivers in different directions.
The signals certainly are mixed: cow-calf producers faced with rising input costs are putting more emphasis on moderate mature size, efficient cows. And conditions have also increased the number of cattle being placed as yearlings to take advantage of grass gains.
All those point to a moderation of mature size if not growth in general. Conversely, tighter numbers, heavier placement weights and the need to utilize capacity is leading feedyards to take cattle to larger outweights and focus on efficiency of gain, as well as composition of gain.
These dynamics are calling for more growth, and perhaps later-maturing cattle – not exactly the same signal. Couple that with the need for more dressing percentage, and what appears to be more than a momentary blip where the Choice/Select spread is narrowing, and there isn’t the clear-cut direction that we’ve enjoyed in the past.
While I’ve always felt that diversity of vision and genetics were good things — even necessary things given the variation in environment, marketing plans and management schemes — the seedstock industry may be taking a risky path. I don’t refer to it heading in a lot of directions, but that it is marketing more philosophy and hype at times than real-world economic drivers.
Every segment must focus on generating sufficient income levels, but I still believe that the focus should be on creating the product that finds the optimum between our production systems and those ahead of us in the production system. Perhaps what the industry needs is not new genetic-selection tools as much as it needs ways to better measure production efficiency and value creation from a total systems approach.