Can you select for profit? No, says Steve Radakovich, owner of Radakovich Cattle Company at Earlham, IA, and one of the early drivers in the Beef Improvement Federation (BIF). You can select for efficiency. But the marketplace takes care of profit and loss.
“If your genetics are within the guardrails of market and environment and you’re not being docked or threatened by either one, genetics will have little to do with profit,” he says.
The profit drivers on a cow-calf operation are many and varied and some of them are even controllable through management, he says. Take, for instance, calving interval, which is a huge profit driver in the industry. That goes back to management – when you turn the bulls out and when you bring them back in. Then there are interest rates and land costs, how much hay you feed and how much machinery you have and how much extra labor you need, among other things.
“These are the drivers in the cow-calf business,” he says.
But, he says, you’ve got to stay within the guardrails, and that’s where bull selection is important. “You can’t have a bull that’s not fertile. You can’t have a high dystocia rate. You can’t get docked in the marketplace because you don’t have quality grade or yield grade,” he says. So if your genetics match your environment and you’re selecting for the efficiency traits you think are important in your operation, you’re where you need to be, Radakovich says. “Worry about more important things.”
Among the things to worry about is how to continue to operate in a cost environment of high corn and high fuel, because those two inputs likely will never be inexpensive again.
Consider China and its 1.3 billion people. They watch our television and they get our Internet. And they want to live like we do. “The good news is they want to eat beef like we do. So export demand looks good.”
But it’s a double-edged sword, he says. In 2010, China became the top car manufacturer in the world, bumping the U.S. to second place. In the U.S., there are 750 cars/1,000 people. In China the ratio is 4 cars/1,000 people. “Is there potential? They haven’t even started burning fossil fuel.”
The U.S. beef industry needs to be conscious of a continued volatile marketplace and will have to breed cattle with the flexibility to handle that. “There’s not a trait in ranch operations more important than flexibility,” he says. “Then you can make marketing decisions. If you’re breeding cattle that can only go to a feedlot, you have lost your flexibility. If you’re producing cattle that can only go to grass, you have lost flexibility and market potential. So we have to keep cattle genetically flexible."