There Is No Magical Cow Size That Guarantees Profitability

There Is No Magical Cow Size That Guarantees Profitability

I had several people this week dispute my statement from last week that biological efficiency doesn’t vary among the accepted range in mature size in the industry (“The Bearish Math On The Beef Industry Doesn’t Add Up”). The bottom line is that maintenance costs rise as mature size increases, but it’s not a 1:1 relationship. In fact, the general rule of thumb is that maintenance costs are calculated by taking mature size to the .7 power.

The same is true with production gains, which also aren’t 1:1. The data indicates that, from a biological efficiency standpoint, input vs output, there is no inherent advantage of one size cow over another.

Animal scientists will tell you maintenance costs are affected by the relationship between surface area and mass. An elephant, for example, has less maintenance requirements per pound than a mouse or hummingbird. While that’s true, the advantage that larger cows would have in this regard is negligible enough not to be significant in the range that we typically see cows in production.

The inverse of that is that an animal still needs to be matched to its environment. Theoretically, in a low-quality forage environment, the limiting factor to meeting requirements is intake capability. If a cow has maintenance requirements too large relative to what it can consume, then it will begin to shut down reproduction or some other biological process. So, while biological efficiency may not be the factor, there is potentially more risk of decreased profits associated with cows that aren’t appropriately matched to their environment.

 

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Others rightly have pointed out that there are moderate cows with as much growth as larger cows. In fact, this is a testament to what the industry has and is continuing to do from a genetic standpoint. We’ve been quite successful in bending the growth curve, having more rapid early growth while not increasing mature size. And I know many seedstock operators who actually are seeing mature size decrease as growth increases in their herds.

We’re doing a great job of defying the genetic relationship that exists between growth and mature size. As a result, some of the general rules of thumb are no longer as valid as they once were.

It’s generally true that maintenance costs increase with mature size. But we’ve also found that within similar metabolic weights and stages of the growth curve, there are large, significant and moderate to highly heritable differences in feed efficiency. Not all cows are created equal when it comes to efficiency.

Some of the old Standardized Performance Analysis (SPA) data tells the story – low-cost producers had more moderate cows and yet also had more growth. Looking at that data, it can be argued that part of this difference was that low-cost producers tended to have better feed environments, which allowed them to more consistently express the level of growth they had selected for in their herd. I’d also point out that such producers also tended to pay more for their genetics and were thus more successful in selecting those animals that defied the genetic relationships between growth and mature size.

Efficiency has always been a difficult trait to measure because so many variables come into play when measuring it. For instance, milk is a relatively expensive way to put gain on a calf, and it’s not very efficient. Yet, no one wants a cow that only provides companionship.

Efficiency of gain of milk production declines as you move further down an animal’s growth curve. For example, gains from milk production have more advantage to a producer who sells at weaning, than to one who retains ownership of calves through the feedyard.

Economic efficiency vs. biological efficiency

Economic efficiency is related to biological efficiency, but it isn’t a 1:1 relationship. Gross profit and gross margins fluctuate depending on input prices and the prices received for the product. If feed is cheap and prices high, then almost any gain in production can be economically justified. Conversely, when feed is high and prices low, the value of production declines.

Economic efficiency also changes based on whether you take a segment approach or a total systems approach. One of the great debates is how to interpret the failures of the marketplace in assigning value, when evaluating the economics.

There are more than 1,600 feedyards in the U.S. that feed a significant number of cattle, and thousands of smaller feeders. That represents quite a pool of potential buyers for a set of calves. Meanwhile, our local sale barn has probably 10+ potential buyers for a given set of cattle. On smaller sets, cattle still lose their identity as they are commingled, so the feedback mechanism isn’t nearly as perfect as it could be.

It’s getting better every day, and we are seeing larger and larger differences in value across similar weights and condition, but the reality is that the more profitable cattle still are significantly subsidizing the poorer cattle. And with today’s tight supplies and the economics of capacity utilization, this trend will remain in place for the foreseeable future. The exciting thing is that the tools to make good genetic and management decisions are becoming more sophisticated, and we’re better able to measure and assess value.

As is often the case, the simple answers are turning out to not be so simple. Many factors come into play, but in the end we can say a couple of things for certain. There is no magical cow size that will guarantee profitability. In fact, producers in the desert of Arizona and producers in the lush pastures of Iowa will likely have significantly different ideal cow sizes. Even then, the ideal will vary with market conditions and marketing targets. In the end, it will come down to finding the proper balance between avoiding extremes and selecting those animals that defy the genetic antagonisms that exist to improve overall efficiency and profitability.

While it is about finding the optimum, the optimum won’t remain constant, either. Constant incremental improvement across a balance of traits should mean that the “ideal” cow today will be, at best, an average cow down the road. Single-trait selection is, and likely always will be, a tremendous mistake; that doesn’t matter if it’s for mature size, growth, or end carcass merit. What is exciting is that today you can make significant progress in all of these areas simultaneously. 

 

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