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The Big 5 Management Areas

The Big 5 Management Areas

Just about every cow-calf conference I’ve attended tends to focus on the five, big management areas of beef production – nutrition, animal health, reproduction, genetics and marketing. This week, relative to those big five issues, I heard an industry expert say that most producers are pretty good in the first two, adequate in the next two, and poor in the fifth.

I’d guess that’s probably a pretty good assessment. However, it’s pretty tough to get all those areas working correctly and together at the same time.

While the cow-calf sector demands far more expertise in far more areas than any other segment, we’ve also tended to operate with the least amount of outside expertise or consultation. I think most producers do an adequate job of nutrition, animal health and reproduction; if for no other reason than if you don’t take care of these three basic needs, you won’t survive in the business very long. 

The genetic side of the equation has moved to the forefront as the area of greatest opportunity to increase profitability. However, it remains the most difficult area to assess. It’s difficult to establish baselines, to make comparisons, or measure progress on the genetic front, because we’re constantly altering so many other variables.

On the terminal side, most producers get little feedback on feed efficiency, carcass weights, average daily gains, morbidity rates and carcass characteristics. I’d argue that maternal traits arguably are the most important traits, but these genetic decisions take years to fully evaluate and realize; the terminal traits are much shorter term. Thus, the industry has tended to emphasize terminal traits, while striving to keep the maternal traits from moving out of bounds.

The breed associations and their national genetic evaluation programs have been doing a better job of adding traits that aid in maternal selection – maternal calving ease, milking ability, heifer pregnancy, stayability, mature size, etc. But we still largely rely on visual appraisal to select replacement heifers from a given population.

EPDs and the large accumulation of data have revolutionized genetic selection and now, more than ever, we’re seeing the value of how genetics affect bottom lines. Most of the prominent breeders selling large numbers of commercial bulls are doing a tremendous job of focusing on the economically relevant traits of beef production, which is predicted to lead to even more rapid consolidation in this business. Of course, the expression of superior genetics is often rendered mute without proper nutrition and animal health.

Reproduction is highly dependent upon nutrition, animal health, genetics and also management; and it remains critical to the profitability of an operation.

The final big management area is marketing, which is growing in importance, particularly if the nutritional, animal health and genetic sides are up to snuff. One can still market volume of numbers well, if the adequate animal health and nutrition have been provided to keep the animals healthy. Increasingly, however, the genetics offered are shaping the value of calves.

Historically, the producers have relied on marketing experts who operate in the marketing chain to market their calves. As a result, this is one area where the industry is accustomed to working with experts. Sadly, however, the marketing model has been built around a commodity system, where the marketing chain is still largely incentivized to sell cattle in a narrow price range. That’s why producers are finding that they must take a much more active role in marketing their cattle if they are to realize their true value.

The trend seems established that there will be more systems and supply chains created to create better price and value discovery throughout the marketing process. And, the antagonistic relationship between the segments is being replaced with cooperation that benefits all involved. Certainly, the distrust that exists between segments will take some time to close, and there remain those who thrive by keeping the distrust alive. But the progressive elements of the various segments are moving forward in a more symbiotic way, and away from the commodity mindset of the past.

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