Third-Party Verification Boosts Calf Premiums

Better prices are available for calves and yearlings with third-party verification (TPV) of solid preconditioning and age and source verification. But you may have to find a special sale to take it to the bank.

Research by the Iowa Beef Center (IBC) shows that from October 2005 to February 2006, TPV of preconditioning claims of certified vaccination and at least 30 days weaning received a significantly higher premium than similar uncertified claims.

The premium hit $6.15/cwt. over the regular cash market, well ahead of the cost of a proper vaccination and preconditioning program. Calves with uncertified claims or only the seller's word of vaccinations and at least 30 days weaning received $3.40/cwt. more than the base cash price, but $2.75 below the TPV price.

Calves with vaccinations but without a 30-day weaning claim, weaning claim without a specific date, or weaning claim for less than 30 days, received $3.14/cwt. more than the base in the IBC study. Calves with only vaccination claims received $2.42/cwt. more than the base.

Iowa State University agricultural economist Harun Bulut worked with IBC director and fellow economist John Lawrence on the study that examined 105 sales in nine Iowa auction markets. More than 20,000 lots and 160,000 head were observed. Base calves were clean animals without vaccination and weaning claims, heifer, dehorned, non-black, not fleshy and healthy calves.

"Buyers at auctions included feedyards, stocker operators and others," Bulut says. "Our recorders collected data on such market variables as sex, lot size and all of the rest, as well as price differences between calves preconditioned and documented in various ways."

The data were analyzed using an econometric/statistical model where the price received by a lot of feeder calves is explained by various factors. In particular, the study looked at the value placed on both the type and source of the preconditioning claims.

"This research shows significant value can be lost if information isn't trusted and/or not properly or accurately delivered to the market, even if all work is really done," Bulut says.

Getting paid for preconditioning and so-called Vac-45 or Vac-30 programs hasn't always been the case. It still isn't in some cases where cattle aren't marketed at special preconditioning sales.

"We occasionally have Vac-45 type sales," says Joe Bell, Amarillo (TX) Livestock Auction manager. "These types of special preconditioned-cattle sales are usually what's needed for ranchers to obtain the premiums (from a vaccination or grower program)."

But with such a widespread industry, Bell says being able to gain a large premium from TPV can be difficult. "It can be hard to obtain a price much above the current market," he says. "If a buyer goes to a ranch when the market is $1/lb., he likely won't want to pay $1.03 or more.

"In many cases, the value of the preconditioning value may already be built into the cash market. You like to do things to get the market price. If you don't, you're going to get discounted," Bell says.

The better calves showing up at a typical auction are likely familiar to the auction owner or manager. That might be enough to bring the highest premium to regular buyers, who trust the manager's judgment or are also likely familiar with the herd.

Bell says that since so many cattle trades are made at the ranch, guaranteeing certification through the feeding stage may be difficult.

"We need to see more education throughout our system to improve the certification process," he says. "There are a lot of little holes in the industry."

Claims that cattle have been vaccinated and preconditioned, as well as the vaccination program, are usually listed on sale lots broadcast through video and Internet auctions. Many feedyards offer certified beef safety and quality assurance programs, from which reliable information on cattle is needed.

"Our feedyard members try to obtain as much treatment information as they can on cattle," says Ben Weinheimer, Texas Cattle Feeders Association (TCFA) vice president who helped establish TCFA's Beef Safety and Quality Assurance Program. "By having this information, feedyards can know not to duplicate treatments to provide good cattle management and be cost effective."

Many state cattle associations offer beef quality system assessment programs for producers. One is Tennessee, which also has a program to encourage producers to promote USDA age and source verification and preconditioning.

Funded by the Tennessee Agricultural Enhancement Program, it's designed to improve the quality of Tennessee calves and create markets to ensure ranchers are compensated for those quality cattle.

Dan Bond, who coordinates Tennessee's Cattle Improvement Initiative, says producers are paid $5/head for calves sold or marketed as USDA-approved age- and source-verified cattle. Another $5/head is available if the cattle are also verified preconditioned. Ranchers can receive up to $250 for each program.

"The general idea is to get the farmer to jump over the fence and at least try these programs," says Bond, a cow-calf producer himself. Through mid-March, more than 5,000 cattle had been enrolled in the program.

Ken Givens, Tennessee agriculture commissioner, says age and source verification and preconditioning programs assure cattle buyers they're getting animals that have been properly cared for and that meet certain standards.

"With these payments, we want to encourage better cattle management and ensure Tennessee cattle producers have access to domestic and international markets where age and source verification are fast becoming standard," he says.

In the Tennessee preconditioning payment plan, producers agree to perform certain best-management practices, such as vaccinations, weaning, castration, parasite control and dehorning for improved cattle health and quality.

"Calves must be on a solid vaccination program in which they receive two rounds of shots," Bond says. "They must also be weaned at least 45 days and bunk-broke."

Producers must enroll in the age- and source-verification program before being eligible for the preconditioning incentive. Auction barns also are eligible for Tennessee state money to facilitate special age, source and preconditioning sales. The goal is to provide marketing opportunities for age- and source-verified feeder calves across the state.

Bond says he's used a good vaccination and preconditioning program for years to boost the value of his calves to stocker operators and feedyards and reduce the risk of animal health problems.

"I've done it for 20 years and I'm finally getting paid for it in the market," he says. "We feel if we can provide funds to help producers pay for some of their costs, more will take advantage of the program."

For more on the Tennessee Cattle Improvement Initiative, go to and click on Tennessee Ag Enhancement. To learn more about the IBC studies, go to
-- Larry Stalcup, BEEF magazine