If the definition of true increased demand is that folks will continue to buy more of a particular product or service, and continue to pay more as they buy more, then value-added calves (VAC) — preconditioned — have defied the expectations of both skeptics and proponents.
Consider this: Across nine years and 78 Superior Livestock Video Auctions — 2.4 million head of cattle sold as 19,487 lots — VAC 45 (see sidebar below) calves have received $2.47-$6.69/cwt. more than peers that weren't at least vaccinated for bovine respiratory disease (BRD). During the same period, VAC 34 calves brought 99¢-$3.39/cwt. more than counterparts not at least receiving a respiratory vaccination. And, VAC 24 calves received 70¢-$1.85/cwt. more than those receiving no viral vaccination.
Incidentally, the top end of each range was achieved last year. For all practical purposes, prices have increased from one year to the next.
That's according to data gathered and analyzed by Colorado State University's (CSU) Animal Population Health Institute in that school's College of Veterinary Medicine and Pfizer Animal Health.
Obviously, the idea that some buyers are willing to pay more for calves with less health risk has plenty of mileage by now. Arguably, John McNeill, head of the animal sciences department at Texas A&M University (TAMU), was among the first to ingrain the value of standardized preconditioning programs on the industry's mind. This was accomplished through TAMU's pioneering Ranch to Rail program. It continues to demonstrate how much less cattle are worth — and how much less feedlot and carcass performance there is — if calves get sick even once while on feed.
What is new is the evidence over time that buyers will, in fact, pay more for VAC calves even when more of them are available.
Back when special preconditioning sales first started cropping up, many people speculated that, as VAC supplies became more plentiful and it became the industry standard, the market would equalize. The thinking was that buyers wouldn't pay more for preconditioned calves, merely less for those that weren't.
Certainly, there's no reason to believe the price differential for VAC calves revealed in the Superior Livestock study are a pure reflection of premium without at least catching the shadows of discount. But the sheer volume, constancy and the stair step-up of the pricing ladder indicates more of the former than not.
For example, the percentage of lots sold comprised of calves with no viral vaccination declined from 45% in 1995 to 6% last year. During that same period, the percentage of lots receiving VAC 45 preconditioning increased from 3% to 22%. The percentage of lots receiving VAC 34 jumped from 12% to 51%.
Such a trend points to some significant shifts in industry thinking.
First, buyers apparently want more calves with increasing levels of preconditioning assurance. Next, and equally important, is that the growing VAC supply indicates the premiums being paid have been sufficient enough, relative to the cost, to encourage more producers to accept the added risk of providing the service.
Moreover, the ebb and flow of cattle prices during these nine years indicates buyers are willing to pay more for reduced health risk in times of both market feast and famine.
Finally, the data suggests that while there is some difference in the price buyers are willing to pay based on the region of calf origin, the price paid for VAC calves has continued to increase in all regions.
Does that mean you should run out and precondition every calf walking? No. Whether preconditioning for the first time means providing a vaccination neglected in the past or providing vaccinations, boosters and 45 days worth of post-weaning development, each producer has to ferret out the cost relative to the potential gain unique to their operations.
However, this data does make a strong case for assuming that calves handled in a manner that predisposes them to fewer health challenges will likely continue to be worth more than calves receiving less attention. That's good news for everyone.
Superior Livestock Auction value-added (VAC) programs
VAC 24 — At 2-4 months of age, 7-way Clostridial, 4-way respiratory viral vaccine and Mannheimia (Pasteurella) vaccine.
VAC 34 — 7-way Clostridial at branding or 2-4 weeks pre-shipping; 4-way respiratory viral vaccination and Mannheimia (Pasteurella) vaccine at 2-4 weeks pre-shipping.
VAC 45-option 1 — 7-way Clostridial at branding or 2-4 weeks pre-weaning; 4-way respiratory viral vaccine 2-4 weeks pre-weaning with revaccination at weaning; Mannheimia (Pasteurella) vaccine 2-4 weeks pre-weaning, with revaccination at weaning; weaned for at least 45 days pre-shipping.
VAC 45-option 2 — 7-way Clostridial at branding or weaning; 4-way respiratory viral vaccine and Mannheimia (Pasteurella) vaccine at weaning, with revaccination according to label instructions; weaned at least 45 days pre-shipping.
Adapted from Pfizer Animal Health Technical Bulletin SV-2004-02