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Are Premiums For Natural Cattle Worth The Effort?

Research shows naturally finished cattle (those raised without antibiotics, ionophores, animal byproducts or hormones) require substantial slaughter premiums to economically compete with conventionally finished cattle

Research shows naturally finished cattle (those raised without antibiotics, ionophores, animal byproducts or hormones) require substantial slaughter premiums to economically compete with conventionally finished cattle. That’s according to North Dakota State University beef researchers who compared growing and finishing performance, carcass traits and economic return of natural (NAT) and conventionally (CON) finished beef steers.

Angus-cross calves, naturally raised, and age- and source-verified, were purchased from one ranch at weaning. Upon arrival at the research feedlot, all calves were dewormed and vaccinated similarly and randomly assigned to the NAT or CON production systems.

CON calves received a growing phase Ralgro® implant and a finishing phase Component TES® implant. NAT calves were fed ProTernative®, a direct-fed microbial probiotic throughout the study. CON calves were fed Rumensin® beginning from day 1 until slaughter but received no probiotic. Both groups were fed Deccox® crumbles during the receiving period. The receiving, growing and finishing rations were similar in composition for both groups with slight differences in the supplement component to ensure the NAT cattle didn’t receive animal by-products, antibiotics or ionophores.

During the 85-day growing phase, CON steers gained 29 lbs. more live weight and consumed 131 lbs. less feed/head than NAT steers, which had a 17¢/lb. higher cost of gain.

The steers were slaughtered when each group was visually estimated to grade 60% Choice. NAT steers required 13 more days on feed than CON steers (333 vs. 320) and one NAT steer was unmarketable as natural due to program rules and thus didn’t qualify for natural premiums.

CON steers were 88 lbs. heavier at slaughter (1,384 vs. 1,296) after gaining 0.72 lbs./day faster than NAT steers (3.98 vs. 3.26). Carcass weight of the CON steers was 97 lbs. heavier (860 vs. 763) due to higher dressing percentage (65.1 vs. 63.0) and the heavier slaughter weight.

Ribeye area was larger in the CON steers but marbling score was greater in the NAT steers (moderate16 vs. modest 87). NAT steers that graded Choice or higher received a $15/cwt. carcass premium. Despite the premium, however, CON steers had $43/head greater carcass value ($1,132 vs. $1,089).

Total feedlot growing and finishing production costs and carcass values resulted in a net economic advantage of $73/head for the CON steers. NAT steers would need an additional $5.60/cwt. live premium to break even with the CON steers in this study.

Additional NAT costs that must also be accounted for include any premium paid for naturally produced feeder calves and fallout of cattle from the NAT program. Fallout cattle normally arise from antibiotic treatment of illness, which makes them ineligible for premiums and likely to be sold at lighter slaughter weights.

Premiums paid for naturally raised feeder cattle and slaughter cattle were determined in a survey of feedyards and beef-marketing companies by Noble Foundation agricultural economics and animal science staff. The premium offered for natural varied substantially from 25¢ to $15.75/cwt. live weight. On average, feedyards were willing to pay a $4.76/cwt. premium for natural feeder cattle. Beef-marketing companies were willing to pay on average $5.79/cwt. premium for natural slaughter cattle. Of companies surveyed, 16% (5 of 32) were unwilling to pay any premium to producers of naturally produced cattle.

When it comes to producing natural beef, the old adage “bought right is half sold” doesn’t seem to apply. Producers who seek to take advantage of the profit potential of natural beef production should seek their market and lock in adequate premiums prior to beginning the production phase of natural beef.
Read the full reports at - abstract # 1036

Scott B. Laudert, Ph.D., is a beef cattle technical consultant and former Kansas State University Extension livestock specialist. Based in Woodland Park, CO, he can be reached at 719-660-4473.