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Angus Announces Alliances

August was a big month for announcements from the American Angus Association (AAA). The world's largest cattle registry announced the following:

  • AAA's AngusSource®, an age, source and genetic USDA Process Verified Program (PVP) for Angus-sired cattle, is pairing up with SelectVAC®, Pfizer's certified preconditioning program.

    The AngusSource program, with more than 145,000 calves enrolled since the program's inception in October 2005, documents genetics, source and age. Its collaboration with Pfizer's SelectVac program completes the total-value picture, says AngusSource director Sara Moyer. More than 2.5 million calves have been enrolled in SelectVAC (www.selectvac.com) in its 12-year history.

    “Our goal is to give our customers the opportunity to maximize their marketing options and profit potential,” Moyer says. “While we aren't requiring them to participate in SelectVAC in order to enroll in AngusSource, we highly recommend it for the added benefits of better health and the opportunity for health verification premiums.”

  • AAA signed a cooperative agreement with USDA's Animal and Plant Health Inspection Service for premises registration education. Under the agreement, educational efforts will include on-site educational discussions through AAA outreach seminars and other educational programs, print advertising and direct mail, as well as e-mail communications. Online training programs also will be available to cattle producers nationwide. The online program will describe the value and benefits of registering premises and the steps necessary to complete an enrollment.

    The goal, USDA Under Secretary for Marketing and Regulatory Programs Bruce Knight tells BEEF, is to register 15,000 AAA premises in the coming year or so. He estimated that about half of AAA members have already registered their premises as part of the National Animal Identification System, and called the USDA/AAA partnership on premise registration “a significant stamp of approval.”

    In a release, John Crouch, AAA executive vice president, said: “This collective effort of livestock organizations and state and federal authorities is the first step in protecting the health of America's livestock industry. AAA is pleased to have the opportunity to assist livestock producers register their premises.”

  • And Tyson, the nation's largest beef packer, announced it is offering Certified Angus Beef® (CAB) brand premiums for AngusSource-tagged calves that qualify.

“This is great news for commercial producers who are working to raise high-quality calves, but color kept them from getting CAB premiums,” says Mark McCully, CAB LLC. “Now that we know their genetics, they'll also be considered for the brand.”

Fever tick quarantine

At least 50 premises in Zapata County along the Mexican border in South Texas are in a temporary quarantine area designated in early September to prevent the spread of the cattle fever tick. The quarantine, issued by the Texas Animal Health Commission (TAHC), requires that livestock hauled within or from the designated area first be inspected for cattle fever ticks, dipped and then permitted by either state or federal animal health officials.

The Zapata County quarantine zone joins two other temporary quarantine zones established earlier this summer in South Texas to stop the spread of cattle fever ticks that spread “cattle tick fever.” In addition to the temporary quarantines, a permanent fever tick quarantine zone runs along the Rio Grande river through eight South Texas counties, creating a buffer zone that separates the rest of the U.S. from Mexico, where the fever tick hasn't been eradicated.

If not contained within the buffer zone, fever ticks could become re-established throughout much of the South, Southeast and parts of California, their historic range in the U.S.

This month in brief

“Market Advisor” columnist Harlan Hughes believes the relative prices for feeder calves, feeder cattle and slaughter cattle will change over the next few years in two phases. In “2007's calf-marketing opportunities,” on page 10, he details the two phases, beginning with the marketing of 2007 calves and following up with his insight and advice on marketing of 2008 and 2009 calves.

The whirlwind growth of the biofuels industry has made for an ever-increasing availability of corn and soybean co-products to livestock producers. While co-products like corn gluten feed, distiller's dried grains with solubles, and soyhulls can be excellent feedstuffs for most classes of cattle, there are negatives. In “Health concerns of co-products,” on page 19, Purdue DVM Mark Hilton provides some insight.

Spring calving is several months off, but the preparations for ensuring a healthy calf crop should start now. That's particularly true if you've had problems with scouring calves in the past and are considering the Sandhills Calving System as a remedy. In “Plan Now For Spring,” on page 28, Editor Joe Roybal talks with the remedy's developer, Dave Smith, DVM, about some of the considerations.

“Are you collecting data or information?” queries the lead in Alaina Burt's first installment of her three-part series on recordkeeping. In “Computer Savvy: Recordkeeping,” on page 52, the BEEF Managing Editor delves into the basics of choosing the herd-management software that's right for you and presents a wealth of background information on getting started.

“What do I want with a cow that's producing a Select carcass?” rancher Kevin Smith rhetorically asks BEEF Senior Editor Burt Rutherford in “Pinging For Premiums” on page 58. With an $8-$10/cwt. premium available for quality cattle, Smith says it made sense to incorporate an ultrasound program into his commercial heifer-management plan in order to know what he was producing.

One of the true delights of ranch life is communing full-time with nature. But some of that nature — in particular, big game animals — can try the patience of landowners when it comes to livestock fence. In “Wildlife-friendly fencing,” on page 66, grazing guru Jim Gerrish imparts some practical advice on designing fencing systems that can create a peaceful co-existence of cattle and wildlife.

Who are the new giants?

The cattle industry said goodbye to two of its greatest pioneers and champions recently. W.D. Farr, 97, of Greeley, CO, and Fred Johnson, 91, of Summitville, OH, left behind a remarkable legacy of achievement, vision and leadership.

Farr was one of the founders of modern-day cattle feeding. But his contributions to agriculture extended to uniform beef grading, water conservation and management, and banking and finance.

Johnson established Summitcrest Farms in 1949, and its champion breeding cattle developed into a world-recognized brand. In 1978, he helped found Certified Angus Beef® and served as chairman its first six years.

As we bid farewell to these wonderful friends and colleagues — and we see around us the incredible contributions they made to the cattle industry — it causes me to wonder: Who will be this century's W.D. Farr? Who will be this century's Fred Johnson?

I don't ask these questions out of doubt or skepticism. On the contrary, I encounter an incredible amount of talent, energy and leadership every day — from men and women of all ages active in our industry. But sometimes I wonder if these talented individuals can really see what I see. Can they envision themselves making such indelible marks on the cattle industry? Can they really see themselves making American agriculture better and stronger for future generations?

These men showed us that greatness isn't the exclusive domain of high-profile, powerful individuals. In meeting either of them, you could easily picture them as your neighbor from down the road. Yet their remarkable achievements and contributions belied their humble, unassuming natures.

Author Linda Ellis crafted the beautiful eulogy poem entitled “The Dash.” She points out that, while a tombstone always includes a date of birth and death, it is the dash between those numbers that really matters. She wrote:

So think about this long and hard.
Are there things you'd like to change?
For you never know how much time is left
That can still be rearranged.

So when your eulogy is being read
With your life's actions to rehash
Would you be proud of the things they say
About how you spent your dash?

We can wait for others to shape the future and direction of the cattle industry, as well as the communities we call home. Or like W.D. Farr and Fred Johnson, we can display the leadership necessary to take command of our own destiny.

By my calculation, this duo spent 150 years between them as visionary leaders of their communities, and working tirelessly to make the cattle industry stronger and more prosperous for generations to come. The rest of us have a lot of catching up to do — and there's no time like today to get started.

Terry Stokes is CEO of the National Cattlemen's Beef Association.

Wildlife-friendly fencing

Farmers and ranchers across the U.S. have a love-hate relationship with wildlife. For many ranch families, one of the perks is seeing wildlife, from big game animals to bluebirds, sharing their pastures and range with their livestock. On the other hand, several hundred over-wintering elk can eat up a lot of forage meant to take your cows through the winter. Then there's the headache of fence maintenance after the elk herd passes through.

If you want to allow wildlife access to your property, but minimize fence maintenance, it pays to design wildlife-friendly fence systems and management.

When we moved onto a central Idaho ranch, there were already some electric fences in place, but they'd been badly beaten up by the local elk, deer and antelope populations. A lot of barbed wire fences had down wires and broken or bent posts. Many ranchers in our valley had tried electric fencing, but gave up due to repeated critter damage.

Assaying our situation

We started looking at animal travel patterns and behavior to determine how to more effectively use electric fence for management in the face of heavy wildlife pressure. One thing we'd learned on our Missouri farm, with its heavy white tail deer population, was to never turn a fence off.

A lot of electric fences on rangeland use battery energizers; when the cattle leave at summer's end, the chargers are taken away. This leaves the fence non-energized for several months and the wildlife lose any respect for the fence gained over the summer. So, when spring comes, the fences are wrecked.

Simply adding solar panels to the energizers and leaving them on all winter can maintain year-round respect from wildlife. Our number-one wildlife policy here is never turn off a fence.

Common thinking has been to try to build a fence stout enough to stand up to animal impact. We design fences to flex with animal impact.

When we arrived, the perimeter fences on our pivots were four-strand, hi-tensile with the top wire at 45 in. When elk hit that fence, they usually hit it with their full body force right across the chest. We've since dropped all the fences to two-wire with the top wire at 30 to 32 in. Elk hit those fences with their legs and deliver a lot less impact on the fence.

The bottom wire on our fence is at 18-20 in., which allows antelope to shoot right under it without difficulty. Having watched antelope repeatedly bounce off barbed wire fences trying to cross them, I know ours are a lot more humane.

The existing fences used either steel T-posts or ⅞-in. fiberglass with little flexibility. When elk hit the fence with steel posts, insulators broke or popped off; then the fence was dead shorted on the post. If the insulators were top quality and stayed on, the T-posts were often bent over at ground level.

Meanwhile, the fiberglass posts were yanked out of the ground and often twisted end over end. On a fence with both hot and ground wires, this was another dead short.

A composite answer

All our fences now use PowerFlex® line posts, a very flexible wood-plastic composite that will bend over to nearly ground level and pop back up to its original position. Their textured surface holds them in the ground much better than slick fiberglass posts. The hi-tensile wire is attached with a long-tailed cotter key that we lock around itself so the wire can't be pulled off the post.

We also use stronger tensile-strength wire than most farm and home store wire. With about 50% greater breaking strength, these fences can take a lot more impact. With flexibility in the line posts, the fence rebounds easily from animal impact. The original fences here were lower-grade wire, and we still repair some breaks each year where that wire is in place. We have yet to repair a wire break where the higher-grade wire has been used.

For intensive management, we also use a lot of temporary fences that get moved every few days. Early on, antelope gave us a lot of problems, so we switched from polywire to high-visibility polytape for just a few months. Once they understood what electric fence was, we switched back to polywire, with few problems since. We knew we had our wildlife well trained this winter as we watched a string of 20 running elk stop for a single polywire, then politely jump it.

You can effectively utilize both permanent and portable electric fencing even if you have heavy wildlife pressure just pay attention to the details of design.

Jim Gerrish is a grazing management consultant based in May, ID, and former lead pasture researcher at the University of Missouri's Forage Systems Research Center in Linneus. Reach him at 208-876-4067, [email protected], or visit http://americangrazinglands.com.

Come fly with us

There are two words that particularly stir the competitive anxiety of U.S. beef producers — “Argentina” and “Brazil,” two countries with seemingly inexhaustible natural resources, cheap labor and governments pinning their people's future on agricultural development.

Brazil boasts the world's largest commercial cattle herd at 180-190 million head and 180-200 million acres of land available for grazing development. Argentina features 55 million head of beef cattle and an ocean of some of the planet's sweetest grazing in its Pampas region.

Both nations made high-profile, beef-industry news recently.

  • Brazil-based JBS-Friboi bought Greeley, CO-based Swift & Co. in a $1.4-billion deal. The purchase makes Friboi arguably the most powerful force in the global beef business.

  • In Argentina, U.S.-based Cactus Feeders and Tyson Foods inked a joint venture with the Argentine agricultural conglomerate Cresud to create the first fully vertically integrated beef operation in Argentina. The new company expects to produce beef products for the domestic Argentine consumer — and give Tyson access to high-value European beef markets.

Those two points of interest are just part of the travel opportunity offered by BEEF magazine and Montana State University in early 2008. Called “The 2008 Beef Study Tour to Argentina & Brazil,” it's tentatively set for Jan. 19 to Feb. 1, and includes a full itinerary of organized cattle-industry stops to various commercial and seedstock cattle farms, feedlots such as Cactus Argentina, agribusinesses, retail beef outlets and a JBS-Friboi packing plant.

The group of 25 men and women will interact with local cattle producers to learn how they deal with the opportunities and challenges of producing and marketing for both domestic and international markets. This “all-beef” tour is designed for anyone interested in sizing up the South American beef situation.

The flavor of two industries

The tour includes visits to a variety of cattle operations in both countries. Beef systems in Brazil and Argentina are quite different, as Argentina's temperate climate utilizes predominantly English cattle, while Brazil's sub-tropical climate necessitates more bos indicus blood.

The tour is coordinated with local tour professionals and translators who understand beef cattle production in their regions. Travelers will gain insight into the comparative advantages and disadvantages of these two beef powerhouses, and assess firsthand the competitive factors we all face in our day-to-day business.

The tour will also visit internationally renowned tourist sites, including the incredible Cataratas do Iguaçu — the international waterfalls listed among the seven natural wonders of the world. The tour ends with two days in Rio de Janeiro, Brazil.

The tour package price of $4,995/person (double occupancy) includes pre-tour orientation, airfare, hotels, most meals and in-country air and motor coach travel. Participants will need to cover airfare to/from Miami, Brazilian visa and incidentals. Deadline for tour application is Nov. 5, with a $1,000 deposit/person.

For a detailed itinerary and sign-up forms contact me at [email protected] (952-851-4669); or Clint Peck, director of Montana Beef Quality Assurance, at [email protected] (406-896-9068). To check out the itinerary, visit www.beefmagazine.com.

This tour of South American beef-production systems promises to be informative, interesting and fun. I hope you can join us.

Plan Now For Spring

If you're thinking about implementing the Sandhills Calving System (SCS) for your 2008 calving season, now's the time to be contemplating your strategy and making those preparations, says Dave Smith, University of Nebraska-Lincoln (UNL) Extension veterinarian.

Named after the Sandhills area of north-central Nebraska where it was tested, SCS utilizes a series of calving pastures to minimize newborn calves' contact with disease agents. The idea is to minimize both the disease load and newborns' exposure to the disease agents until their immune systems are better able to withstand them.

“I like to say we're creating eight, one-week calving seasons rather than one, eight-week calving season,” Smith says. “We're trying to recreate the conditions of the first week of calving season during each of the remaining weeks of the calving season. We want a clean calving area without the presence of older calves that may be shedding pathogens.”

Some SCS specifics

SCS consists of a series of large contiguous pastures. You can learn more specifics at: vetext.unl.edu/publications.shtml?to=Beef (click on “The Sandhills Calving System to Prevent Calf Scours”), but basically here's how it works:

  • Cows are turned into the first calving pasture as soon as the first calves are born, and calving continues for two weeks.

  • After two weeks, the cows that haven't calved are moved to Pasture 2, with cow-calf pairs remaining behind in Pasture 1.

  • After a week of calving in Pasture 2, the cows that haven't calved are moved to Pasture 3, and cow-calf pairs born in Pasture 2 remain in Pasture 2.

  • With each subsequent week, cows that haven't calved are moved to a new pasture, and pairs remain in their pasture of birth (Figure 1).

The result, Smith says, is a series of pastures that contain calves all born within one week of each other. Cattle from different pastures can be commingled after the youngest calf is four weeks of age.

The age segregation prevents pathogen transfer from older calves to the younger calves. And moving pregnant cows to new calving pastures helps minimize the pathogen load in the environment, as well as a newborn calf's exposure time to those pathogens.

Smith says the key component is the age segregation of calves and the movement to new pastures of cows that haven't calved, rather than moving pairs.

But adopting the system that requires multiple calving pastures vs. a single traditional calving yard necessitates some planning early on, Smith says.

“October is a good time to get started, because that's when a lot of herds are doing their reproductive exams and considering their calving and winter-feeding strategies,” Smith says.

Here are some of his recommendations:

  • Plan the pastures you'll use for calving and stockpile some forage on those pastures. The standing forage will help disperse the animals on those pastures and minimize the concentration of pathogens.

  • Consider your herd's anticipated calving times. Calving typically begins with a few early calves, followed by a peak when most calving takes place, and finishing with a long tail-off period for stragglers.

    “Look at your herd's historical calving experience. You need to start thinking about what you need in terms of pastures and when during the season you will need them,” Smith says.

    For instance, if your herd's calving history is that a big influx of calves tend to arrive about the third week of the calving season, plan to utilize your largest pasture for that group, he says. “What you're trying to do is match cow numbers to the available ground. You don't want to overstock and damage the ground.”

  • Consider your locale's typical winter-weather patterns. While it isn't possible to predict winter storms, Smith says most operators have a general idea of climate patterns for their area.

    “Particularly for your earliest-born calves, which run the greatest risk of being born in potentially troublesome weather, identify and plan to utilize pastures that offer animals some additional shelter,” Smith says. “That could be a row of trees or hills, something you're comfortable about having your cows in if there's a storm.”

    In addition, he says producers should draw up an emergency plan for really serious winter weather.

    “Identify a place for cattle to go for shelter in those extreme storm situations ? areas to which they can have relatively ready access. You might not need to implement the plan every year, but there's some comfort in having planned for that blizzard of the century,” Smith says.

  • In implementing SCS, realize that you're trading some labor. While a properly designed and implemented SCS can carry some huge dividends in minimizing calf scours, there are a few costs to the system, Smith says. Among them is the time spent getting feed to those animals.

    “Instead of spending time treating scouring calves later on, SCS will entail more work early because your cattle will be spread out. That means you'll likely spend more time delivering feed to those areas and monitoring those groups than you would in a traditional calving yard. I think most ranchers would rather deliver feed than deal with scours, but it's a labor obligation that must be recognized and considered upfront,” he says. “And be sure to vary your feeding locations within each pasture in order to disperse the pathogen load.”

  • While SCS was designed for beef operations typical of western Nebraska ? larger herds on larger acreages, Smith says the age segregation of calves is the most important factor, not the number of acres or stocking density. Thus, the system should work for smaller herds on smaller acreages.

A better determinant for implementing SCS, he says, is your herd's calving history.

“If scours are a problem on your operation, SCS is one approach to beating the problem. But if you're not having losses due to scours, you probably shouldn't change what you're doing.

“In addition, if you have major concerns about weather because you calve in January, or about calving problems in your herd, SCS may not be the system for you because it does present greater challenges for those issues.”

The main thing, Smith says, is to adhere to the SCS principles of clean pastures and age segregation of calves.

“There's nothing magical at work here. SCS just applies some principles about infectious disease control. Cutting corners to simplify the system, such as not properly segregating calves, violates the principles and compromises the results.”

Smith encourages producers interested in implementing SCS to do so in cooperation with their herd-health veterinarian.

“It really helps, because SCS strives to apply medical principles to calving. Most ranchers are pretty sharp on these things, but having a veterinarian as part of the planning process is a big help,” he says.

The SCS Theory

Neonatal calf scours is a multifactorial disease, says Dave Smith, University of Nebraska-Lincoln (UNL) Extension veterinarian. The ideal scenario for an outbreak is to have susceptible hosts (naïve calves) existing in an environment (infected communal calving area) that's conducive to the proliferation of (and continued exposure of the host to) the disease agent, be it E. coli, Salmonella, rotavirus, cryptosporidia, etc.

Smith says even the healthiest calf can fall prey — particularly in the wet, muddy conditions common to spring calving periods — if the pathogen load is high enough, or the exposure long enough, to overcome the passive immunity provided by the calf's mother.

The UNL-developed Sandhills Calving System (SCS) utilizes a series of calving pastures to minimize newborn calves' contact with disease agents. The idea is to minimize both the disease load and newborns' exposure to the disease agents until their immune systems have sufficiently matured to better withstand them.

Effects of wintering stockers

Rate of gain during the winter stocker period impacts finishing performance and carcass quality, researchers from West Virginia, Virginia and South Carolina conclude.

Angus-crossbred steers were used in a three-year study to assess the effects of winter stocker growth rate and finishing system on finishing and carcass performance. From December to April, steers were randomly allotted to three stocker growth rates: Low (0.23 kg/day or 0.5 lbs.), Medium (0.45 kg/day or 1 lb.) or High (0.68 kg/day or 1.5 lbs.).

After completion of the winter phase, steers were randomly allotted within each stocker treatment to a corn silage-concentrate or pasture-finishing system. Steers were finished to an equal-time endpoint, regardless of treatment. Upon completion of the finishing period, steers were slaughtered in two groups (half from pasture and half from feedlot cattle each time) and carcass data were collected.

Winter stocker treatment resulted in differences in final body weight, average daily gain (ADG) and ultrasound longissmus (LM) area between all treatments for that phase. Pasture-finished cattle had lower final body weight, ADG, hot carcass weight (HCW), LM area, fat thickness, kidney, pelvic, heart (KPH), dressing percent, USDA Yield Grade (YG) and Quality Grade (QG).

Winter stocker treatment influenced final body weight and HCW, with Low and Medium treatments being less than High. Steers with Low stocker gain had greater finishing ADG. Dressing percent was greater for High than Low, and USDA QG was greater for High than Low and Medium. Carcass LM area, fat thickness, KPH and YG were not influenced during winter rate of gain.

Cattle on Low treatment during winter exhibited compensatory gain during finishing, but were unable to catch the High treatment group regarding body weight or HCW. QG was greater for High treatment than Low or Medium.

Researchers concluded animal performance during the winter stocker period clearly impacts finishing performance, carcass quality and beef production in both pasture- and feedlot-finishing systems, when cattle were finished to an equal-time endpoint.
J.P.S. Neel, et al. 2007. Journal of Animal Science, 85:2012.

Stocking the future

It's easy to watch thousands of calves prowling vast pastures or smaller groups trolling a feed bunk, and get to thinking the stocker and backgrounding business is all about the cattle.

It's not, though. It's about people, partnerships and converting forage and feed energy into something of higher value. Subsequently, it's about making beef more price-competitive.

If you ever doubted that, or if you don't know much about how this segment operates, take a gander at the special section in this month's issue feting the National Stocker Award finalists and the overall winner. Between what's here and lengthier articles available at the BEEF Web site — www.beefmagazine.com — you can get a flavor for the innovation that continues.

For instance, Shawn Mercer, Mercer Cattle Co. at Richton, MS — this year's National Stocker Award winner — makes an art of turning two-weight, high-risk calves bought one head at a time into a product feedyards want.

“We think our operation is unique in that we have consistently been able to limit death loss in extremely high-risk cattle that are assembled from several states and unknown health programs during the worst time of year to straighten out cattle — late summer and early fall,” Mercer explains.

Mercer and his family continue to exploit intensive rotational grazing to squeeze more production from ryegrass and native grass in a sustainable way.

“We're able to prove that cattle can be very profitable, and that we can take marginal land and make cattle make us money by utilizing our grass,” he says.

The Gallery Ranch at Dewey, OK — this year's winner in the drylot/backgrounding division — is mining data gathered on every head that flows through its backgrounding facility in the name of increasing efficiency. The Gallery family shares ownership and risk in a unique alliance with a livestock market and cattle feeder. Not coincidentally, the arrangement also exploits geography. The cattle head from Missouri to northeastern Oklahoma, then on to the western part of the state, rather than passing each other on the highway.

The Gallerys also test every calf for persistent infection (PI) with bovine viral diarrhea, and try their best to track down the producer of that calf.

“It's not a matter of finding them to say we won't buy your calves next time; we're already testing,” says Tom Gallery, who runs the stocker program with his brother Bill. “It's a matter of letting them know they have a problem that's costing them a fortune.”

Scot Holcombe at the Holcombe Ranch based at Bartlesville, OK — this year's summer stocker division winner — is also leveraging the notion of partnerships as he focuses on forage management. Every head he stockers on sweeping patches of the Osage country ultimately flows to the same cattle-feeding organization.

“You've been able to buy high-risk cattle cheap enough that it still works,” says Holcombe. “You might be low-cost when you look at the breakeven coming out, but you're going to have a lot of expenses getting there. Those aren't the kinds of costs you cut, otherwise you become a high-cost producer.”

Nothing is ever easy for anyone in the cattle business. Between these three operations, drought, flooding, blizzard conditions and a hurricane have all been endured during the past couple of years.

A redefined challenge

But the challenge in the stocker business is being redefined, perhaps more acutely than in other segments, by increasing input costs and availability, especially those for forage, be it grass or small-grains pasture.

On one hand, forage is worth more and the gains derived from it are more valuable. On the other hand, available grazing opportunities continue to dwindle as marginal ground is planted to row crops, and wheat farmers ponder the economics of growing a dual-purpose crop or keeping cattle off it altogether.

Given the intractable role of stocker and backgrounding in building cost-effective beef, it's too easy for this segment to blend into the background of the industry and into related enterprises, be it a feedlot or cow-calf herd. That's one reason these top operations are being recognized in this issue. That's also why BEEF will conduct a National Stocker Survey this fall in an effort to benchmark and characterize stocker management practices.

“I feel that my role as a stocker operator will become increasingly important over the next few years. With the higher price of corn, grass-based programs will also become an increasingly important part of the industry and its efforts to be competitive with poultry and hogs,” Holcombe says. “If we can take advantage of our lower cost on grass, we should be able to take some market share from our competition.”

All The Choice You Want

Look at the numbers commonly used to gauge industry trends in carcass quality and it's easy to conclude that fewer cattle are grading Choice.

For instance, if you look at USDA's historical meat grading summary, 56.2% of cattle graded Choice last year compared to 60.4% a decade earlier, and 93.6% in 1986 (see ranges, Table 1). During the same time, 40.9% of the carcasses graded Select last year, compared to 37.1% in 1996 and 2.8% in 1986, when today's Select grade was known as Good. This was despite the fact that more genetic focus was aimed at increasing the percentage of Choice cattle.

But the conclusions drawn from these numbers are misleading, according to researchers at Texas A&M University (TAMU).

“There is little evidence that the increase in Select beef output has been the result of declining amounts of Choice beef produced,” explains Ryan Rhoades, a TAMU graduate research assistant in beef production. “Increases in the amount of Select beef produced result from the increase in the proportion of beef that is presented for grading.”

Huh?

It's not that the previously reported figures are lying. Rather, it's that the most commonly presented ones represent something different than lots of folks realize.

Specifically, Jason Sawyer, TAMU beef specialist who also worked on the project, explains historical USDA data are most often expressed as a proportion of the product graded, rather than as a proportion of the total produced. That realization isn't new, but this is the first study to quantify the effect.

“Let's say half the cattle out there have the ability to grade Choice, and I'm choosing the ones I believe will grade Choice,” Sawyer says. “Of that population, suppose I only select about half to present for grading. Even if I'm wrong 10% of the time, 90% of the ones I present for grading are still going to grade Choice, although the population only produces 50% Choice carcasses.”

That's not far off the percentage of Choice-grading cattle — as a proportion of cattle presented for grading — that was routine through the 1980s, when quality grading and yield grading were still coupled, and before changing the name of Good quality to Select (in 1987) had much impact. As recently as 1988, only about 56% of the federally inspected beef slaughter was graded because there were no economic incentives to present cattle that might not grade Choice.

“During the late 1970s and early '80s, there wasn't much distinction between beef grades; it was either Choice or Prime, or it was just beef,” Sawyer says.

But today, Rhoades points out only about 15-20% of carcasses harvested go un-graded (no-roll). Mathematically, that means a lower percentage of the cattle graded are grading Choice, based on those same USDA statistics. However, that doesn't mean the overall proportion of Choice-grading cattle is dwindling.

Quality distribution is stable

When you express grading percentages as a proportion of all cattle harvested, rather than as a proportion of only the cattle graded, the percentage of cattle grading Choice has remained fairly stable during the past decade (Figure 1); the same goes for cattle grading Select (Figure 2).

Perhaps the most glaring example of how the picture changes based on how the grading percentages are calculated can be seen between 1986 and 1996. Looking at USDA figures — based on only the cattle graded — you'd say Choice beef production declined 35%. Base it on all cattle harvested though, and there's little change.

Lending support to this alternative way of expressing percentages is what TAMU researchers uncovered relative to the elasticity of beef demand associated with Choice and Select grades.

In the short term (52 weeks May '06 to May '07), demand for Choice product is inelastic, while the demand for Select product is relatively more elastic in nature, say the researchers. That means consumers tend to demand Choice beef at more constant levels, despite price, whereas the more elastic demand for Select has consumers demanding more when prices decline and visa versa.

“It basically says that we'll consume the amount of Choice beef we consume despite the price. If we produced a lot more though, it would probably take a lower price to move it. At least that's what a year's worth of boxed-beef transactions say,” explains Sawyer. “As supply tightens, the price of either category would be expected to increase. This price increase would have minimum impact on the amount of Choice product sold, but might have a large impact on the volume of Select product moved.

“It's important to note that when both Choice and Select supplies increase by an equal amount and price is reduced within both product segments, a slightly greater reduction in the price of Choice beef compared to Select might be expected,” Sawyer says.

He adds, “The demand inelasticity for Choice also supports the volatility we've seen with the Choice-Select spread during the past 18 months when it has ranged between $3.50 and $30. A fairly small change in supply might result in a fairly large swing in price.”

Demand defines quality mix

“What surprised us the most was just how stable the distribution of quality grades has been, relative to the population of cattle harvested during the past 10 years. It appears the industry has achieved an optimum threshold mix of Choice and Select carcasses for the market,” Rhoades says.

According to the researchers, the significant discrepancy in elasticity between Choice and Select also suggests they aren't necessarily strong substitutes. As supply tightens, the same amount of Choice is demanded, albeit at a higher price. However, as prices increase, the quantity of Select product demanded diminishes, suggesting that consumers substitute with non-beef products.

None of that belies the opportunity for individual producers to benefit by increasing the percentage of Choice cattle they produce.

“Individually, if producers think they can increase the percentage Choice at a cost lower than the premium paid for it, there is opportunity,” Sawyer says. “The two demand lines suggest Choice and Select really represent two different commodities, though. As we ‘decommoditize’ portions of the market, we start to reduce the commodity characteristics of the market as a whole.”

In other words, as brands have taken center stage, and as Prime, Choice and Select have emerged as de facto brands unto themselves, they're governed less by the pure commodity principles that drove them in the past.

Moreover, the data suggests the apparent sluggishness of the industry to grow more Choice-grading carcasses may be influenced as much by market demand as any genetic or management constraint.

Rhoades emphasizes, “The large increase in Select production during the late 1980s and 1990s doesn't appear to be offset by reductions in Choice production during the same time span. This suggests the increase in Select-graded product was a result of grading more cattle, not a result of declining overall marbling in the population.”

In fact, Sawyer explains, “As an industry, we have a tendency to talk about the good old days, but what good old days are we talking about? In 1956, about 28% of the carcasses produced in the U.S. were graded Choice. Last year, over 50% were. So it looks to me like we've made tremendous progress.”

Bottom line, Rhoades says, “It's difficult to support the hypothesis that beef quality is declining, or that the slaughter mix is decidedly non-optimal.”

Table 1. USDA Grading Percentage*
Years Choice (%) Select (%)

Low High Low High
1970-79 77.3 89.0 4.1 12.9
1980-89 86.2 94.5 2.2 11.1
1990-99 58.2 82.4 15.4 38.5
2000-06 56.2 58.3 37.9 40.9
*Percentages are a proportion of cattle presented for grading
Source: Historical Beef Grading Volumes, USDA-AMS