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Articles from 2004 In November

Industry-Wide Sigh Of Relief Over Negative BSE Test

USDA's announcement last evening of the negative test results on the animal whose initial rapid screening test results were inconclusive was a welcome relief for cattle producers going into the Thanksgiving holiday. Of course, the major takeaway news is that the animal did not have BSE, our screening program is working and, irrespective of the result, consumers are safe. In addition, this latest BSE scare points out several other things the industry must consider:

What is the proper way to handle these inconclusive test results? Conducting two rapid screening tests before announcing the inconclusive results was a positive and sound decision. Still, many are justified in their complaint that the market reacts negatively to these announcements about inconclusive tests, and the effect is very adverse to cattle prices and cattlemen.

USDA did a magnificent job of keeping the location, age and breed of the cow from the public domain the last seven days, but cattlemen's concerns that the market could be manipulated and information could be leaked are also very legitimate concerns.

Transparency is almost always the best course of action in a free market situation. Theoretically, the market's reaction will moderate as more inconclusive test results are announced (the market reaction this week was actually far less than its reaction for the first two tests).

Yet, with the test's manufacturer claiming that two inconclusive tests equate to a nearly 95% chance an animal is BSE positive, some sort of market reaction is justified.

  • How is it that the American consumer has a better understanding of the risk posed from BSE than the industry? Certainly, the media flurry was intense after the first case of BSE on Dec. 23 of last year, but the industry's response was so well orchestrated and conducted that consumer confidence never wavered and, in fact, may have grown in the face of BSE.
  • Certainly, that single case of BSE cost U.S. producers billions of dollars and led to long-term negative marketplace changes. But, it's important to understand that BSE is an animal disease issue, not a consumer safety issue. Any who try to mire that distinction for political purposes puts this industry at extreme risk.

  • How do we interpret the negative test result, and the 121,000 negative test results that have occurred since Dec. 23, 2003? The results virtually ensure that the industry's problem with BSE is virtually non-existent. The myriad of firewalls and preventions that have been put in place will prevent any significant occurrences of BSE and have protected consumers from any risk from the disease.
  • At the same time, there is some evidence that -- despite all safeguards -- BSE can randomly occur in high-risk populations at a rate of about 1 in a million. This fact will keep risk in the marketplace because at some point we just might find that one in 1 million instance.

  • What is the proper way to deal with this risk? To the majority of producers this answer is obvious. Our response needs to continue to be science based and we must continue working toward trade rules based on sound science. We also must develop rules and protocols that will minimize market disturbances and ensure customers of the absolute safety of the product.
  • Some industry folks advocate using BSE as a means to erect trade barriers in the hope we will never find BSE in a domestic cow. I can imagine no higher risk strategy than that.

  • How much longer can the industry afford to wait relative to national ID? While the industry is closer to a national ID program than it was 11 months ago when the first U.S. case of BSE hit, progress has to be considered dangerously slow. This industry still does not have an effective way to trace back animals through the production cycle.
  • Such an ID and trace back system will be costly, and will present some serious implementation problems, but most agree that it soon will be a marketplace requirement. With age documentation on the verge of becoming a market reality, it's time for the industry to not just begrudgingly accept animal ID but embrace it.

    The Political Winds In the Wake Of The Election

    U.S. Senate Minority Leader Tom Daschle (D-SD) lost his Senate seat to Republican challenger John Thune by about 4,500 votes. The loss by Daschle, as close as it was, will likely become another nail in the coffin of prairie populism. Daschle was Congress' most ardent and powerful proponent of the populist policies advocated by organizations like the National Farmers Union and R-CALF-USA.

    Now, word on Capitol Hill is that Daschle aides are furious over the lack of support provided their boss by R-CALF leadership in the days leading up to the Nov. 2 election. While R-CALF never officially endorsed Daschle, the claim is that more could have and should have been done by R-CALF leadership to stump for Daschle's re-election.

    But, one has to wonder if Daschle's aides are reading more into R-CALF's clout than it deserves. A better question to ask is if Daschle's defeat is a referendum on the reality that American agriculture will continue to mold itself into the global food economy -- and not stagnate in protectionism and isolation? If R-CALF and the Farmer's Union can't gather enough other political horses needed to corral global food production, will economics prevail over sentimentality as food and farm policy is set over the next few years?

    Time will tell, as they say.

    Meanwhile, Senate Agriculture Committee chairman Thad Cochran (R-MS) is scheduled to leave his post to become the highest-ranking Republican on the Senate Appropriations Committee. He'll probably be replaced by first-term senator Saxby Chambliss (R-GA).

    It's important to note that Chambliss received support from the National Cattlemen's Beef Association (NCBA) in his close race two years ago. In fact, the NCBA-Political Action Committee (PAC) gave Chambliss a sizable check as he appealed for money to fund an 11th-hour media blitz that turned the tide in his campaign.

    Will Chambliss remember who helped bring him to the table? The same can be asked of the Bush Administration. Will it remember that NCBA instructed its PAC to financially support Bush because of the President's fundamental support of cattlemen's issues and the collective interests of the beef industry?

    I doubt we'll need to wait long for the answers to those questions.

    Elections Showed Ag And Rural Areas Have Clout

    Regardless of whether their individual election hopes materialized, most Americans likely are celebrating the fact that the election is behind them.

    Most surprising about Tuesday's results was the strength the Republican Party showed in gaining more seats in both the Senate and House. Beyond the presidential election where George Bush beat Sen. John Kerry, two of the most closely watched races were in South Dakota, where former Rep. John Thune unseated Senate Minority Leader Tom Daschle, and in Texas where longtime House fixture and ag advocate Charles Stenholm was defeated by Randy Neugebauer in a race forced by redistricting.

    The striking thing is how overwhelmingly farm and ranch country voted for Bush. USA Today reports that the counties Bush carried accounted for 3.28 million square miles of land, while the counties Kerry controlled covered just 741,000 square miles. The contrast in outlook between urban and non-urban areas has never been so dramatic.

    The one message rural and ag states sent in this election is that they still matter. You can bet that when farm and ranch policy is brought forward, the industry will have the ears of both parties.

    The election results would seem to indicate we're likely to see aggressive action on making the tax cuts and reform enacted in 2001 and 2003 permanent. Perhaps most importantly, the Death Tax will be permanently repealed.

    It would also appear the defeat of Kerry and Daschle, both major proponents of mandatory country-of-origin labeling (COOL), spells a serious setback for mandatory COOL.

    The Bush Administration also has laid out an aggressive domestic agenda that calls for tackling Social Security and health care reform, simplifying the tax code, and even more aggressive steps to reform education. In addition, tax refunds and deductions to help cover health insurance premiums are a top priority.

    While very little likely will be addressed legislatively in the upcoming lame duck session of Congress, all ears will be tuned to announcements regarding the new Bush cabinet. In addition, both expectations and accountability will be higher for Republicans, with their stronger majority in the Senate possibly removing the gridlock that has characterized the Senate for the last several administrations.

    Farm groups in general seemed ecstatic about the election outcome and what it portends for property rights, small business environment, trade, energy, and environmental and tax policies.

    What's a bred heifer worth this fall?

    As more normal rainfall patterns return, ranchers will need to repopulate their herds. The good news: bringing bred heifers into your herd over the next year or two should be quite profitable.

    This bred-heifer outlook is based on my current strong price projections for calf prices over the next three to four years. My projections suggest we've even entered into a new price plateau for beef feeder calf prices for this beef price cycle.

    For one, U.S. cattle numbers are down, and beef prices should remain strong as producers build the nation's beef cow herd over the next three to four years. Beef prices, however, will likely turn down toward the end of this decade, as the current beef price cycle is projected to bottom out in the 2011-2013 time period.

    Thus, the economic potential for a bred heifer is now. A fall 2004, preg-checked heifer is projected to produce her first three calves during this beef price cycle's high calf prices. The production of her remaining calves, however, will likely fall during the lower price period of the current cycle. Typically, calves produced during the lower price years of the beef price cycle don't add much to the economic value of bred heifers.

    The time is now

    In reality, the maximum economic potential for bred heifers occurs before the run-up in beef prices begins. I expect history to confirm that heifer calves born in 2001, bred in 2002, and producing their first calf in 2003 will be the most valuable heifer during this decade. That's because she will produce more of her calves during the peak prices of the current beef price cycle.

    Remember that the sale barn price of a bred heifer differs from that heifer's economic value. The sale barn price of a bred heifer highly correlated with current calf price and is projected to go up over the next couple of years. At the same time, the economic value of heifers in a beef cow herd is projected to go down.

    That's because the sum of a heifer's net incomes starting in 2005, 2006 and 2007 will progressively go down as increasingly fewer calves are born during the peak of the current beef price cycle. All this leads to my projections that over-valued bred heifers will be brought into herds in 2006, and possibly 2007, and negate much of the profit potential from running beef cows over the rest of this decade.

    The rule of thumb for adding replacement heifers is quite simple: A rancher should add replacement heifers that have economic values greater than the acquisition cost of the bred heifers. (Acquisition cost can be either purchase price or the cost of raising your own replacement heifers.)

    The greater the difference between the economic value and the acquisition cost of replacement heifers, the higher the profit potential of that heifer in a beef cow herd. If the acquisition cost exceeds the economic value, a rancher should not add that replacement heifer.

    My six rules

    For this analysis, I assume a preg-checked heifer will have seven consecutive calves, starting with her first calf in 2005. Here are six steps required to calculate the economic value of a bred heifer in your herd.

    1. Develop a set of calf planning prices for the expected life of the bred heifer. Annual calf planning prices are needed for years 2005 through 2011.

    2. Project annual net income for each of the seven years the heifer is projected to calve in your herd.

    3. Project the salvage value of the cull cow at the end of the seventh year.

    4. Determine the appropriate discount interest rate to use in calculating the time value of money.

    5. Calculate the economic value of a bred heifer.

    6. Adjust for different number of lifetime calves produced.

    For most beef producers, developing a set of planning prices is among the most difficult and complex tasks in planning. The problem is beef prices tend to go in cycles and today's price is a poor proxy for long-run planning prices. (My latest long-run planning prices are posted near the bottom of my Web page:

    Fall Northern Plains, 500- to 600-lb. steer calves averaged $77/cwt. in 1998, went up to $91 in 1999, and hit a first peak of $100 in 2001. Calf price dropped to $94 in 2001 and continued downward to $86 in 2002. Calf price turned upward in 2003 to $116 and is projected to hit the beef price cycle peak at $136 this fall.

    Prices are projected to remain strong in 2005 at $129, reach a second peak of $133 in 2006, and turn down from 2007 through 2011. I used these long-run planning prices to project the net income for beef cows over for the next seven years.

    A new price plateau

    The good news is that a new price plateau is projected for the current beef price cycle. As a result, beef calf prices are projected to remain above $100/cwt. throughout the downward phase of this beef price cycle. Cull cow price projections are based on long-run price projections.

    Using North Dakota's Farm Business Management Record Summaries (databased at, I obtained a five-year (1999-2003) average beef cow enterprise account for Northern Plains beef cow herds. The five-year average calf price was $90/cwt., which generated a $97 five-year average net income for these Northern Plains beef herds. This five-year average net income served as the base for calculating the economic value of a 2003-born heifer checked pregnant in fall 2004.

    Beef cow budgets were prepared for each of the seven years this heifer is scheduled to have a calf. Net income per cow is projected at $314 for 2005, $282 for 2006, $224 for 2007, $208 for 2008, $186 for 2009, $170 for 2010, and $159 for 2011. The cull cow value of this heifer after having seven consecutive calves is projected at $444.

    The final step is to calculate the net present value (NPV) of these future net incomes. These future net incomes (and cull cow income) total $1,987. But, when a 6% discount rate is used to calculate the time value of money, the NPV of this heifer investment is reduced to $1,560 in today's dollars. (Find these calculations at

    What does this $1,560 economic value of a heifer tell us? It suggests that if this beef cow producer paid $1,560 for this bred heifer this fall, and if my net income projections come true, this $1,560 investment is projected to earn a 6% return on investment (ROI). If this producer pays more than $1,560, he's projected to earn less than 6% ROI. If he pays less than $1,560 for this heifer, he will earn more than 6% ROI.

    In summary, a bred heifer is worth all of her future annual net incomes, including her future cull value, while in a rancher's herd discounted back to today's dollars. Given my projected new price plateau, the economic value of today's bred heifers, while not a record high, is still very high. My recommendation — don't wait too long to add heifers to your herd.

    Harlan Hughes is a North Dakota State University professor emeritus. He lives in Laramie, WY. Reach him at 701/238-9607 or [email protected].

    An Important Election Looms

    The negative election campaign rhetoric is coming to an end and Americans will cast their votes on Tuesday to decide whom our leaders will be. Please make sure your opinion is heard by exercising your right to vote.

    If you vote on one issue this election, your decision is easy. It is also easy if you vote based on your inherent belief system about the role of government. If you vote on who is best for the cattle industry, your decision is already made. If you vote based on one's stand on abortion, your decision is black and white. If you vote on whether you prefer less taxes or more government programs there should be no question about which candidate you support. If you want gun restrictions, or are concerned about second amendment rights, you are going to vote one way, and the list could go on.

    Yet, for the first time in my life I will not vote merely for the man who has the philosophies and policies that most closely align with mine. I will be casting my vote, in part, because of the message that this election sends to the world -- friends and enemies alike.

    For me it is simple task to interpret the message that will be sent -- it is a message about whether America will embrace the lessons of our past or shun its responsibility to the future. Many would argue that this election is about whether America accepts its awesome responsibility as the world's only super power and confronts the world's single greatest threat -- terrorism. I would argue rather that this election is so vitally important because it is not about who will occupy the White House the next four years, but instead is a referendum on America itself and whether we will maintain our mantle of leadership and address the problems that the rest of the world either lacks the will, fortitude or ability to tackle.

    I believe that history will say that Kerry and Bush had little choice in their roles and or even in the message that this election will send. Events out of their control made this election far different than any other in recent times. Can you imagine Roosevelt being set aside because of frustration that was caused from the climbing out of the Great Depression, or because of the devastating losses that the Allies had suffered in WWII? Or, to have Abraham Lincoln replaced because of the tremendous loss and division that had led to a war far more devastating than America had ever experienced? While it is inherently unfair to the candidate John Kerry, if this country was to replace George Bush at this time in our history, we as Americans would send to the world the message that America no longer has the ability to take on big tasks.

    While a rejection of Bush would be heralded around the world (with the notable exception of our allies, who would also be devastated), we have to recognize why they would be celebrating. They will be celebrating that America is no longer a beacon of light. What message will we send to the next president that must make tough decisions? The lesson will be to defer tough decisions.

    Perhaps more concerning than America turning away from idealism to pragmatism, will be the message we will send to those who wish to do us harm. Again, this isn't about Bush or Kerry as much as it is about us. This would only to serve to validate the belief that America can be defeated, not on the battlefield (even the terrorists know that this not attainable in the long-term) but rather in the court of American public opinion. You defeat America by striking at the sentiments of American voters who are unwilling to endure sacrifice.

    Before you dismiss this assertion, consider George H. Bush and the first Gulf War, Somalia, the terrorist attacks in Spain, the actions of the U.N, and now the war on terrorism? Don't for a minute think the beheadings, mass executions, and attacking of the innocent taking place are merely the acts of mad men. They are done to achieve a clear objective to stop America from the course it is on. If we reinforce the message that terrorism works, I think the results will be dire. Freedom and leadership comes with a price, and unfortunately this election is not about whom will do a better job of securing our ideals and national interests domestically and abroad, but it is in large part a message of whether America is still able to carry the mantle of leadership.

    That is why all the pundits are right in calling this the most important election of our generation. It is not as much a referendum on Bush or Kerry and their beliefs which are worlds apart; it is a referendum on what America is and what it hopes to be. Whomever your candidate, don't allow this decision to be made without you. Past generations have had their defining moments in a variety of avenues -- ours is likely to be held at the ballot box.

    What to use, what to lose

    Back in 1960, when Paul Genho, vice president and general manager of King Ranch, Inc., was a college undergraduate in animal science, a visiting expert lecturer spent three sessions talking about genetics, using a single breed as the example. At the end of the third session, Genho asked why the discussion was limited to that one breed.

    “Son,” said the expert, “as long as Hereford cattle represent 70-80% of all of the cattle registered in this country, we won't waste our time talking about those other insignificant breeds.”

    The point is that human nature being what it is, shortsightedness and impulse based on today's hot fad or tomorrow's projected next big thing can breed a myopic arrogance that increases the odds of making some downright horrendous decisions. In the case cited above, the guest lecturer was just as wrong about the future fortunes of a particular beef breed as folks today may be for questioning Hereford's place in the industry tomorrow.

    “Somehow, ranchers have to have the ability to identify innovations they should use and those they should leave alone,” Genho emphasized at the recent King Ranch Institute for Ranch Management Symposium.

    A litmus for change

    Predicting how new innovations fit individual operations and the industry overall, relative to current and emerging macro-trends, is neither easy nor infallible. But, Genho's developed an approach that's served him well for more than four decades.

    “As a young man, I concluded I needed to know as much about the industry as I possibly could,” he says. That means Genho never quit learning. He reads and networks constantly to stay abreast of industry thought and possibility.

    And, early in his career, Genho created a litmus test he still uses to decide whether or not a new innovation — be it a practice, product or service — is worth considering.

    For any new innovation being considered Genho wants to know:

    • Is it scientifically sound?
    • Is it financially viable?
    • Is it workable in my operation?
    • Does it fit into a system?

    For instance, back when mineral buffets were supposed to be the next frontier of animal nutrition, Genho never bought into it because the notion cattle would select only the minerals they needed wasn't scientifically proven. He was right.

    Choosing a grazing system

    Similarly, while the high intensity, low frequency Savory Grazing System meets the needs of some producers Genho found it wouldn't work for the ranches he managed. The principles are sound, he says, but the system isn't financially viable in the sprawling country he's managed due to all the fencing that would be needed, the lay of the land and the availability of water.

    And, since wildlife represents a financial enterprise at King Ranch, the program does not fit its overall system as wildlife move to other grazing cells rather than staying put. It didn't make for sustainable wildlife habitat.

    Instead, Genho identified the Merrill Grazing System as one that would allow him to cost-effectively increase cattle and range performance. It's basically a rotation of three grazing groups between four large pastures, with each pasture being grazed for 12 months and rested four months.

    This system of resting all pastures works at King Ranch because it can be accomplished with the existing infrastructure, making it financially viable. And, since it didn't negatively impact wildlife habitat, it fit their system overall.

    Avoid big mistakes

    Conversely, while scientifically sound, Genho has only used embryo transfer technology on a limited basis because it's not affordable or workable on the ranches he's managed. But, he has embraced both genomics as a tool for selecting carcass traits and Geographic Information Systems for benchmarking and managing the range. In each case, the principles are scientifically sound, he can apply them cost effectively, they work in his operation and fit his system overall.

    “I don't need to make any big mistakes, but I can afford to make a few small ones,” Genho says. So, even when an innovation seems to meet all his criteria for application, he explains that he implements on a small scale to validate his decision.

    The need for evaluating and selecting innovations of merit will likely grow even more important in the future. As Genho says, “We can anticipate that the rate of change we have seen will continue in the world and in the industry.”

    Beef fat as a cholesterol fighter

    Using beef fat as a cholesterol-fighting tool? Tim Carr, a researcher at the University of Nebraska-Lincoln, has developed a compound he says can lower cholesterol more effectively than commercially available plant-based food additives, and should be easier to incorporate into foods.

    The raw materials in Carr's compound come from soybeans and beef tallow. Preliminary results indicate the combination works at least as well as currently prescribed cholesterol-lowering statin drugs.

    The plant substances, called sterols, can only be used to lower cholesterol in high-fat foods. Sterols can't dissolve in water, but mixing them with oil or fat improves their solubility.

    Carr's compound contains stearic acid, which is found in beef tallow and is known to lower cholesterol. There are few fats and oils rich in stearic acid, with the exception of beef tallow. Carr mixed the stearic acid-rich beef tallow with soybean-derived sterols. The compound can be made into a powder, which could be added to a diverse group of foods — from breakfast cereal to dairy products.

    Carr is testing its effectiveness in animal studies and exploring alternatives for commercial use. So far, the results have been positive. In a hamster feeding trial, Carr compared his compound with commercially available sterol product. The compound lowered LDL (bad cholesterol) by 70%, compared with 10% using the sterol additive.
    University of Nebraska Institute of Agriculture and Natural Resources.

    Canadian researchers believe adding two aluminum-based minerals to composting beef manure will reduce odors and greenhouse gas emissions. The new method is being tested at the Olds College Composting Technology Centre, part of the Olds College School of Innovation in Olds, Alberta.

    The two aluminum silicate products — zeolite and perlite — are commonly found in industrial applications. Zeolites are used to filter or remove odor and absorb gas. Perlites, glassy volcanic rocks, are often found in plant potting mix.

    Seven windrows are being tested in the first year of the study — one is a control, three use varying amounts of zeolite, and three use varying amounts of perlite. Gas emissions are being monitored to measure methane, carbon dioxide and nitrous oxide production. The windrows are turned periodically to ensure aerobic composting.

    In the second year of the project, the treated and untreated composts will be applied to fields and pastures to compare it to commercial fertilizers, and to test the maintenance of essential nutrients. The study is sponsored in part by the Greenhouse Gas Mitigation Program for Canadian Agriculture.
    Canadian Cattlemen's Association

    Research suggests supplementing fat to beef cows in late gestation can enhance postpartum reproductive performance. But, a University of Wyoming study involving 155 crossbred mature cows measured the value of adding fat to diets prepartum and found no difference.

    The cows were divided up and fed two different prepartum diets. 1) control, no added fat (2.69% crude fat); and 2) added fat (4.63% crude fat). The diets were high-energy, limit-fed and equivalent in total digestible nutrients and crude protein.

    The diets were fed 60 days prior to calving. At 60 days postpartum, cows were estrous synchronized and bred by artificial insemination (AI) after heat detection. Cows that again showed heat were again AI'd and turned out with cleanup bulls. After 30 days, cows were pregnancy-checked.

    Researchers found the dietary treatments had no effect on calf birth weight or calf vigor. Feeding the additional fat didn't affect final cow weight or condition score at 60 days postpartum. No differences were detected between the control and supplemental treatments in percentage of cows exhibiting estrus within seven days of synchronization. And, first service conception rate didn't differ between the treatments.

    Researchers also concluded the lack of response to the additional fat supplements may be due to the relatively high plane of nutrition and body condition score of the cows in the prepartum feeding period. (Small et al. 2003. Univ. of Wyoming Research Report).

    Iowa State University (ISU) research shows condensed distillers solubles (CDS) can be fed to finishing cattle without reducing performance or carcass value.

    CDS is a co-product derived from manufacturing ethanol from corn. It's a liquid product derived from partially dehydrating thin stillage, which remains after removing the ethanol and wet grain fraction from the fermentation of corn grain.

    It's considered a source of energy and protein for beef cattle. Researchers found that feeding it at 4%, 8% and 12% of total ration had no effect on carcass quality or value, or performance measurements of the cattle. CDS can be cheaper to feed than corn, with a relative energy value equal to or greater than dry rolled corn.
    ISU Extension News, September 2004

    What Are Your Traits Really Worth?

    For a commercial producer, choosing the right herd genetics can be a daunting task. There are more than 20 EPD values published by breed organizations.

    The American Angus Association (AAA) alone publishes 17 EPDs, but the organization is working to simplify the data for producer use. Thus, the newest selection tools to be introduced by AAA are a set of bioeconomic indexes, called Dollar Value ($Value) indexes designed for multi-trait selection.

    “We really feel it's important to begin to express genetic values in useable measures in terms of dollars and cents,” says Sally Northcutt, AAA director of genetic research.

    Last year, AAA introduced the first $Values in its sire evaluation report.

    “It's adding a lot of simplicity and convenience to commercial bull buyers compiling a laundry list of EPDs,” Northcutt says, “and providing a tool for directional change with an economic twist.”

    The first three $Value indexes AAA released — Feedlot Value ($F), Grid Value ($G) and Beef Value ($B) — measure postweaning and end-product value. They were created from three major components — EPDs, industry-based economic values and the equations that tie together the genetics and economics. See Table 1 on page 32 for an example of how $Values would appear.

    The indexes combine multiple traits into a single value that can be used to rank the animals.

    Index explanations

    $F is calculated using associations between weaning weight and yearling weight EPDs, with feedlot gain value, feed consumption and cost differences figured into the final calculation. $F calculates the dollar-per-head average difference in a calf's performance for postweaning merit compared to the progeny from other sires.

    For example, if Bull A has a $F value of $20.56 and Bull B's value is $14.34, with random matings to comparable cows, Bull A's progeny would, on average, generate $6.22/head more in the feedlot than Bull B's offspring.

    The $G measures “the expected average difference in future progeny performance for carcass grid merit, compared to progeny of other sires,” says AAA on its Web site, It combines quality grade and yield grade (YG) values, and is calculated using either carcass EPDs, ultrasound EPDs or both, if available.

    For example, a bull's quality components contribute +6.65/head, which takes into account marbling score and %IMF (intramuscular fat) EPDs. The YG contribution is +9.72, using YG 3 as a base, with YG 1 and 2 bringing premiums and discounting YG 4 and 5. The YG components take into account ribeye, fat and carcass weight EPDs. The combined grid impact in dollars per head (6.65 + 9.72) is +$16.37 for the $G.

    “We have industry-relevant base values on a three-year rolling average to address the quality grade components and YG schedule,” Northcutt says. “They are real-world economics in terms of what the industry currently dictates.”

    Bill Bowman, AAA vice president of information and data programs, adds, “I think the exciting aspect is that it allows people who may understand grids and grid marketing to see the interaction of the quality and yield grade into one value that's reflective of how grids work in today's industry.”

    $B is a combination of $F and $G, measuring the dollar per head difference in the post-weaning performance and carcass values between progeny of different sires.

    “Simply put, $B is representative of me weaning a set of calves, putting them in a feedlot, retaining ownership and sending them through a value-based grid,” Bowman says. He stresses that is strictly postweaning data, and has nothing to do with maternal traits — fertility, reproduction and calving ease.

    Industry response

    There's been much discussion the past few years about moving away from single-trait selection using EPDs, to indexing these traits to show a truer picture of what happens when selection decisions are made.

    “Indexes aren't really new to the animal industry,” Northcutt says. “They've evolved in other species — swine and dairy — so it was very timely that the beef industry would evolve into index tools to tie the wealth of EPDs and to present selection tools in dollars per unit.”

    Brian House, beef specialist at Select Sires, says the indexes have helped their customers see how to put real dollars into play, and how to utilize those dollars.

    “It's differentiated the cattle genetically based on what their $Values were. A lot of breeders have waited a long time to have something that simple,” House adds.

    “In some respects, it allows breeders or commercial cattlemen, or anyone who uses the whole gamut of performance information, to make genetic progress more consistently across all traits. Compare that to making a big jump in one trait, and going backwards in three or four others,” says Don Trimmer, Accelerated Genetics beef genetics manager. “I think they're a great tool to use. As we look to the future of genetic evaluations we'll see more of these indexes coming out.”

    Terrebonne, OR, producer Aaron Borror has mixed feelings about using indexes. He says they group too many traits together, which makes it difficult to improve a specific trait. Still, he believes indexes will have their place.

    “If you're using them for breeding purposes and mating individual cows, I think it's better to look at individual EPDs,” Borror says. “But, if you're sorting sires — or narrowing down the field, because there are thousands of sires in the sire summary — sometimes it is useful to sort on grid or beef dollars first.”

    The next step

    While the first three $Values are based on terminal characteristics, AAA is working toward creating indexes measuring reproductive performance. In September, AAA announced the release of the Weaned Calf Value ($W) index to be released in the Spring 2005 Sire Evaluation Report.

    “The $W is an intermediate value to look at that cow component and revenue and expenses charged to that pre-weaning phase,” Northcutt says. “It has some key impact areas that tie together areas like birth weight and how that relates to calf death loss and weaned calf crop percentage, and revenue back to the cow.

    There is also a weaning direct component, which incorporates the weaning weight EPD, and takes into account both revenue and expenses, including calf maintenance and gain costs. The Milk EPD is also used to assess maternal milk impact, both from a revenue and cost standpoint. Mature cow size and related maintenance energy costs are some of the final considerations in calculating the $W.

    “It's probably going to be the most important one for Angus breeders and their customers because it takes into consideration the traits that have made Angus cattle the dominant breed in country — calving ease, weaning weight, maternal traits, and cow maintenance and replacement females,” Trimmer says. “So when you look at the real strengths of breed, probably $W is the most important index for many producers and their bull customers to look at.”

    For more information on the $Value Indexes, visit

    Table 1. Example of $Value Index

    AAR New Trend — 9958634 Beef Value ($B): +26.02
    Feedlot Value ($F) +6.92/head
    Difference in $/head
    Feedlot Assumptions Value of Weight Gain 5.52
    Time on Feed 160 days
    Ration Cost $150 dry ton Difference in $/head
    Fed Market $75 cwt. live
    Cost of Feed Consumed -1.40
    Grid Value ($G) +16.37/head
    Yield Grade Schedule
    Quality Grade Schedule YG 1 Premium $3.00
    Prime (above Choice) $6.00 YG 2 Premium $1.50
    CAB (above Choice) $3.00 YG 3 Discount $0.00
    Choice-Select Spread $10.00 YG 4 & 5 Discount $-25.00
    Standard Discount $-15.00 Average Carcass Weight 816
    Grid Impact $/cwt. $/head Grid Impact $/cwt. $/head
    Quality Grade .82 6.65 Yield Grade 1.19 9.72
    Source: AAA Web site

    Cutting taxes is a better move

    I have a couple of issues with the article “There's A Lot On The Line” in October BEEF ( page 14).

    A major flaw by writer Doug McInnis is his claim that the only way to increase federal revenues is to increase taxes. There is another time proven and very effective way to increase federal or state revenues — cutting taxes.

    The Reagan tax cuts in the early 1980s doubled federal revenues. The Johnson tax cut in the early 1960s also increased revenues. The Judy Martz tax cuts here in Montana have also allowed for an upcoming surplus. I believe the article really shorted the readers by not mentioning the power of tax cuts to increase federal revenues.

    McInnis also writes that President Bush wants to limit discretionary spending. Well, he has. There's been only a 1% increase in each of the last three years.

    There's been a lack of federal revenue for several reasons. The recession handed off by President Clinton — due to the bubble burst and the largest tax increase in American history in 1993 — was put into overdrive by 9/11. In addition, unprecedented energy prices in this country due to our lack of refining capability kept the economy stalled.

    However, the Bush tax cuts have given this economy and citizens room to spend, invest and maneuver our way out of the recession and begin moving toward greener pastures.
    Shane Eaton
    Lindsay, MT

    Sneaky words from Ranger Rick

    My children received a gift subscription to Ranger Rick magazine, a publication of the National Wildlife Federation (NWF). In the September issue a “reader” asked: “Is there anything I can do to help the environment?” Ranger Rick gave four tips and then referred readers to a Web link for further info. Here are the two top tips:

    • Eat less meat. (Raising animals for food uses lots of energy and water and can cause awful pollution.)

    • Eat more organic food. (Organic farmers don't use chemicals that harm the environment or people's health.)

    Maybe it sounds silly to get up in arms over a typical comment from NWF in a children's magazine. But I think most of the Ranger Rick readership is just animal-loving kids, not diehard tree huggers. I would guess few parents know what their kids are reading; it's not all cute and furry.
    Robin Schiefelbein
    Greeley, CO

    Unidentified cowboy has a name

    I opened your September issue, looked on page 74 (“40 Years Of Cattle Marketing”) and was pleasantly surprised to see my husband, Vern Schiller, pictured. He was the young, unknown cowboy who brought in the calf and held it during the historic opening of futures trading in live beef cattle at the Chicago Mercantile Exchange, Nov. 30, 1964. At the time, he was the manager for Col. Herman Lacy, owner of Shamrock Farms, McHenry, IL.

    Today, a few cattlemen might recognize him. He's been featured in numerous industry magazines. Among his honors, he received the National Cattlemen's Association's first National Feedlot Quality Award (farmer-feeder division).

    Vern is retired but still maintains 30 Angus brood cows, two bulls and his cattle dog, Corky. He continues to work on behalf of the industry volunteering, cooking and promoting beef at fundraisers for cancer drives, kids functions, town activities and state and local fairs.

    The next time I open a magazine and see that infamous 40-year-old picture, I hope to see that the young cowboy has a name!
    Jean Schiller
    McHenry, IL