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Articles from 2000 In March

2000 Feed Guide

The ultimate goal of feedstuff analysis is to predict the productive response of animals when they are fed diets of a given composition. Accompanying this discussion is a table showing the typical composition of feedstuffs and ingredients commonly used in the feeding of cattle and sheep in North America.

What is the purpose of this information? Nutrition research spanning more that a hundred years has defined the nutrients required by animals. Using this information, diets can be formulated from feedstuffs and ingredients to meet these requirements with the expectation that animals will not only remain healthy but will also be productive and efficient.

Table values for feedstuff composition Feedstuffs are not of constant composition. Unlike chemicals that are "chemically pure" and therefore have a constant composition, feeds vary in their composition for many reasons. What is the value then of showing composition data for feedstuffs? No one will argue that an actual analysis of a feed to be used in a diet is much more accurate than the use of tabulated composition data. Actual analysis should be obtained and used whenever possible. Often, however, it is either impossible to determine actual composition or there is insufficient time to obtain such analysis and therefore tabulated data are the next best source of information.

When tabulated data are used, it should be understood that feeds vary in their composition. Using the data shown in the accompanying table, one can expect the organic constituents (i.e., crude protein, ether extract, crude fiber, acid detergent fiber and neutral detergent fiber) to vary as much as +/-15%, the mineral constituents to vary as much as +/-30% and the energy values to vary up to +/-10%. Therefore, values shown can only be guides. For this reason they are called "typical values." They are not averages of published information since judgment was used in arriving at some of the values in the hope that these values will be realistic for use in formulating cattle and sheep diets.

New varieties of crops usually result in nutrient composition variation. Genetically modified crops through genetic engineering will result in feeds with generally improved nutrient content and availability; the composition of these feeds, however, will require specific nutrient profiles.

Chemical constituents vs. biological attributes of feedstuffs Feeds can be chemically analyzed for many things which may or may not be related to the response of an animal when fed the feed. Thus, in the accompanying table certain chemical constituents are shown. The response of cattle and sheep when fed a feed, however, can be termed the biological response to the feed which is a function of its chemical composition and the ability of the animal to derive useful nutrient value from the feed.

The latter relates to the digestibility or availability of a nutrient in the feed for absorption into the body and its ultimate efficiency of use depending upon the nutrient status of the animal and the productive or physiological function being performed by the animal. Thus, ground fence posts and shelled corn may have the same gross energy value in a bomb calorimeter but have markedly different useful energy value (total digestible nutrients [TDN] or net energy) when consumed by the animal.

Therefore, biological attributes of a feed have much greater meaning in predicting the productive response of animals but are more difficult to accurately determine because there is an interaction between the chemical composition of a feed with the digestive and metabolic capabilities of the animal being fed. Biological attributes of feeds are more laborious to determine and are more variable than chemical constituents. They are generally more predictive, however, since they relate to the response of an animal being fed the feed or diet.

Source of information shown in the table Several sources of information were used in arriving at the "typical values" shown in the table. Where information was not available but a reasonable estimate could be made from similar feeds or stage of maturity, this has been done since it is not too helpful to have a table with considerable missing information. Where zeros appear, the amount is so small that it can be considered insignificant in practical diet formulation. Blanks indicate that the value is unknown. The table this year contains revisions as well as values for feeds that were not included in previous tables.

Using information contained in the table Feed names: The most obvious or commonly used feed names are given in the table. Feeds designated as "fresh" are feeds that are grazed or fed as fresh cut materials.

Dry matter: Typical dry matter (DM) values are shown; however, the moisture content of feeds can vary greatly. Therefore, DM content can be the biggest reason for variation in feedstuff composition on an "as-fed basis." For this reason, chemical constituents and biological attributes of feeds shown in the table are on a DM basis.

Since DM can vary greatly and since one of the factors regulating total feed intake is the DM content of feeds, diet formulation on a DM basis is more sound than using "as-fed basis." If one wants to convert a value shown to an "as-fed basis," multiply the decimal equivalent of the DM content times the compositional value shown in the table.

Energy: Four measures of the energy value of feeds are shown in the table. Total digestible nutrients (TDN) is shown because there are more determined TDN values for feeds and because this has been the standard system for expressing the energy value of feeds for cattle and sheep.

There are several technical problems with TDN, however. As mentioned below, the digestibility of crude fiber (CF) may be higher than for nitrogen-free extract (NFE) in certain feeds. TDN also overestimates the value of roughages compared to concentrates in producing animals. Some have argued that energy is not measured in pounds or percent and therefore TDN is not a valid measure of energy; however, this is more a scientific argument than a criticism of the predictive value of TDN.

Digestible energy (DE) values are not included in the table. There is a constant relationship between TDN and DE in cattle and sheep; DE (Mcal/cwt.) can be calculated by multiplying the %TDN content by 2. It should be apparent, therefore, that the ability of TDN and DE to predict animal performance is equal.

Interest in the use of net energy (NE) in evaluating feeds for cattle and sheep was renewed with the development of the California net energy system. The main reason for this is the improved predictability of results depending on whether feed energy is being used for maintenance (NEm), growth (NEg) or lactation (NEl).

The major problem in using these NE values for growing cattle and sheep is predicting feed intake and, therefore, the proportion of feed that will be used for maintenance and growth. Some only use the NEg values but it should be obvious that this suffers the equal but opposite criticism mentioned for TDN; NEg will overestimate the feeding value of concentrates relative to roughages.

The average of the two NE values can be used, but this would be true only for cattle and sheep eating twice their maintenance requirement. The most accurate way to use these NE values to formulate diets would be to use the NEm value plus a multiplier times the NEg value all divided by one plus the multiplier; the multiplier is the level of feed intake above maintenance relative to maintenance.

For example, if 700-lb. cattle are expected to eat 18 lbs. of DM, 8 lbs. of which will be required for maintenance, then the NE value of the diet would be:

NE = [NEm + (10/8)(NEg)]/[1 + (10/8)]

Such a calculation can be easily introduced into computer programs designed to formulate diets and predict performance.

In deciding on the energy system to use, there is no question on the theoretical superiority of NE over TDN in predicting animal performance. This superiority is lost, however, if only NEg is used in formulating diets. If NE is used, some combination of NEm and NEg is required. Net energy for lactation (NEl) values are also shown. Few NEl values have actually been determined. NEl values are similar to NEm values except for very high and low energy feeds.

Protein: Crude protein (CP) values are shown for each feed, which are Kjeldahl nitrogen times 100/16 or 6.25, since proteins contain 16% nitrogen on the average. Crude protein does not give any information on the actual protein and non-protein nitrogen content of a feed.

Digestible protein (DP) has been included in many tables of feed composition but because of the contribution of microbial and body protein to the protein in feces, DP is more misleading than CP. One can calculate DP from the CP content of the diet fed to cattle or sheep by the following equation:

%DP = 0.9(%CP) -3 where %DP and %CP are the diet values on a DM basis.

Undegradable intake protein (UIP; rumen "by-pass" or escape protein) values are shown. This value represents the percent of CP that passes through the rumen without being degraded by the rumen microorganisms. Like other biological attributes, these values are not constant. UIP values on many feeds have not been determined and reasonable estimates are difficult to make.

How should these values be used to improve the predictability of animal response when fed various feeds? Generally, degradable intake protein (DIP) can supply CP up to 7% of the diet. If the CP required in the diet exceeds 7% of the DM, all CP above this amount should be UIP.

In other words, if the final diet is to contain 13% CP, 6 of the 13 percentage units, or 46% of the CP should be in the form of UIP. Once the relationships between UIP and DIP have been better quantified, CP requirements may be lowered especially at higher CP levels.

Ether extract: Ether extract (EE) is the feed's crude fat content of the feed.

Crude, acid detergent and neutral detergent fiber: After more than 100 years, crude fiber (CF) is declining in popularity as a measure of poorly digestible carbohydrates in feeds. The major problem with CF is that variable amounts of lignin, which is not digestible, are removed in the CF procedure. In the old scheme, the remaining carbohydrates (nitrogen-free extract; NFE) were thought to be more digestible than CF even though many feeds have been shown to have a higher digestibility for CF than NFE. One reason CF remained in the analytical scheme was its apparent requirement for the calculation of TDN.

Improved fiber analytical procedures have been developed, namely acid detergent fiber (ADF) and neutral detergent fiber (NDF). ADF is related to digestibility and NDF is also somewhat related to voluntary intake and the availability of net energy.

Both of these measures relate more directly to predicted animal performance and, therefore, are more valuable than CF. Lignification of NDF, however, alters availability of surface area to fiber digesting rumen microorganisms; therefore, lignin may be added to future tables.

Recently, effective NDF (eNDF) has been proposed to better describe the dietary fiber function in high-concentrate, feedlot type diets. While eNDF is defined as the percent of NDF that is retained on a screen similar in size to particles that will pass from in the rumen, this value is further modified based on feed density and degree of hydration. Rumen pH was found to be correlated with dietary eNDF when diets contained less than 26% eNDF. Thus, when formulating high concentrate diets, including eNDF will help to prevent acidosis in the rumen.

The 1996 Nutrient Requirements of Beef Cattle (NRC) recommends eNDF levels for feedlot diets from 5 to 20% depending on bunk management, inclusion of ionophores and digestion of NDF and/or microbial protein synthesis in the rumen. Therefore, estimated eNDF values are shown for many feeds. These values must be modified, however, depending on degree of feed processing (i.e., chopping, grinding, pelleting) and hydration (fresh forage, silages, high moisture grains) if these feed forms are not specified in the table.

Minerals: Values are shown for only certain minerals. Calcium (Ca) and phosphorus (P) are important minerals to consider in most feeding situations. Potassium (K) becomes more important as the level of concentrate increases and when non-protein nitrogen is substituted for intact protein in the diet. Sulfur (S) also becomes more important as the level of non-protein nitrogen increases in the diet. Zinc (Zn) is shown because it is less variable and is more generally near a deficient level in cattle and sheep diets. Chlorine (Cl) is of increasing interest for its role in dietary acid-base relationships.

Several other minerals could logically be included in the table. The level of many trace minerals in feeds is largely determined by the level in the soil on which the feeds are grown or other environmental factors that preclude showing a single value in a table of feed composition. Iodine and selenium are required nutrients that may be deficient in many diets, yet their level in feed is more related to the conditions under which the feed is grown than to a characteristic of the feed itself. Trace mineralized salt and trace mineral premixes are generally used to supplement trace minerals; the use of these supplements is encouraged where there are known deficiencies of certain trace minerals.

Vitamins: Vitamins have been omitted from the table. The only vitamin of general practical importance in cattle and sheep feeding is the vitamin A value (vitamin A and carotene) in feeds which depends largely on maturity and conditions at harvest, and the length and conditions of storage. Therefore, it is probably unwise to rely entirely on harvested feeds as a source of vitamin A value.

Where roughages are being fed that contain good green color or are being fed as immature fresh forages (i.e., pasture), there will probably be sufficient vitamin A value to meet the animal's requirement. Other vitamins, if required, should be supplied as supplements.

Future revisions, additions and deletions to the table A table of feed composition is of value only if it is relatively complete, contains feeds commonly fed and the data are updated with new compositional values. I welcome suggestions and compositional data to keep this table useful to the cattle and sheep feeding industry. When sending compositional data, adequately describe the feed, indicate the dry matter or moisture content and whether analytical values are given on an as-fed or dry matter basis. If more than one sample of a feedstuff was analyzed, the number of samples should be indicated.

What's The Future For Small Guys?

Whether you run 10 cows or 10,000, concern about your future in the business has likely crossed your mind. With the perception that the trend is toward fewer, larger operations, what does that mean for small producers?

In an industry where 80% of the nation's calf crop comes from operations of less than 50 cows, it's hard to imagine that numerous business opportunities don't exist for this group. And a lot of folks agree, particularly for smaller operators who know production costs, understand genetic improvement and are serious about contributing to a consistent, quality beef supply.

"A lot the nation's beef supply comes from the smaller herd operators," says Patsy Houghton, manager of Heartland Cattle Co., McCook, NE. "A good portion of these are striving to improve genetics and profitability while sending a quality product through the supply chain."

Smaller herd owners don't always produce lower-quality cattle, nor do they always produce the highest-quality cattle. The same goes for larger operators. Overall, the percentage in each category is about the same, says Rodney Jones, Extension livestock production economist at Kansas State University.

"There's no 'set-in-stone' definition of a small producer," Jones says. "From an economic standpoint, I consider about 50 head of cows to be a smaller operation, and less than 150 cows to be a part-time operation."

Economics sort out good producers from bad ones and will continue to do so, he says. Good producers on average, he adds, are profitable over the long haul, responding to economic signals and changing to remain profitable.

"If there is such a thing, 'bad' producers are consistently unprofitable and subsidize the cow/calf operation with old equity, off-farm income or income from other farm enterprises," Jones says. "They don't respond to economic signals and are slow to change production practices."

Jones says research confirms a huge difference in the cost of production in the cow/calf sector. It's not uncommon to see ranges of $300/cow/year from low cost to high cost.

"This translates to an approximate range of 60 cents to $1.20 to produce a pound of weaned calf," he says. "This isn't tied to the size of operation, either. Research reveals a small degree of economies of scale in cow/calf production, but the magnitude isn't as large as other enterprises."

The issue isn't "how big am I?" but "how cost efficient am I?" Jones says. "The economies of size findings are somewhat self selecting. Could it be that large producers aren't necessarily low-cost because they're large, but rather their operations grew because they are low-cost operators?"

Know Your Costs Jones says the most important piece of information about an operation is unit cost of production or cost per pound of weaned calf. That summarizes all production and cost information into one standardized measure, plus it accounts for production problems and cost problems.

"Before you can evaluate the merits of any marketing option or change in production practices, you've got to know these figures and understand the long-term viability of the options you consider," Jones adds.

He says several state data sets reveal costs savings of more than $100/cow, once all costs are known. And, it's a goal that's realistic and achievable in many instances. This translates to about 20 cents/lb. of weaned calf.

"Measuring costs is simply a matter of enterprise analysis or looking at the profitability of the cow/calf operation separate from the entire farm," he says.

Jones says to get the full benefit of measuring and benchmarking costs, follow the Standardized Performance Analysis (SPA) guidelines established for:

* measuring production,

* accounting for inventories,

* documenting costs and

* defining production and fiscal years.

These guidelines have been in place for several years, so if your analysis is consistent with them, it will produce production and financial measurements that can be compared across many operations.

"Don't go halfway," Jones warns. "Production benchmarks without financial benchmarks are dangerous. It's easy to go halfway and only calculate the production measures to compare to existing benchmarks. This leads to the trap of striving for high production without considering the costs. Always look at the production and the financial considerations within the SPA framework."

Timing for getting costs under control couldn't be better, according to Harlan Hughes, an Extension economist with North Dakota State University.

"In North Dakota SPA data for 1997, the production cost difference between our high-cost producers and low-cost producers was $46 per cwt.," hesays. "Yet, people will spend days and weeks shopping alliances hoping to gain $4 and $5 per cwt. The big payoff is in controlling costs, but most of us don't want to deal with it.

"However, with cattle prices trending upward in the next two to three years, controlling costs means you can increase profit potential even more," he says.

Genetics Is Another Critical Area Another critical area that offers long-term solutions is genetics, Houghton says. Consistent and uniform genetics doesn't mean everybody has to produce the same thing - far from it, she adds.

"Different people want different things for different reasons and there are a number of niches out there. If you're talking uniformity, a producer must set goals, then strive to produce that product. If the goal is low Choice, Yield Grade 1 and 2 product, don't select the highest marbling bulls, but don't ignore marbling either. Pay more attention to cutability," she says.

Goal setting applies to producers of all size herds, Houghton adds. Rather than reproduce maternal genetics, which is more practical with larger numbers, a smaller operator can produce terminal cross cattle to go into meat production and achieve genetic uniformity more quickly and economically by buying the right replacement heifers and bulls or semen.

In addition to genetics, Houghton says that Total Quality Management (TQM) practices add value from birth to harvest.

"Adding value should be done first and foremost at the calf or genetics level," she says. "Certainly there needs to be financial incentives for TQM practices, but sometimes we should do a specific thing because it's the right thing to do.

"One low-cost procedure is early weaning," Houghton says. "This let's you take cows into winter at higher body condition scores. It also reduces cow costs and let's them enter calving in better condition."

And, if you're striving for uniformity of production and genetics, Houghton says to move into short calving intervals to wean calves of similar size. This simplifies all management, health, feeding and marketing programs.

Cow management should be a part of the plan, too, Houghton says. She recommends separating two- and three-year-old cows from mature cows to increase the rebreeding rate. Also, provide the best feed resources for the young ones and don't overfeed older ones.

Commodity Or Added Value? So, your genetics are in order, production costs are under control and TQM is an everyday practice. How should you sell - a commodity system or value-added or grid system?

"The advantages or disadvantages of targeting a commodity vs. a quality market depend on the individual situation," Jones says. "In an ideal world, the higher-quality product will be rewarded with a price premium. We're seeing those market alternatives develop and it may or may not cost more to produce the upper-end product.

"It's going to take a detailed analysis to answer this question. The commodity product may be produced at a lower cost and receive a fair compensation in some instances. Or, it may be that a premium can recoup additional costs of producing higher-end carcasses. Each producer must determine where his operation fits within our current system."

One way to make the decision is to retain some level of ownership on your cattle.

"Human nature is such that if you don't retain a financial stake, your interest level is diminished as to how that product goes all the way through the system," Houghton says. "And, if you don't have the interest in following that product all the way through, you won't make progress."

Jones paints a similar picture.

"Any serious producer will know costs, manage costs and understand how cost structure must be integrated with whatever marketing alternative is chosen or he won't survive. That, more than size of operation, contributes more to ongoing viability than anything else."

Profitability isn't the size of margins - it's the return to equity, says James McGrann, Texas A&M University Extension economist. If your herd isn't contributing to equity, consider additional measures to lower production costs.

"This is more about land stewardship and keeping forage at optimum levels," McGrann says. "It keeps pastures in better condition and lowers supplemental feed costs. With grazing and feed costs being 40% of total costs, any management practice that lowers this is a benefit."

In addition, he recommends producers:

1 Minimize machinery investment.

2 Maintain separate accounts for a cow operation and keep close track of expenses in those separate accounts.

3 Target to keep costs under $350 to $400/cow. This includes production, cash costs, depreciation, labor and management costs.

4 Buy replacements rather than raise.

5 Be considerate of what you put into the marketplace.

McGrann says Texas Standardized Performance Analysis (SPA) data shows that cost of production is $180/cow less in top herds than in low net income herds. Table 1 shows variations in herd size costs and opportunities to lower costs.

"All herds, irrespective of their size, can lower the cost of production," McGrann says.

Aiming For Consistency

Take a walk through some feedyards and look at the different shapes, sizes and colors. There's practically no way to count the numbers of breeds that fill the pens.

Some say too many breeds create too much variation in the beef supply; others say there's a place for every one. That aside, it's the management of a breed, or type within a breed, that makes it a success or failure in the feedyard.

John Hough, chief science officer for EPD International, a beef cattle information management company in Statham, GA, says most problems with breed variations occur when cattle aren't fed according to their genetic potential.

"There is tremendous variation in all breeds of cattle and it's not appropriate to categorize an entire breed into one stereotype," Hough says. "Even the 'right' genetics managed in the 'wrong' environment can cause big problems."

Sorting traits related to genetics or environment will create a more efficient pen of cattle, and that's where Expected Progeny Differences (EPDs) can help. Put simply, EPDs measure the difference in performance that can be expected from future progeny of an individual compared to other similarly bred cattle.

Bruce Gordon, Minneapolis, MN-based beef sire selection manager for Alta Genetics, says using past performance records on like groups of cattle can often be the best guess as to what future performance will be.

"If you combine past performance of cattle with EPDs, you'll be able to sort out the traits that are genetic and factors that are related to the environment," Gordon says. "But, it's not always possible to know EPDs of every head on the truck."

That said, Gordon says it's still helpful to know the origin and makeup of the cow herd, the genetic crosses in a group, health records and other performance characteristics to determine the appropriate feeding program.

Identify Genetic Factors Despite knowing as much as possible about a group, there can always be questions when it comes to optimum feeding. Matching genetics to management or vice versa isn't always easy.

Once a foundation is laid however, Hough says developing feeding regimes gets easier.

"Using EPDs, producers can identify the growth potential, maturity rate, carcass composition and carcass quality genetic potential of their cattle," he says. "If they can accurately determine these genetic factors, matching feeding and management procedures will come easily, based on experience. Obviously, proper management and preconditioning will have a large, non-genetic bearing on how they perform."

He adds that the more you compare slaughter data to EPDs, the better you can fine-tune the feeding program.

Tweaking a ration for a specific pen isn't possible in all feedyards, though. Ted McCollum, Extension beef specialist with Texas A&M in Amarillo, says some variation can be managed by reading bunks correctly, getting cattle to a proper ration level quickly and feeding adequate amounts of protein so they gain well.

"Even though a customized ration may not be available for specific animals, EPDs are worthwhile to determine feeding plans," McCollum says.

He adds that EPD information is useful to determine which implant program to use, based on how the cattle may grade. For example, if a sire has a heavy yearling weight EPD, an implant program may be selected to avoid heavy carcass discounts.

If no EPDs are available, experience can guide you, Hough says. If a customer sends cattle without EPDs, but from the same background, a couple or more years' worth of data will show how best to manage those groups. But, just because two groups may look similar doesn't mean they can be managed the same way.

Hough cites near-identical looking Angus and black Limousin or black Simmental steers. Though they may look almost identical at an in-weight stage, they will likely have significant differences in days on feed, gain and grading.

If EPDs are available, Gordon suggests focusing on the yearling weight EPD or the adjusted yearling weight of a bull's progeny when compared to the breed average. He adds it provides a strong indicator of feedyard growth and performance.

With or without EPDs, matching feeding to potential is the challenge at hand.

"Matching your management feeding programs to a pen's genetics is the most important aspect in getting the most out of the cattle," Hough says. "If you feed and manage the cattle absolutely correctly, many types of genetics can end up with the same type of product. Even supposedly 'good' and 'poor' cattle can produce nearly the same end product if managed right."

Differences in genetic potential require different feed and management, according to Hough. Some are best fed as calves, others as yearlings. Some need high-energy rations while others need lower energy diets. And, some may never reach the desired grade endpoint, so they should be marketed earlier to reduce feeding costs.

He and McCollum agree that genetic shortcomings can be managed in the feedyard, especially if a group of cattle are consistent and genetically predictable.

"EPDs are the best tool for cow/calf producers to make guided decisions on what kind of sires they use on the cow herd," McCollum says. "More importantly, EPDs are a proven marketing tool that offers information about growth and carcass traits to buyers."

Existing EPDs will be improved over time as incentives build.

"Better, more diverse and more accurate EPDs need to be developed," Hough says. "These may include tenderness, consumer acceptance and feed efficiency. There's also potential for developing health and disease related EPDs."

And, the incentive may come soon. Hough estimates matching feedyard management to genetics may be worth $25 to $75 or more per head.

Getting There Quickly With an incentive of that amount, you'd think the industry would be blazing a trail toward genetic improvement. According to Roy Wallace, vice president and chairman of beef programs at Select Sires in Plain City, OH, some producers are improving genetics. Some of those are doing so at the encouragement of feedyard management.

"One of the biggest problems in the feedyard is that we have so many small groups of cattle," Wallace says. "That alone is hard enough to manage. Then you add in the numerous health challenges - some being preconditioned while others aren't - along with lack of an EPD profile, and it's a hard job getting any uniformity at all.

"With larger groups that have an EPD profile of the bulls that sired the calves, or the artificial insemination (AI) bull, you can more accurately predict what those calves will do," Wallace adds.

Genetics is only part of the equation, however. Managing calving seasons is an area where feeding customers can improve their profit positions.

"Calving seasons are simply too long. The easiest way to increase uniformity is to have a short calving season where more than half of the calves are born the first week," Wallace says.

A shorter calving season gets more calves to weaning weight earlier and into the feedyard as larger, more uniform groups that are easier to manage.

When it comes to improving genetics, Wallace says some producers object to labor and synchronization costs. He counters by demonstrating a plan that produces AI pregnancies, including synchronization and labor costs, for less than a $2,500 natural service bull.

Whether through natural service or AI, there are options for genetic improvement. Universities, breed associations and seedstock companies can develop specific plans for feeding customers.

"Follow the end product and make selections and adjustments from there," Gordon says. "And be very aggressive. Get rid of the poor performers."

A young person's game

Winter calving is a young person's game. Husband Lynn and I have done it for more than 30 years, but no longer have the endurance we once had.

Most of our cows calve in January, with a few late ones in February. We'd prefer to calve a different time of year - a season less labor intensive than cold weather. But spring, summer or fall calving in our situation are challenging, too.

We started winter calving in the late 1960s to get away from the sloppy weather of March and April. We wanted to cut the incidence and seriousness of scours. Our January calves are usually born in dry, cold weather, and are old enough by March to be relatively unaffected. Diarrhea at that time is not an intensive life-or-death situation for them.

We also went to winter calving to avoid breeding on summer range (public mountain pastures) with its non-selective matings and more strung-out breeding and calving seasons.

We prefer a short, fast calving season and selective breedings (more genetic improvement) at home in April before the cows go out. Thus we can use our own bulls, several small breeding pastures and mate selectively. This allows us to keep a good bull a long time and enables us to raise a lot of our own bulls. Predators Are An Issue

Summer calving would be difficult in our situation. The cows on summer range are harder to monitor. We have an increasing predator problem - both coyotes and transplanted wolves. It's harder to deal with a predator problem when cows are on public land.

Fall calving won't work, either. Cows are off range and the private mountain pastures we use until snow gets deep in December work best for dry cows after weaning in late September. In our arid climate, these native grasses are adequate for dry cows but lack enough protein for lactation. Newborns would also be at risk from predators.

To best utilize the feed our ranch and range produce, we almost have to calve in winter or early spring. Due to scours considerations in early spring, we're locked into winter calving unless we want to trade labor intensive calving for labor intensive doctoring.

Or, we could let nature take her course and trade off calf losses (from sickness in spring or coyote/wolf depredation in summer on public range) for the less labor-intensive calving time.

It's A Tradeoff The bottom line on profit in the cow/calf business is not how big the calves are at weaning nor even the percent of calf crop weaned. Rather, it's what it costs to get there.

What happens if the feed and supplement costs (to wean bigger calves or get cows bred back) are more than the extra income from a larger calf? For us, it's more profitable to have cows that produce well on our marginal feeds, wean slightly smaller calves and always breed back than to spend extra money to feed for higher production.

By the same token, the labor-intensive care required to save every calf in a winter calving situation can more than offset the profit in those calves. Perhaps a producer is better off financially and physically to go to a "survival of the fittest" philosophy of a different calving season.

For instance, we could calve in spring and hope we don't have a scour epidemic every year, or calve in summer and take our chances with predators on the range. But Lynn and I have a problem with the ethical implications of that.

We've been so intensively focused on saving every calf these past 35 years that we can't in good conscience take the "easy" route. These cows are our responsibility as well as our livelihood; and we feel obligated to give them every chance.

Ranching is a unique mix of financial and emotional obligations. It's often hard to sort out where one ends and the other begins.

At this point, we are caught in the calving season dilemma, and we will probably try to just continue to improve upon and work out the problems of winter calving. We also hope that as our endurance wanes the younger generation can help pick up where we leave off.

The bullish picture continues

The fed cattle market remained steady in January. Choice slaughter steers in the Amarillo feedlot area averaged $69/cwt., about on par with the month earlier. Feeder cattle and calves did slightly better, averaging $1.50/cwt. more than a month ago. January kicked off the year with the highest feeder price level in several years.

January 1 Inventory The total number of cattle and calves in the U.S. as of January 1 was 98 million head. That's 1% below the 99 million head reported on Jan. 1, 1999 and 2% under the 99.7 million head of two years ago.

The two most important statistics were beef cow numbers (33.5 million) and the 5.53 million beef replacement heifers. Cows fell 1% from 1999, while replacement heifers were down only slightly. Both figures suggest a continuation of the breeding herd liquidation in 2000.

The 1999 calf crop is estimated at 38.7 million head, down slightly from 1998 and 1% lower than 1997. It suggests the same number of feeders will be available in 2000 as in 1999.

The major beef cow states are Texas (5.4 million), Missouri (2.1 million), Nebraska (2.0 million), Oklahoma (1.9 million), Montana (1.6 million), Kansas (1.5 million) and Kentucky (1.1 million). These states account for 46% of the nation's beef cows, which are located on 843,230 farms and ranches.

The cattle feeding industry has substantially increased the feeding level. On-feed statistics as of January 1 were up 7% from last year, the highest January level reported since the new series began in 1995. Placements into feedlots in December were 9% greater than a year ago and almost as large as the December 1996 level.

Cattle and calves on feed the first of this year were 11.46 million head, up over 800,000 head from 1999. The major gains were in Texas, Nebraska and Kansas.

In December, fed cattle marketings were 1.84 million head, 1% above the 1998 level. Kansas, Nebraska, Idaho, Iowa and Washington had larger marketings than a year ago, while all others had less.

Cattle and calves placed on feed in December reached 1.65 million head - 9% greater than 1999 but also 8% larger than the December 1998 level. The major increases came in Kansas, Texas, California, Colorado and Nebraska. Idaho, Iowa, New Mexico, South Dakota had fewer placements.

Placements by weight groups in December continued to emphasize lighter weight animals. Calves less than 600 lbs. were up 17% at 465,000 head, while the 600- to 699-lb. class was similar to last year. Those in the 700- to 799-lb. group (422,000 head) were up 14%, while the 800-lbs.-and-over animals grew only 6% at 261,000 head.

USDA is forecasting record beef and cattle prices in the second half of 2000. They note that retail prices for Choice beef reached $3.02/lb. in December 1999, the highest since 1993.

Increased supplies of Choice grade beef anticipated through spring will hold down further price gains. In the second half of the year, prices are expected to exceed the 1993 record of$2.95/lb.

Fed cattle prices in 1999 averaged $4/cwt. higher than in 1998. Prices in 2000 are likely to average $70/cwt., with the greatest strength expected in the fourth quarter.

Yearling feeder cattle prices rose nearly $5/cwt. in 1999 and will likely rise another $9 in 2000 as feeder supplies decline.

Given the extremely large expansion in cattle feeding underway, it's difficult for me to assume a real reduction in feedlot marketings later in the year. With placements in 1999's final quarter up 8% over 1998, it seems certain that larger fed cattle marketings will surely come, at least by early summer.

Since January feedlot profits are also encouraging, chances are placements will stay substantial. This could tone down some of the expected price gains of the second half.

Larkspur Alert

Tall larkspur (wild delphinium) is a cattle killer. The poisonous plant claims average death losses of 4-5% annually in some allotments in Utah, Colorado, Wyoming, Idaho and Montana. Some ranchers experience death losses of more than 15%, says James Pfister of the USDA Poisonous Plant Research Laboratory (PPRL) in Logan, UT.

As a result, the presence of tall larkspur on many ranges forces stockmen to avoid some pastures early in the season. That reduced value of forage is the greatest economic loss, far exceeding animal deaths and management headaches, Pfister says.

The best "treatment," however, is prevention - not using pastures with larkspur during seasons and situations when the plants are most deadly. Or, going in ahead of the cattle and pulling up or breaking off the plants (if located in a few specific areas where they can be eliminated).

Graze At The Proper Season The poison content of larkspur is high during early growth, then drops off rapidly after maturity, except in the seed pods, Pfister says. Poisoning of cattle is less likely after flowering is past.

Cattle may not eat larkspur during preflower stage (when it's most toxic) unless other forage is sparse. In a typical year, cattle begin eating larkspur during flower stage, says Pfister. Consumption usually peaks during late flower or pod stage. Toxicity is declining at that point but consumption is increasing.

He says, "This results in a toxic window when most cattle deaths can be predicted. Depending on weather conditions, this toxic window may be 4-5 weeks long in a typical season."

Researchers say tall larkspur contains up to 20 different alkaloids that vary in toxicity from very poisonous to almost harmless. Alkaloid levels can vary from one patch to another, and from year to year in the same patch. These differences may be part of the reason for variations in annual death losses. It takes more pounds of larkspur consumption in some years to be fatal.

Nutritionally, larkspur is similar to alfalfa hay (60% digestibility and 12% crude protein). Small amounts have no detrimental effects on digestion.

For instance, if plants contain only 0.2% of the most toxic alkaloid, a 1,000-lb. cow must eat more than 14 lbs. of larkspur to kill her, according to Utah studies. By contrast, a cow only needs to eat 3 lbs. of tall larkspur to be fatally poisoned, if plants contain 1% of the most toxic alkaloid. For fatal poisoning, cattle must eat these amounts within a couple of hours.

Patterns Of Consumption Weather patterns and stage of maturity can affect consumption and extent of death loss. For example, cattle eat less larkspur during drought if plants are dry. But if larkspur grows in a wet area and stays green longer than surrounding grasses, larkspur consumption may increase.

Cattle losses during wet years tend to be higher, probably due to changes in the chemistry of the plants, says Mike Ralphs, range scientist with the PPRL.

In late summer, larkspur may make up as much as 25-30% of a cow's diet, especially if she spends a lot of time in the moist bottomlands where there are large patches. At this stage of maturity, this amount of larkspur may not be fatal, especially if cattle are eating other plants along with it and spreading their larkspur consumption throughout the entire day.

But during or just after a storm, larkspur consumption often increases; cattle eat more in a short time, causing more death loss. This may be because cattle "hole up" in the bottoms during the storm instead of spreading out to graze. Also, wet larkspur may be more palatable than when it is dry.

In experimental studies in Utah, Idaho and Colorado in 1988, and 1991 to 1996, cattle were grazed early, while plants were immature or in the bud stage. In none of those years did the cattle eat more than a few bites of larkspur before the plants flowered.

The researchers felt it might be safe to graze some of these ranges very early in the summer, then remove cattle after larkspur starts to flower, returning again in late summer. This type of use could minimize (though never eliminate) risk of poisoning, while allowing greater use of forage.

In some situations, sheep can be grazed ahead of cattle since tall larkspur is not toxic to sheep. If sheep eat or trample the larkspur before cattle are put into a pasture, cattle losses may be reduced.

Mineral supplementation has been tried by some ranchers to reduce consumption of larkspur. But after four years of study, researchers found that no level of mineral supplement changed the amount of larkspur eaten.

PPRL researchers say the best management is for livestock producers to take note of larkspur defoliation.

"We suggest ranchers directly observe what cattle are actually eating one or two days each week when cattle begin to graze troublesome pastures. When cattle start eating larkspur, move them," Pfister says.

Use Of Herbicides Another avenue of control is herbicides, but tall larkspur can be hard to kill. The entire tap root and underground buds must be killed, or it will regrow the next year.

Total eradication is nearly impossible, but reducing larkspur density can significantly lower the amount eaten and reduce death losses, according to PPRL studies.

In a study completed in 1993, researchers looked at the effectiveness of various herbicides. The value of cattle saved by controlling dense patches far outweighed costs of control, even when using the most expensive herbicides and labor-intensive spot applications.

Utah State University Extension economist Darwin Neilsen says, "Even though herbicides are much higher priced than they were a few years ago, returns from control are economically feasible. Sometimes, the cost of control more than paid for itself during the first year."

The goal in larkspur control, says PPRL range scientist Ralphs, isn't eradication, but reduction in density of patches where losses are highest, making sure that a cow can't eat larkspur fast enough to kill her.

One effective herbicide is Tordon (Picloram), which can be used throughout the growing season. Another is Escort (Metsulfuron), which works well during the early stages of growth, but is less effective as larkspur matures, according to Ralphs. Roundup (Glyphosate) can be selectively applied by hand spraying or with a wipe-on applicator to kill larkspur in the bud stage. It, however, is not as effective after the plants have flowered.

Ralphs recommends keeping cattle off treated areas until plants are completely dead and dry.

"Larkspur's toxicity and palatability may actually increase after the plants are sprayed. To be safe, a rancher should keep cattle off the area for the remainder of the grazing season," he says.

If done properly, herbicide application can give long-lasting control. On some areas that were treated in the early '70s, Ralphs says that larkspur still isn't a problem.

Tall larkspur contains numerous alkaloids which can be very toxic. The toxic alkaloids interfere with the central nervous system and paralyze muscles.

Symptoms develop within a few hours after plants are eaten. Muscles become fatigued - beginning with mouth, ears and legs and progressing to the diaphragm, making breathing difficult. This causes muscle tremors and collapse. Typically, it occurs so fast that the first symptom is a dead animal.

The gut becomes paralyzed and the animal bloats. Inability to burp up and swallow the cud can result in bloat or spillage of rumen contents into the windpipe and lungs. Exertion can make the effects worse (due to muscle fatigue), so poisoned cows that are still alive should not be moved.

Many, but not all, affected cattle die unless the amount eaten has been small, according to researchers.

IBP bids for value discovery

Value-based marketing may finally be sprinting toward industry rule rather than niche exception. That's thanks to a new, open-to-the-world, fed cattle pricing grid offered by IBP, the world's largest beef packer and purveyor.

The grid itself is the first industry-wide opportunity for cattle producers to negotiate the base price or tie the base back to the actual value of Choice 3 carcasses in IBP's system each week. But, the grid itself is less significant than the fact that the industry's giant has thrust both feet into the value-based mainstream, meaning everyone else swimming in the same waters will have to react.

"This could be the best of both worlds," says Kevin Good, Cattle-Fax market analyst. "Where we take the hide off of cattle and get closer to true value, while at the same time having competition between packers grow keen enough that producers have the option to accept or pass on bids. What we get is price discovery, plus value discovery."

Briefly, IBP's Real Time Market Value (RTMV) program raises the bar on quality, compared to many other industry grids, while offering significant premiums for yield. Where some other grids come with a grading base, there is none in the RTMV grid where par value is a Choice 3 carcass.

In essence, that means any carcass that doesn't grade Choice will be discounted on their grid and no carcass will earn a quality premium until it grades at least in the upper two-thirds of Choice and qualifies for the Certified Angus Beef program. So, as usual, the base price will probably drive user acceptance.

As an example, let's look in the Southern Plains where 55% of the cattle might grade Choice in a given week. Let's say a producer can get $1.08/lb. in the beef on the open market and qualifies for the yield grade premiums (say 15% 1s and 45% 2s). He must negotiate a base price of $1.09 or so on the IBP grid to be on equal footing if the Choice/Select spread is $7.

Cynics might look at the high cost-of-quality admission and claim it's just a peel and steal smokescreen. And, too, if mandatory price reporting takes hold, odds are base prices tied back to company carcass values won't be reportable.

But, no one can argue the clarity of the value signal. Across this grid, IBP leaves no question about the value of non-Choice, low yielding cattle to their system. As well, RTMV premiums and discounts will change each week to reflect the real-time value of different traits to IBP's system, based on customer demand.

"If the market is $65, there are cattle that sell every day that are worth $60 and some that are worth $68. Cattle producers say they are tired of selling on the averages," explains Bruce Bass, IBP vice president of cattle procurement. "People who really want to discover value rather than just price will be able to do so."

What's more, RTMV should answer concerns voiced by critics of captive supplies. With this grid, cattle are plugged into the grid system the week of delivery, not weeks ahead of it.

Plus, Bass points out producers who sell cattle on the RTMV grid will receive group carcass data back free of charge. "We're trying to help everyone adjust to what the value is," says Bass. "We're not trying to slap anybody."

Moreover, when the nation's largest packer, sometimes portrayed as the poster-child for pennies-on-volume commodity production, offers a pricing grid to the world there is little question about where industry pricing is headed.

"This transition toward value discovery has been taking place for the last four to five years and has really accelerated during the past two years," says Cattle-Fax's Good. In fact, the percentage of cattle trading outside spot markets has grown from 18% in 1996 to about 35% in 1999.

As for how this reality might impact overall price discovery, Bass says, "The idea that there won't be any price discovery during your or my lifetime is ludicrous. This (grid pricing) doesn't change the laws of supply and demand, so it doesn't change the market."

Instead, what grid pricing might do eventually is shift risk from value-based marketing to commodity production.

"Risk is probably still the number-one reason people don't participate in grid pricing," explains Clem Ward, Oklahoma State University Extension agricultural economist. "A lot of people don't know how their cattle would do on a grid and a lot of people don't understand them. But, as long as you had an IBP with commodity pricing, you didn't have to worry as much about changing your cattle because you could always find a home for them."

As IBP and other packers compete harder for fewer cattle overall and for more cattle to feed their branded products, the gap between commodity and specification cattle will likely grow wider, faster.

Running In Place

Say this for Uncle Sam, doling out disaster payments instead of complex subsidies has pushed recent farm income performance to decade-average levels. That's despite the fact that net farm income - adjusted for inflation - plummeted 21% between 1990 and 1998 (Table 1).

"When we add in government payments, farm income was fairly strong in 1999. At issue, of course, is the distribution of that income," says Alan Barkema, vice president and economist for the Federal Reserve Bank in Kansas City.

Indeed. Some coffee shop chatter across the country puts the current agricultural slump on par with the early 1980s. Although the economic hole may look similar, the path there last time was strewn with lost equity. This time around, it's all about prices and cash flow.

"Net farm income during the '80s went up and down like a bobber, except for cow/calf producers who put together a string of bad years," says Phil Kause, U.S. livestock and crops analyst for the Food and Agricultural Policy Institute.

In a nutshell, he explains that high interest, inflation and anticipated increases in demand drove up land prices and the equity needed to borrow more money. When overproduction and weakening export demand conspired to crash commodity prices, the bottom dropped out of land values and highly leveraged producers got buried.

This time around, Barkema says domestic and international producers were ramping up production when economic crises around the world knocked the stuffing out of exports. In fact, he explains beef, pork and poultry grew to record levels of production the last two years while U.S. agricultural exports declined 20% since 1996. Throw in a strong American dollar, four consecutive years of record global crop production and it's easy to see why prices got softer.

"Today, it's more of an income problem," says Kause. "Lower commodity prices are pressuring producers, but we haven't seen the decline in land prices. As a result, producers have been able to maintain equity, and interest rates have been reasonable.

Plus, the steaming economy that low commodity prices help build, ironically, has offered little in the way of inflationary pressure. Barkema explains, "We simply have a very healthy and strong economy. But, that doesn't imply that all boats are rising at the same time."

All told, Barkema says, "The industry's financial foundation remains stronger today...Total farm debt has been edging up, but it's still less than it was in the '80s."

For perspective, compare the industry's debt to asset ratio of 16.2% in 1998 to 23% in 1985 (Table 2). Likewise, the debt to equity ratio continues to hover below 20%, compared to almost 30% in 1985.

Economic Strength Is Relative But, producers are bringing in more off-farm income to stay in business. In 1992, for example, farm income generated 16.7% of the income for farm households. Farm income has accounted for even less since then (Table 3).

Both economists are quick to point out aggregate numbers hide the economic struggles of individual producers.

"Obviously, given price levels, there are definitely some people with both feet in hot water. On the other hand, some producers are talking about expanding, and obviously those folks must have their houses in order to do that with commodity prices so low," Barkema says.

However, even those looking to expand may see the commodity price hole grow deeper over the long haul.

"Prices will come back up, but over time I think we are moving to lower price planes as global production expands," says Kause. For instance, rather than bank on seeing $3.50/bu. corn, over time he says it's more likely to be $2.50-2.75. The same goes for every other commodity.

Just take a look at the '90s (Table 4). Adjusted for inflation, corn prices dropped 32.9% between 1990 and 1998, and calf prices fell 33.9%.

"Essentially, what we're looking at is supply and demand. Through time, the supply of agricultural commodities is growing faster or slower than demand, and through time we have generally seen production grow at least as fast as demand," says Barkema.

If technology can keep boosting production incrementally, he explains, "The population of the U.S. is growing at about 1 percent or a little less. Agricultural production in the U.S. is growing at about 2 percent or a little more. So, you can quickly see we'll have to find a home for that additional production or add more value to it and rely on income growth to pick up the slack."

Spun differently, Kause explains, "Agriculture is cyclical in nature because we are always trying to balance supply and demand, and without a system in place (farm programs) that tries to balance that artificially with acreage reduction programs and government storage, current policy allows the market to determine the price that clears it.

"Today, commodity prices are low because producers globally have had excellent growing conditions the past four years. Couple this with a reduction in demand caused by economic problems in Asia, Russia and South America, and the market has moved lower in order to spur usage," he says.

For perspective on how Freedom to Farm measures can impact commodity prices on a day-to-day basis, Barkema explains government grain stocks are still lower than they were in the '80s, even though they have grown substantially since 1995 when they were depleted by poor production years. Even so, those stocks have created more price pressure than in the '80s because in this new Freedom to Farm age they are considered to be free stocks, a liquid commodity that can move to market at any time, rather than with the bureaucratic wrangling it used to take.

Of course, the production sword does cut both ways. "If you look at trends in deflated dollars, there has been a long, sustained downward trend in prices," says Kause. "On the other hand, when you look at production trends, you see that trend line moving the other way."

Although prices are trending down, he explains producers have more units of production to sell today. So, even with lower prices, Kause says gross revenue per production unit hasn't changed all that much.

But, competition for consumers continues to pressure prices of all commodities, no matter the supply.

"The share of consumer disposable income that goes toward food has been declining, too, as savings are passed along to consumers," says Kause. That means consumers are not only paying less for food, they're paying less than ever before for food with added value and convenience.

Reality Vs. Opportunity Given these long-term price challenges, Kause says, "I think it will become more important for producers to know exactly what attributes their products contain and market them accordingly." He believes more buyers in the future will evaluate and pay based upon specific attributes of the commodity, rather than offer one price for a given commodity.

"I do think we're laying the ground for some real structural changes in agriculture," says Kause. "I think we are moving toward more supply chains. If you consider increasing awareness about food safety, these supply chains make it easier to monitor inputs."

Through vertical coordination, not necessarily ownership, he points out supply chains also lower transaction and marketing costs. That, while giving the system more opportunity to tailor products to specific consumers.

Whether or not producers are eyeing the value-added frontier, Kause suggests, "If I'm a producer today, given how tight these margins are, I want to know exactly what my production costs are and I want to evaluate each of my enterprises for cost and return...Then, I can make educated decisions about where I can cut costs and I can identify enterprises where I don't have a comparative advantage.

"Evaluate all management practices and make sure you have your house in order on the farm, then examine how and where you can add value to what you produce," Kause says. "You just have to take the time. With margins what they are today, it has to be done."

A Prototype For Global Marketing

PM Beef Group is a beef buyer's dream. Most global beef customers would appreciate buying from a company that provides different product specifications depending on their markets. And, if they're foreign buyers, they want a company that gets the product to its destination.

They get all that and more from PM Beef Group. Under the umbrella of its parent, PM Holdings LLC, PM Beef Group generates and markets a wide variety of products for a diverse range of domestic and international markets. It's the kind of company that knows how to work in the new beef economy by servicing its global customers in specific ways better than ever before. PM Holdings LLC includes:

* PM Feeders in Omaha, NE, which works backward into the beef production system with its cow/calf producer partners and certified feedyards to produce consistent beef products. Its retail customers dictate the specifications for these products.

* PM Windom in Minnesota, a custom-slaughtering plant.

* PM Hartley in Iowa, a custom fabrication plant.

* PM Richmond, a central cutting facility located near PM Holdings' corporate headquarters in Richmond, VA. The facility trims subprimals into retail cuts, eliminating the slightest variations caused by different meat cutters even within the same retail chain. All beef in PM's retail branded product line also is aged for 14 days to ensure optimum tenderness.

* PM Omaha, a specialty meat product company for domestic and international customers.

* And, PM Global Foods, which sells cattle fed for the company as well as commodity beef and other protein sources to markets around the world.

The company's unique production coordination and customer service philosophy allow it to generate a retail branded product for two major retailers - Ukrop's and Heinen's. It also packages the Amana beef product for the HyVee retail chain. It is the largest kosher processor in the nation. And, it has a large commitment to export markets.

Specifically Addressing Customer Needs With one foot in the domestic market and the other offshore, PM prides itself on marketing specifically to customers' needs. The target of its feeding program is a Yield Grade 1 or 2 low-Choice to Select product, but the company is considering targeting an upper two-thirds Choice product for its Asian customers. And, its feeding program allows it the flexibility to do so.

"One of the changes we're looking at is creating a new grid, in addition to our existing grid, to reach different specifications for different customers and to allow us to get more cattle in the upper two-thirds of Choice," says Rick Carlson. Carlson is PM's vice president of beef operations, Kansas City, MO.

"We would create new grids in order to create other new product lines. That would allow us, for instance, to have an export grid that would help producers target the highest quality export markets," he explains.

At present, PM Feeders primarily focuses on the company's branded program for Ukrop's and Heinen's. But the company's feeding plan has many features that could allow the company to appeal to foreign buyers. The company is exploring the possibility.

"We have aligned our product so when we work with feedlots we can build a product for most markets," says Leann Saunders, PM's marketing director.

That flexibility gives PM Holdings a quick advantage into feeding for international markets should conditions warrant. It has developed live cattle standards for its domestic markets that are stringent enough to satisfy the crustiest European diplomat while pleasing the most demanding Asian hotel or restaurant.

The process starts with what Saunders calls the company's "functional coordination." In a trademark twist on the traditional cattle marketing industry, PM allows cow/calf producers and feedyard operators to remain independent businessmen who produce beef in concert with the company's marketing objectives through a specific set of management practices.

"Our customer base is diverse," says Ken Fox, PM's director of cattle feeding. "Our cow/calf producers are located as far east as Virginia, as far south as Georgia and as far west as California."

PM specifies breed types and the cow/calf producer's health program. Among PM's requirements are providing documentation of type, location and method of injection and adherence to withdrawal times. All producer clients have to follow a Beef Quality Assurance program. And each has to sign an affidavit stating that the producer has never fed meat or bone meal to cattle.

The latter requirement, although fairly cut and dry in the U.S., is a huge selling point in foreign countries that have concerns about BSE. Organic matter from bovines fed to cattle has been suspected as a possible reason bovines become infected with BSE.

Specification Feeding Fox works with nine company-certified feedyards located in Nebraska, South Dakota, Minnesota and Iowa. The cow/calf producers retain ownership through the feedyard, with their cattle undergoing a feeding regimen specified by PM Holdings.

To become certified, Fox says, the feedlots, for the last 100 days on feed, must feed PM's cattle 60 megacalories of net energy gain (NEg) per head on a corn-derived ration, as well as 1,000 IUs/head/day of Vitamin E for 100 days.

Fox calls the NEg requirement "really bare bones," but the Vitamin E stipulation again has huge international implications. Vitamin E extends shelf life, important when shipping fresh beef overseas over a period of weeks. The 1,000 IUs of Vitamin E has been recommended by international research, Fox says.

Although the PM feeding division is continuing to adhere to the 1,000 IUs, Fox says the company may reduce that level based upon research that shows optimum levels for domestic marketing.

Other positives that allow PM to target the domestic market while still poising itself for export include its carcass specifications. Its current retail brand grid system pays premiums for cattle that produce:

* 600- to 950-lb. carcasses, * 1/10 to 4/10 inch back fat,

* 11- to 17-inch ribeyes and

* low Choice and high Select carcasses.

Anything outside these ranges are eliminated, as are hardbones. The company does not want to slaughter any calf over two years of age.

Its highest premiums are for:

* 750- to 875-lb. carcasses,

* 2/10 to 3/10 inch back fat and

* 14 to 16-inch ribeyes.

Some of these specifications could change for different foreign markets. But a track record of adhering to tight specifications is also of interest to many foreign buyers. It allows them to differentiate their marketing line from generic beef produced in competing countries like Australia, Argentina and some European countries.

Feedback Helps Build Performance PM's continuous feedback to its producer partners helps make those specifications easier to reach with each calf crop. PM's partners receive data on how their cattle perform in the feedlot, yield and quality grade, ribeye size, percent kidney, pelvic and heart (KPH) fat and other important information. That allows a tight communication circle within the company that permits the producers to come closer to their product specifications, regardless of the target market.

PM's branded beef program also enjoys USDA process verification certification, which could be an added marketing tool. PM became the first "ranch-to-retail" beef program to receive that accreditation. To PM's customers, USDA certification means the company's statements are verified by a third-party organization that is highly respected around the world.

"For us, the certification tells retailers that USDA is monitoring our process and they can feel comfortable that there is credibility behind it," Carlson says.

For international customers, that same certification could mean huge dividends for PM. In fact, a main reason USDA developed the program was to open up new opportunities for exports of meat. Europe has had a similar certification process for its meat industries for several years.

"It could become like a heart-healthy certification (from the American Heart Association) in terms of significance," Saunders says. "That's an important story to a potential customer."

Through astute planning and implementation of its requirements, PM has the ability to move into new markets - from export to domestic - at any time. It's a luxury that global beef buyers only dreamed about in the past. Today, it's tantalizingly close to reality.