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Articles from 2002 In May


The New Farm Bill's Impact on Beef Producers

The new farm bill signed into law by President George W. Bush on May 13, 2002, contains several features that will impact the U.S. beef industry.

The major features of the six-year Farm Security and Rural Investment Act (FSRIA) of 2002 that relate to the beef sector are summarized here, although the full impact will remain uncertain until USDA regulations have been issued. Many of the provisions in the bill will take effect immediately, while others will be implemented beginning in 2003.

There are three general areas that could have an impact on beef producers’ businesses – crop policy, new conservation provisions and country-of-origin labeling of meat products. Although there were other provisions intensely debated, like the packer ban on livestock ownership, they were not included in the final bill.

Crop Provisions

Livestock producers will likely continue to enjoy low feed costs under the new farm bill. Estimates by the Food and Agricultural Policy Research Institute (FAPRI) suggest that feed costs will remain nearly unchanged, compared to the continuation of policies contained in the 1996 farm bill.

One word of caution remains for livestock producers, however. Grain stocks will still be at low enough levels that the threat of a short crop will drive feed costs higher. FAPRI’s analysis of the new farm bill can be found on their web site at: www.fapri.missouri.edu.

The new bill provides crop producers with the opportunity to update base area and program yields. The combination of loan deficiency, fixed, and counter-cyclical payments provided for in the new bill should provide checks to crop producers similar to those seen in recent years under the 1996 farm bill and ad hoc disaster payments. Adjustments to government expenditures under these provisions could occur if they do not fall within our current WTO commitments.

The new farm bill increases the cap on Conservation Reserve Program (CRP) acreage to 39.2 million acres from the previous cap of 36.4 million acres. Other conservation provisions like the Conservation Security Program that pays producers for using good farm and ranch stewardship practices are included as well.

More EQIP Funding

Funding of the Environmental Quality Incentives Program (EQIP) is increased under the new bill to $1.3 billion by the 2007 fiscal year compared to the $200 million spent annually under the 1996 farm bill. Sixty percent of the total EQIP funding is targeted to livestock producers.

An individual producer or entity cannot receive more than $450,000 during the fiscal 2002 to 2007 period for all EQIP contracts entered into with USDA.

One reason for the increase in EQIP money for livestock producers is to help offset the cost of new Concentrated Animal Feeding Operation (CAFO) regulations that the Environmental Protection Agency (EPA) will issue by December 15, 2002. EPA estimates that annual costs to the livestock sector could total near $1 billion under the proposed CAFO rule issued in January 2001.

Country of Origin Labeling

The farm bill contains a provision requiring retailers of beef products to inform consumers of the product’s country of origin at the point of final sale. Pork and lamb are included, too. This provision will not include products sold by food service establishments.

The country-of-origin provision is voluntary for the first two years. The Secretary of Agriculture is required to issue final mandatory regulations no later than September 30, 2004. This portion of the new bill could be one of the most important for the beef sector.

For beef products to be labeled "Made in the USA" the animal must be exclusively born, raised and slaughtered in the U.S. This restriction, for instance, calls into question how to label Mexican-born and Canadian-born feeder cattle that are finished in the U.S. annually. It’s unlikely that a clear answer to this issue will occur until final regulations are issued.

USDA will be busy over the next several months implementing all of the provisions contained in the FSRIA of 2002. As regulations are issued, the bottom line of what the new farm bill means to the cattle industry will become clearer. To keep track of USDA’s progress, check out their farm bill web site at: http://www.usda.gov/farmbill.

Editor’s Note: Look for reader viewpoints on the 2002 farm bill on BEEF magazine’s Web site www.beef-mag.com.

Also, for a side-by-side comparison of old and new farm legislation, go to USDA’s farm bill Web site at www.ers.usda.gov/features/farmbill. Further information on the farm bill, including a summary of the bill and implementation across USDA agencies, visit www.usda.gov/farmbill.

Scott Brown is with the University of Missouri's Food and Agricultural Policy Research Institute.

Alfalfa Q & A

I am going to graze cows on alfalfa pasture for breeding. What problems may I encounter other than bloat?

When grazing alfalfa or other legumes, the first concern is obviously bloat. However, bloat can be limited through grazing management. In New Zealand and Australia where legumes are grazed intensively, the loss of cattle is only 0.3 to 1.2%.

Use of non-bloating legumes such as birdsfoot trefoil, sainfoin and cicer milkvetch can help. In addition, a reduced-bloat variety of alfalfa was recently developed in Canada.

Livestock management is the key to successfully grazing legumes. Feed animals good hay with plenty of water before turning them out on pasture. Gradually acclimate the animals by turning them out for several hours in the afternoon over several days. Observe them and remove chronic bloaters.

Maintaining a high density forces cattle to utilize the whole plant, not just the leaves. Avoid rotating to new pastures on days with heavy dew, rain or after a frost. In addition, provide plenty of water, minerals and utilize a bloat-guard product.

Fetal death loss and reduced conception rates can occur when alfalfa is grazed during breeding season. And, with no outward signs, the problem may not be readily apparent to the manager.

These problems are caused by an excess of highly digestible intake protein (DIP). Lush green alfalfa is high in DIP, but this problem may also be true of feeding any excess protein.

Ruminally degradable intake protein consumed in greater amounts than what rumen bugs can utilize is absorbed through the rumen wall. The excess protein then travels to the liver where it’s converted to urea, which leaves the liver via the bloodstream and concentrates in the kidneys for excretion.

Urea in the bloodstream is where the problem lies. The fetus receives all its nutrients from its dam’s blood via the umbilical cord. The cow, because of her size and her fully developed metabolic system, is better able to handle the excess urea, while the fetal calf is not. The urea is toxic to the calf, and it may die.

Excess protein also can adversely modify the uterus so that the normal processes leading to fertilization, embryo development and fetal implantation may be hampered. Because uterine development influences embryo development, cows on a high protein diet may be conceiving, but the embryos are not surviving.

Producers with cows on a high protein diet should supplement some energy – either carbohydrates or fats – to utilize more of the excess protein. Supplemental fat may also allow the cow to return to estrus earlier after calving. It also may help secrete more progesterone, which is necessary for implantation and nutrition of the newly formed embryo.

In addition, some fats inhibit the production or release of prostaglandin by the uterus. This prevents regression of the corpus luteum on the ovary so the newly formed embryo survives.

What’s your opinion of a.m. vs. p.m. cutting of alfalfa hay?

The main advantages of cutting alfalfa hay in the afternoon are a higher sugar and starch content and less fiber. Studies show dairy cows fed such hay produced 10% more milk. The effects on beef cattle, however, are harder to measure.

These trials were done on dry hay. When hay was harvested as haylage, there were no differences in sugars, neutral detergent fiber or in vitro digestibility.

A major concern for cutting hay in the afternoon is the extended drying time. Because hay won’t dry much overnight, this can delay baling by up to eight hours.

If the choice is between somewhat higher sugars or getting the hay put up as quickly as possible, we should get the hay up. The longer hay sits on the ground, the greater chance of weather damage and nutrient loss.

David Wieland is a nutrition consultant specializing in cow/calf, feedlot and horses. Based in Shepherd, MT, he also publishes a subscription newsletter. Contact him at 406/373-5512 or [email protected]

All in the Family

At a recent Ranching for Profit School several participants discussed how they could make room in their ranch businesses for their kids. They came up with several solutions. But they were basing their discussion on the assumption that they should make room for their children in their business. I pointed out that parents don’t owe their adult children a living. I’m all for keeping it in the family. But it isn’t a parent’s job to make room for the kids. The kids should make room for themselves.

It may be tempting to bring junior right back to the farm as soon as possible. From a parent’s perspective we could use that cheap labor to subsidize our businesses. We usually pay them less and treat them worse than non-family employees. We get away with it because of our promise, implied or spoken, that "Someday this will all be yours." But bringing Junior right back often isn’t good for the business, usually isn’t good for Junior and may not be good for us.

Bad For Business

We do our businesses a disservice and set the stage for future problems when we bring our kids straight back to the ranch when they get out of school. Consider two candidates for a managerial position in a business. One finished school, worked on a couple of ranches in different parts of the US and may have even traveled to Australia where he worked for a year. The other candidate has no significant experience beyond his family’s farm. Which person would you hire? Because the answer invariably is, "The one who’s related," we need to make sure he’s the one with the experience.

Bad For Junior

Our well-intentioned nepotism leads to another, even more serious problem. When our kids come straight into the business, without taking time to stretch their wings and experience the world, what they do becomes who they are. Without the perspective gained by varied experience, there is no separation between their work and their life. When prices slip or drought descends, they tend to be even more vulnerable to depression than the rest of us. At the very time they need strength and creativity to manage through these recurring issues, they become least able to perform.

In contrast, people who are able to leave work at the office when they go home and focus on family and other interests are in a much better intellectual and emotional position to manage through the difficult times. Burnout and depression can have its roots in coming back to the farm too soon.

Bad For Dad

When Junior comes straight back to the ranch, Dad is usually just entering his managerial prime. Will Junior really be happy mending fence until Dad is ready to hand over authority? If the only experience Junior gets is at the back end of a post hole digger, Dad would probably be smart to hang on to the authority as long as he can. If Junior comes right back to the farm, where will he gain the life experiences he will need to become an effective business man? It’s a vicious circle.

Sharing your genes does not predispose your kids to managerial excellence. When we limit the candidate pool for positions in our business to our gene pool, it becomes even more important to design a career path for our kids to prepare them for the managerial challenges ahead.

If the kids come back to the business, it should be because they have something valuable to contribute. In other professional businesses, associates are expected to generate at least three times their salary in gross income for the firm. You should expect the same performance from the people you hire, whether or not they are related, when you are ranching for profit.

David Pratt of Ranch Management Consultants teaches the Ranching for Profit School. For more information, visit www.ranchmanagement.com, contact him at 707/429-2292 or e-mail [email protected]

Hopper Poppers

When local ranchers find themselves up to their ankles in grasshoppers, Darrin Pluhar knows it’s time to fly into action. For several years, his choices for rangeland grasshopper control have been a short list of insecticides – malathion, acephate (Orthene®), methyl parathion (Penncap M®) and carbaryl (Sevin®).

Pluhar is the owner of Plu’s Flying Service of Miles City, MT. He’s among a growing number of folks on the front lines of the hopper war who have added to their arsenal a new tool in rangeland grasshopper control – Dimilin®. Other insecticides are labeled for control of grasshoppers in forage grasses, alfalfa and crops.

“Everything considered, Dimilin is a great product for grasshoppers,” says Pluhar. “If we have a year like 1997 – the last year hoppers were really bad here – Dimilin would be a no-brainer.”

This year, because of a cool spring, Pluhar says grasshoppers might be set back a few weeks in his region.

“We really have no idea of what we’re going to face until hoppers start showing up,” he adds. “It’s just a matter of watching and then moving fast when you decide there are enough under the right conditions to do damage.”

The U.S. has more than 700 different species of grasshoppers. Among the 40 or so that can damage crops, the most damaging to rangelands are the migratory (Melanoplus sanguinipes), bigheaded (Aulocara elliotti) and whitewhiskered (Ageneotettix deorum) grasshoppers.

Outbreaks of grasshoppers and Mormon crickets (Anabrus simplex), a ground-dwelling katydid found in western Rocky Mountain basins, have historically occurred in the 17 states that lie on or west of the 100th meridian. In 2001, they caused an estimated $25 million damage to crops in Utah alone.

Rancher Craig Randall, Broadus, MT, has had experience with grasshoppers. In 1998 he sprayed 10,000 acres of rangeland for grasshoppers. He wishes Dimilin would have been available.

“We’d have had a better kill – and it’s definitely safer,” he says. Now, after two years of experience with Dimilin, he’s ready to roll with it again if necessary.

As a growth regulator, Dimilin disrupts the nymph’s ability to molt and affects a young grasshopper’s coordination and feeding habits. Dimilin is also effective on Mormon crickets, primarily a pest on croplands, but they can damage rangelands when at very high populations.

Observation Is Key

“The best thing a rancher can do is get out early and look around,” advises Randall. “But, you have to be a good scout, otherwise you’re throwing you’re money away no matter what material you use.”

He says economic thresholds are very tough to figure.

“It’s a matter of past experience – and getting to grasshoppers early.”

Greg Jackson, of Wheatland, WY, says it takes a few days to begin seeing results with Dimilin, but it’s “rainfast” and can provide up to a full month of residual control.

“We sprayed 10,000 acres with Dimilin last year,” says Jackson, an aerial applicator. “Within two to three weeks, the areas we sprayed were almost void of grasshopper activity.”

Cost of control is the first thing customers ask, Pluhar and Jackson say.

“We’re looking at less than $2 per treated acre for Dimilin, not including application costs,” says Pluhar. “And because it can be applied in alternating treated and untreated swaths, costs can be cut in half.”

This strategy for rangeland grasshoppers is called Reduced Agent/Area Treatment (RAATs). The ultra-low volume product can be aerial applied at 8 oz./acre – half normal rates.

Randall says Dimilin poses no risk to wildlife, birds, fish or nontarget insects, including honeybees. But, the restricted-use pesticide is toxic to some aquatic invertebrates and should not be applied by ground within 25 ft., or by air within 150 ft., of water bodies. Care should be taken to avoid drift and run-off that may reach aquatic organisms.

Ranchers also may need to consider other registered insecticides for spraying protective “barriers” around crops and valuable forage production areas, such as hay meadows, seeded crops like alfalfa or annual forages.

For more information on grasshopper identification and control, check out http://scarab.msu.montana.edu/ hpipm/ and www.sdvc.uwyo.edu/ grasshopper.

In My Opinion: Reader Views on the Farm Bill

Here are some initial reactions from beef producers regarding the new 2002 farm bill. These are excerpted from our exclusive survey of BEEF readers conducted just after the farm bill came out of House-Senate Conference.

What do you think of the 2002 farm bill and how it treats cattle producers?

  • It’s a real rip-off. A Tom Daschle campaign tactic and a buyoff for tobacco.
  • It helps farmers and farmer-feeders. As a rancher (1,000 mother cows), we seem to miss out in that we have no price support for beef. I was in Scotland recently where the government gives a price support at the time of birth and electronic I.D. What an idea to help the cow calf man. We’re so worried about the feeder, the packer and the backgrounder but seem to not care about the one that starts the chain. As long as slaughter controls live beef prices, no one can help.
  • I like the increase in EQIP funds but the program needs to benefit the maximum number of producers. I’m concerned about the lack of payment limitations and the use of EQIP funds for large livestock feeding operations.
  • How will we label beef by country of origin and enforce it? I don’t have a problem with packers having limited ownership of cattle, such as through alliances.
  • Effect is minimal.
  • Fair as can be expected.
  • Fair to cattle producers and may help them.
  • Cattlemen and the whole livestock industry took it the shorts. The government is always worried about the grain man.
  • We got precious little considering the condition our industry is in. No help with drought at all, no packer ban. I was very pleased to see that country-of-origin labeling passed.
  • It sounds cattle friendly.
  • It appears the program is intended more for the row-crop farmer and diversified operations.
  • The money that’s being made available for conservation practices should be helpful.
  • The farm bill should keep feedstuffs cheap as the grain payments encourage over-production by farmers.
  • I don’t think it affects cattle producers, except to allow cattle to be more competitive with chicken by freeing packers to better control their inputs, as the chicken industry has done. Chicken has more than doubled on per capita consumption.
  • I don’t think it does much for the small feedlot operator.
  • It doesn’t effectively addresses the needs of meat livestock producers. I don’t see anything that helps meat protein producers capture a fair, sustainable share of the retail value of their raw product.
  • I don’t like the farm bill. It keeps farmers in a set of "golden hand-cuffs" and treats cattle producers like a red-headed stepchild.
  • I don’t want a farm bill that does anything for me. The government left out of the cattle industry as much as possible is what I would like.
  • I would have encouraged greater benefits to cow/calf producers.
  • The 2002 farm bill does very little for the beef industry.

2002 BIF Convention July 10-13

http://www.beefimprovement.org/BIFconv.html

Boosting bull returns

There's nothing glamorous or new age about auditing the fertility of bulls, but it's still one of the simplest and cheapest ways cow/calf producers can hedge their bets on bull investment.

After all, Glenn Coulter of the Lethbridge Research Center for Agriculture Canada at Lethbridge, Alberta, points out, “In an unselected population (of bulls), we say 20-40% of them are deficient reproductively. They aren't sterile, but they will have fewer calves than you want them to.”

That means you may get calves on the ground, but you may not get as many sired by the bulls you invested more heavily in.

“An individual has to look at their objectives, where they want to go, how they want to get there and how much risk they can comfortably live with to accomplish their goals,” Coulter says. “Getting cows pregnant is one thing; making significant genetic improvement is another thing.”

As an example, assume a bull whose genetic merit you are relying on ends up being 20% less fertile (defined here as number of conceptions/cow exposed) than a sire of equal merit that you could have used on a particular group of cows. Now figure an 85% calf crop/cow exposed — 25 cows/bull.

The difference between knowing and not knowing adds up to about 12 calves across three breeding seasons. Besides passing genetic merit forward, that kind of lost opportunity adds significantly to the cost of each pregnancy.

Examine Breeding Soundness

With that in mind, Coulter recommends annual scrotal measurements and breeding soundness examinations (BSE) as the first step in hedging the fertility bet each year.

First, Coulter says, “Taking a scrotal measurement is the easiest and cheapest thing you can do.”

He emphasizes scrotal measurements should be more than a selection tool. Routine measurements a couple of times each year can help detect new fertility challenges; for instance, if the measurement declines 2-3 cm. over time, he says, that may indicate a problem.

“The next step is semen testing,” says Coulter. “I believe it's useful, and I recommend producers do it each year. It's useful in yearling bulls because you can make sure you have a basis for selection before buying. It's useful in older bulls to make sure they're producing semen as well as they were last year.”

Likewise, Vincent Traffas, DVM, of Traffas Vet Service in Smith Center, KS, explains, “Routinely, bulls should be assessed for soundness in legs, eyes and the reproductive tract.”

Evaluate Physical Ability, Libido

In addition to a BSE before each breeding season, Traffas recommends an evaluation of the libido and physical ability of bulls to service cows during the first week of the breeding season.

Traffas points out that even producers who routinely conduct a BSE on their bulls often do so just before turning them out.

“During breeding season, penile injuries and accessory gland problems are very common. If one waits until the start of the next breeding season, these things may escape detection and never be realized,” he explains. Besides, Traffas adds, “If there is a problem with a bull, he can be readied for salvage, and plans can be made to replace him sooner.”

As well, Traffas advises, “During the off-season, bulls still need to be monitored for health. Vaccination status should be maintained and hoof and leg soundness heeded. Vibrio and Lepto immunizations are routinely recommended, and others may be necessary depending on your area and the recommendations of your consulting veterinarian.”

In Traffas' practice area of Nebraska and Kansas, he says approximately 3% of bulls are affected by Trichiomoniasis. With that in mind, he emphasizes, “From a biosecurity standpoint, I'm really against leasing bulls.”

Short of conducting a BSE on every bull prior to each breeding season, Traffas says, “If there is any unaccountable deviation from normal pregnancy rates, bulls should be fertility tested. The closer to an event that factors can be evaluated, which determine the outcome of an event, the easier it is to discover what the problem was.”

Stress Impacts Fertility

Moreover, Traffas and other bull fertility experts point out injuries and stressors that can impact fertility — including nutritional and health stress — continue to impact fertility long after the aggravation is removed. Part of that has to do with the spermatogenic cycle. Basically, it takes about 56 days from the time a sperm cell starts to develop in the testes to the time it leaves the epididymides and is available for ejaculation. So, stresses today can impact semen quality soon after the event and for as long as eight weeks later.

All told, the cost of knowing the fertility potential of bulls before each breeding season is a bargain compared to wishful thinking.

EPDs: Precision Loads For Carcass Targets

We've used only high-accuracy EPD (expected progeny difference) bulls for the economically important traits since 1980,” says Ashland, KS, seedstock producer Mark Gardiner. “For the past 15 years or so, we've hit 90% or better Choice consistently.”

He adds, “If any of our bull customers get below 75% Choice, they are concerned and we are concerned.”

Research backs up what EPDs can do, says Kansas State University (KSU) animal scientist Dan Moser.

“The EPDs for marbling, fat thickness and ribeye area do work and work very well,” he says. “Producers can feel comfortable about making the changes they need to make, even with yearling bulls with fairly low-accuracy EPDs. The low-accuracy EPDs are still more accurate than any other estimate,” he adds.

Ready to give carcass EPDs a try? Fine, but first you have to know what your feeder calves do in the carcass before you can make intelligent choices on carcass EPDs.

“I'd want to see at least two, if not three, years of carcass data on a herd,” says University of Nebraska beef cattle specialist Jim Gosey. “This needs to be on all the breeds or combinations a producer is using.”

KSU animal scientist Twig Marston agrees. “Whether using AI or natural service, making the correct genetic decision depends on the present status of the cowherd. Some herds need to emphasize red meat, others marbling, and still others a balanced combination of carcass traits.”

He continues, “Selecting the proper genetics can make great advances in calf crop value when calves are sold in the meat. But, if first you don't know where your cowherd is, the first time you put calves on a grid can become quite a crap shoot.”

Gosey also wants to know about your total marketing program. Are you feeding the cattle yourself? Are they fed as calves? Are they fed as yearlings?

Next, Kensington, KS, producer John Ferguson asks, “What is your target? Is it red meat yield, quality grade or a combination?”

If Quality Is Your Goal

If quality is your goal, think marbling. An Iowa State University (ISU) study done by grad student Mark Scott and animal scientists Doyle Wilson and Gene Rouse analyzed more than 28,000 Angus and Angus-cross cattle sired by 1,571 different Angus sires. Scott says 92% of the steers that failed to make Certified Angus Beef (CAB) had insufficient marbling scores.

The answer? Breed to sires with positive marbling EPDs.

“The correlation between the marbling score of the sire and the CAB acceptance rate was 0.37,” says Scott. “In all the other carcass EPDs, (fat thickness, ribeye area, hot carcass weight and percent retail product), the correlation ranged from 0.05 to -0.03.”

Scott states, “If you want to increase the CAB acceptance rate, pay more attention to a sire's marbling EPDs.”

Be forewarned, though — if your cows don't have much marbling ability, even breeding to high marbling bulls may not increase quality grade dramatically in one generation. And in cattle without the genetic potential to marble, the ISU data says there's another correlation that may get you in trouble come pay time — the one between marbling and fat thickness.

Increase marbling, and if you aren't careful, you'll increase backfat. Have you checked out the deduction for Yield Grade (YG) 4s lately? Ouch.

There's good news here, too, however. Those same CAB steers, the ones with the high marbling scores, did not have more fat cover.

Moser adds: “There are bulls with a very favorable high marbling EPD and a very favorable low fat thickness.”

So, where do you look for these bulls? Common wisdom and years of data from the U.S. Meat Animal Research Center (MARC) in Clay Center, NE, points to the British breeds.

“If you just want to work on marbling, the best opportunity to increase it would be with Angus, both black and red,” comments Gosey.

However, if you're crossbreeding with Continental bulls, don't ignore their carcass numbers — there are quality differences.

“We'll get in full pens of cattle — 60 to 100 head, and have 70% to 80% Choice, YG2,” says Robert Williams, director of breed improvement and foreign marketing for the American-International Charolais Association. “Then, we'll get in another pen and they'll run 30% Choice, YG2.”

These are primarily half-blood cattle, “but we'll get purebred heifers that are 70% to 80% Choice,” he says.

The Charolais herd book now offers carcass EPDs on marbling, carcass weight, fat thickness and ribeye area. Williams says, “These carcass EPDs allow producers to do what EPDs are supposed to do. They can make selection decisions based on how they market their cattle.”

If you're marketing through a grid that pays a bonus for Select, there isn't much need for them to select a Charolais bull on marbling, he says. If your grid pays a premium for Choice, which most do, they can select for marbling in the Charolais breed, he adds.

If Yield Is Your Goal

The Continental breeds are your best bet if you want to make strides in the red meat yield category. Focus on EPDs for ribeye area and backfat thickness. Some breeds throw in hot carcass weight and calculate a percent retail product EPD for the optimum combination of the three traits.

No matter what the official name of the trait, Gosey says if you're putting a Continental bull on British cows, you don't need to be too concerned with the exact EPD number on red meat yield.

“The average Limousin or Charolais sire will create a substantial increase in red meat yield,” he explains.

If you do want the precise carcass numbers on Continental bulls, you'll probably have to look a little harder to find them. But Gosey adds, “The Continental breeds are trying really hard. The amount of carcass data they have is much improved over the last two or three years.”

In the last four years, Williams says they've doubled the number of EPDs they offer in the Charolais breed — from five to 10. Four of those are carcass traits, while the other new EPD is scrotal circumference.

Now that you know which traits and breeds to target for quality and red meat yield, are there exact EPD numbers to shoot for? There are no easy answers on that one. In the case of marbling, however, the ISU study can provide a guideline. See Table 1 for the relationship between marbling EPDs and CAB acceptance rates.

No Good Or Bad EPDs

Still, Gardiner comments, “There are no good or bad EPDs. Each producer must figure out for himself which EPDs fit his production environment.”

“I draw on the producer's experience or data to make those decisions,” says Moser. “What are the bulls' EPDs you are currently using? How far do you need to go?”

Also, before you put all of your faith in EPDs, there are some things the numbers can't do.

“A single EPD by itself doesn't mean anything,” says University of Georgia animal scientist Keith Bertrand. “You have to compare it to something else.”

For example, say your cows are +10 lbs. for carcass weight and you breed them to a bull of the same breed who is also +10 lbs. for carcass weight. More than likely, the calves' carcass weight won't improve.

Table 1. Predicted CAB acceptance rate given marbling score EPD
Marbling EPD Mean CAB acceptance rate N, of 1,531 sires
-0.60 0.0% 3
-0.50 1.4% 0
-0.40 6.5% 8
-0.30 11.6% 26
-0.20 16.7% 77
-0.10 21.8% 196
0.00 26.9% 665
0.10 32.0% 307
0.20 37.1% 157
0.30 42.2% 65
0.40 47.3% 39
0.50 52.4% 19
0.60 57.5% 6
0.70 62.6% 3

Bertrand also says EPDs won't tell you exactly what your calves' carcass weight or marbling score will be, unless you have several years of experience using the same breed of sire on your cowherd. Then you can probably get close on an estimate.

Consider the environmental/management factor. Yes, carcass traits have high heritabilities, somewhere around 0.4 for marbling and maybe up to 0.5 for red meat yield. But think of the definition of heritability: the portion of variation in a trait due to the genes.

“Management on a trait like marbling still accounts for 60% of the variation,” says Gosey.

Jon Ferguson knows all too well. After using carcass EPDs since 1990, he had a pen of his Angus-Charolais cross calves harvested in '96. The heifers were 84% Choice and 87% YG1 and 2. The steers were 75% Choice and 82% YG1 and 2.

“We were dead on. We thought we had it down to a science,” Ferguson says. “Since then, we've seen those results jump all over the board, depending on the environment and where they were harvested. We've been amazed, and we've been disappointed. Their performance in the feedlot has been consistent, but we haven't been able to pinpoint where the carcass differences are coming from.”

Partly because of those curve balls thrown by the environment, producers and researchers alike warn against single-trait selection. The best red meat yield in the business isn't going to help you if your cows don't have enough body fat to get themselves through the winter and rebreed.

“Carcass EPDs are not a single-trait selection item,” emphasizes Sally Dolezal. “You can't just chase marbling or muscling.”

For instance, the Derby, KS-based consultant says, “You need to monitor carcass size. Otherwise, selection for extremes can filter back to the cowherd and ultimately impact cow size.”

“There are 18 EPD traits in the Angus sire summary,” states Gardiner. “We pay very close attention to all of them.”

Becky Mills is a beef cattle production freelance writer based in Cuthbert, GA.

Technology Speeds The Measurement Process

Thank goodness for technology. Not long ago, progeny testing was about the only way to find out what kind of carcass a sire passed on to his calves. The calves had to be fed and harvested and the carcass info collected. It was, and is, a lengthy, expensive process.

Now there's ultrasound. In the hands of a skilled operator, the technology can provide marbling, fat thickness and ribeye area measurements on a prospective sire while he's still a yearling. The same goes for his replacement-quality sisters. That data can be calculated into his or her EPDs.

“That shortens the generation interval considerably,” says Iowa State University animal scientist Gene Rouse. “It's cheaper, and you don't have the identification problems and tag transfers on the harvest floor.”

“We can capture a large amount of information at a rapid rate,” says Kansas consultant Sally Dolezal.

“As a side benefit of less cost and time, we're getting data in from a larger variety of breeders,” says Lowell Gould, genetics director for the Red Angus Association of America. “Ultrasound allows smaller breeders to take part in the carcass evaluation program. They have good genetics but have never had the chance to prove them.”

The advantages go on, especially in these days of embryo transfer. Kansas State University animal scientist Dan Moser says, “A group of full sibs are not identical. Ultrasound lets us look at which animals got the favorable draw for leanness, ribeye area and marbling.”

Kansas Angus breeder Mark Gardiner is a believer. In '98, a Gardiner yearling bull called Pinnacle went through their testing program with the rest of that year's home-breds. “He was a nice bull, but we didn't know he was remarkable,” Gardiner recalls.

At 322 days of age, he was barely old enough for an official ultrasound, but the procedure showed his marbling, ribeye and percent retail product scores were off the charts. Now, Pinnacle is the number-one bull in the breed for intra-muscular fat, in the top 1% for ribeye area and the top 2% for retail product. Ultrasound EPDs work, too.

Why Feeders Fell

Over a 30-year period ending in 2000, the U.S. beef cow inventory fell 8.4%, yet inflation-adjusted prices for 500- to 550-lb. feeder steers fell by 33.6%. But why in a supply/demand world would this price drop occur at a time of falling cow inventory?

Cow/calf producers operate in an economic environment characterized by cycles in feeder cattle prices and beef cow inventories. From 1970-2000, U.S. beef cow inventory fell from 36.7 million head to 33.6 million head. Meanwhile, real feeder steer prices (500-550 lbs., Oklahoma City) declined from $88/cwt. to $58.43/cwt. in inflation-adjusted dollars (Figure 1). This precipitous price drop affected ranchers' management decisions in areas such as genetics, financing and marketing as they struggled to remain economically viable.

Numerous factors caused the long-term decline in real feeder prices, but they generally encompass the fundamentals of demand and supply. Of course, other factors such as weather or political decisions can be important.

  • Two factors influencing feeder cattle demand are consumer beef demand and meat packer demand. These demand levels determine the economic health of the cattle feeding industry.

  • Backgrounding profitability also affects feeder demand. Meanwhile, the factors influencing feeder cattle supply include the costs of producing calves and imports of feeder cattle, primarily from Mexico.

A recent statistical study evaluated the demand and supply factors that determine levels of real feeder steer prices (750-800 lbs., Oklahoma City). This price weight range reflects backgrounded cattle ready for finishing.

A number of market factors were studied. These included slaughter steer price, corn price, feeder cattle supplies (including Mexican feeder imports), finance cost (interest rate), feedlot profit risk, feedlot technology and beef cow productivity.

Generally, increases in slaughter cattle prices and cost savings from feedlot technology increase feeder price. Meanwhile, increases in the other factors decrease feeder price.

The past 20 years reveal trends in these variables that could have affected feeder prices. From 1980-2000, real (750- to 800-lb.) feeder steer price declined from $81.78/cwt. to $62.53/cwt., or $19.25/cwt. (23.5%). The market factors accounted for $18.57/cwt., or 96.5% of this decline.

The following discussion focuses on changes in the demand and supply factors from 1980-2000 and their effects on feeder cattle prices. The numerical effects are also given in Table 1 on page 6-BF.

  • Slaughter steer and corn prices

    The largest single reason for the long-term decline in feeder steer price is the 34% decline in real slaughter steer price. This caused a $33/cwt. decline in feeder price.

    Many analysts indicate the long-term decline in consumer beef demand (beginning in the late 1970s) and increases in dressed weights of slaughter cattle (domestic and slaughter imports) led to the slaughter price slide.

    Real (inflation-adjusted) corn price declined by about 60% over this period, primarily as corn supplies increased relative to corn usage. This resulted in a partial offset to the slaughter price decline (by increasing feedlot demand), increasing feeder steer price by about $11/cwt.

  • Feeder supplies and Mexican imports

    Based on the U.S. beef cattle cycle (Figure 1), feeder cattle supplies declined 12% from 1980 to 2000. This added about $12/cwt. to feeder price as smaller calf crops reduced stocker/feeder supplies available for backgrounding and finishing.

    However, imports of Mexican feeder cattle utilized by backgrounders and finishers (primarily in the South) increased over this period from 332,000 head to 1.22 million head. This jump increased imports' share from 1% to about 4% of U.S. feeder cattle supplies.

    Table 1. Changing market factors and impacts on feeder cattle prices, 1980-2000
    Factors changing
    Feeder price
    response
    Slaughter
    price
    (-34.2%)
    Corn
    price
    (-60.2%)
    Feeder
    supplies
    (-12.0%)
    Interest
    rate
    (-45.9%)
    Feedlot
    risk
    (+26.1%)
    Feedlot
    technology
    (+39.5%)
    Beef cow
    productivity
    (+36.4%)
    Mexican
    share
    (+3.0%)
    Percent -51.1% +16.9% +18.6% +1.8% -4.2% +9.6% -20.4% -3.6%
    $/cwt. -$32.84 +$10.84 +$11.99 +$1.17 -$2.70 +$6.14 -$13.13 -$2.30
    Note: Under Factors Changing, percentage changes (plus or minus as shown in parentheses) represent trends in market factors from 1980 to 2000. Under Feeder Price Response, the response of freeder cattle price to these changes is given in percent and $/cwt. terms.

    Increasing Mexican cattle inventories, the reduction of trade barriers and utilization of U.S. feedlot capacity accounted for the import increase. The result was a $2.30/cwt. reduction in feeder cattle price.

  • Finance cost

    Money interest rates adjusted for inflation impact feeder cattle prices since they affect carrying costs from feedlot placement to finishing. However, their price effects are quite small.

    Statistical analysis indicates a 1% increase in the U.S. prime interest rate (which affects rates on agricultural loans) decreases feeder price by less than 1/10 of 1%. However, interest costs for individual feedlots can represent up to 18% of total cost of gain. The 46% drop in real prime interest rates from 14.4% in 1980 to 7.8% in 2000 resulted in increasing feeder price by less than $1.20/cwt.

  • Feedlot profit risk and technology

    Profit risk for feedlots is difficult to measure. Agricultural economists, however, often use the ratio of fed-steer price to corn price as an approximate measure of finishing profitability. The greater the variation in this output-input price ratio, the greater the profit risk facing feedlots. An increase in feedlot risk usually reduces the demand for feeder cattle placements.

    For individual lots, forward pricing through futures and options can manage price risk, but basis risk still occurs. The data show that feedlot profit risk increased 26% from 1980 to 2000, which contributed to a $2.70/cwt. decline in feeder price.

    Statistical analysis indicated that increases in feedlot technology led to increases in feeder cattle prices. Developments such as increased mechanization and health and nutrition management can result in a lower per pound cost of gain.

    These technology changes have been commensurate with increasing feedlot size. Feedlot size may be price-neutral, or size may result in large feeding firms exercising market power and decreasing cattle prices. Alternatively, firms may pass on technological cost savings to feeder suppliers through increased price bids.

    The latter appears to have occurred. Marketings from large feedlots (32,000 head or greater) as percent of marketings from all feedlots increased from 10% in 1980 to 47% in 2000. This resulted in nearly a $6.15/cwt. increase in feeder steer price.

  • Beef cow productivity

    Beef cow productivity here represents carcass pounds of beef produced/breeding cow. Adjustments are made for imports of Canadian and Mexican cattle destined for U.S. slaughter.

    U.S. cow/calf producers have increased beef cow productivity from 496 lbs. in 1980 to 677 lbs. in 2000 (36%). It's attributed to improved breeding genetics, feed nutrition and other management practices that have increased calving percentages and weaning weights.

    The downside is that the increased beef tonnage was marketed at lower prices. Holding beef demand constant, results show that the weight increase contributed to about a $13/cwt. decline in U.S. feeder cattle price.

The Bottom Line

Changes (or risk) in feeder prices are subject to many factors. Some producers manage price risk through contracting and futures markets. Others engage value-based and product-niche markets to improve their net price positions.

Long-term changes in cattle prices depend heavily on factors influencing consumer beef demand. Other factors include production costs, technology changes, processor and retailer competition, and exports and imports.

Demand improvement, besides requiring economic growth, necessitates consistency between cattle genetics and consumer preferences.

Consumer demand is a major factor affecting the prices packers are willing to pay for slaughter cattle. To negate the $13/cwt. feeder cattle price drop from 1980-2000 due to increased beef cow productivity, for example, consumer beef demand would have had to increase to the point of raising real slaughter cattle price by 14%. That's not a trivial change considering that slaughter price declined by 34% over that period.

John Marsh is a Montana State University professor of agricultural economics in Bozeman.