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Articles from 2001 In July


Testing The Diary

Day 7 - Roasario and Buenos Aires, Argentina

Thursday – February 1

We checked out of our hotel and walked 2 blocks to the Argentina Board of Trade. This facility has a trading floor similar to the stock and commodity exchanges of the U.S. Here we met an individual who lectured for about one hour. The following are my notes from this meeting:

Rosario is located in the center of Argentina’s grain production. The Board was founded 116 years ago. It annually handles 15 to 16 million metric tons, mostly soybeans, but also some wheat, corn, and sunflowers. The Buenos Aires grain exchange handles about 11 million metric tons per year.

They analyze 300,000 samples per year. He estimates a big crop of soybeans in South America this year. He stated that U.S. production is expected at 75 million tons; Brazil 35 million tons; Argentina 25 million tons and China 16 million tons.

Most of Argentina soybeans are exported. They produce 64 million tons of soya and export 47 million tons. Transportation within country is mostly by truck and this is a major disadvantage. 60% of wheat, 58% of corn, 97.4% of soybeans and 85.5% of sunflower production is exported. This year’s production is estimated at 25 million tons for soybeans, 16 million tons for wheat, 15 million tons for corn and 4 million tons for sunflowers.

Most of the major crushing plants are north of Rosario on the Parana River. Activities of the Exchange are very high. Plants owned by Dreyfus crush 14% of the soybeans, Cargill 13.5%, Vicntin? 11.8%, Ag Deheza? 13.5%, Bunge 8%. ADM is expected soon. Most of these facilities are on the river. He said that Brazil production area is very dispersed; they have a bigger crushing capacity, but they are more dispersed, older, and inland (disadvantage according to him). Brazil equals 160 million people and consumes 30% to 40% of production. Ports are far from production. Cuiaba is the main producing area.

He said Argentina is the number one exporter of oil and soybean meal. He said they had big profits in 1996-1997, and net profit was 3% of Pampas’s investment. 1999 and 2000 profits are not so good. He said U.S. net is similar to here. 2.5% on assets without government support and 4.5% with government support. He is not worried about U.S. subsidies. In summary, most of the data he gave us is on the Internet. But the conversation and location of the discussion makes me aware that these Argentineans are big time players in the market.

Plane ride #2

We left Rosario at 10 a.m. for the Buenos Aires Airport. It took nearly 30 minutes to reach the outskirts of Rosario. We got on a 4 lane limited access highway similar to U.S. Interstates. We arrived at the Buenos Airport at 2:35 p.m. for our flight to Curitiba Brazil. The airport terminal is similar to a typical U.S. terminal. By the time we checked our baggage, got through security and customs it was 3:20 p.m.

Plane ride #3 We landed in Porto Alegre Brazil, a city in the far southeast corner of Brazil. We cleared through Brazilian customs and boarded a new flight to Curitiba Brazil. Each flight was 40 to 50 minutes. Nice planes, first an F100 and then a Boeing 727. We arrived in the Curitiba airport at 10 p.m. The time in Curitiba was 4 hours faster than Chicago. We checked into our hotel and it was the best we had had so far. One of the things we all began to suffer from was "shipping fever." We were on an extremely heavy travel pace with many 12 to 15 hour days. Some of the group developed colds and congestion and all the other things that go with traveling. We had no real trouble with the water, and in the major cities most of us were not concerned with brushing our teeth with the hotel water. Too much in and out of the heat and then into air-conditioned buses and hotel rooms. By the end of the trip, I think we all knew each other’s aliments more than we really wanted to know. I was originally concerned about mosquitoes and malaria. All of the areas we were in have no malaria carrying mosquitoes. I only saw two mosquitoes while we there. Most health people recommend yellow fever shots. We all survived.

Trichomoniasis treatment advice

In regard to your April article “Tracking Trich,” (page 30), I practice in a mixed animal practice in northeast California that includes many large ranches that run in California, Oregon and Nevada and run on public lands in the summer.

Our practice diagnosed heavy trich infections in 1980 and have seen many cycles ever since in this area. We usually see 35% non-pregnant cowherds with 5-10% infected bulls. In heavily infected herds where the herd had been clean, we might see 50% open cows and 50% of the bull herd infected.

A few years ago, we had an infected herd with 35% of the cows open and 25% of the bulls infected. The following year, we noted 35% of the cows open and no infected bulls. This herd had no trich vaccine program and was poorly managed. We felt that the bulls were being chronically infected with trich and were building immunity in the field.

Even though past trials run by Dr. Bill Kvasnicka did not show the vaccine to be highly protective in bulls, we decided this immunity from vaccine might be slower in giving local protection in the sheath. We now recommend vaccinating all bulls with one dose of vaccine two to six weeks apart with boosters every six months.

In the past four years, we have diagnosed very few bulls positive for trich that have been on a good vaccine program. A much higher pregnancy rate has also occurred at this time. This may keep us from feeling the need to sell good bulls more than four years old.

Cattle herds in which trich is at risk are treated similarly for the cows. We recommend two separate vaccinations on females two to six weeks apart with an annual booster prior to breeding. If the calving period is spread out or fall and spring calving cows are run together, we recommend vaccinating females in the spring and again in the fall.
Donald D. Crum, DVM
Alturas, CA


It's A Hoof, Not A Foot

In your May issue (cover, cover story and “Editor's Roundup”), you mention foot-and-mouth disease (FMD). Please be aware that the correct name for the disease is hoof-and-mouth. FMD is the name provided by animal rights people and implies contagion to humans.
Don Gabrielsen
San Rafael, CA


We welcome reader letters. Include name and address and send to BEEF, 7900 International Dr., Suite 300, Minneapolis, MN 55425; or e-mail to [email protected]. BEEF reserves the right to edit for length.

Hoping for a hurricane

South Florida is experiencing perfect Chamber of Commerce weather — beautiful blue skies and cool breezes. It's extremely dry, however. While our tourists are happy, the agriculture community is stressed. Anyone with cattle or crops is very concerned about the water shortage.

Hopefully, a good rain will reach us soon. The few locations that have received the moisture are greening up and starting to grow. Others of us haven't been so fortunate.

As crazy as it may sound, I am hoping for a hurricane this year. Not a real big one, but one that would bring the water table back up for our area and bring some relief.

It may seem crazy, but it is what we really need. A few scattered showers have given us a little break, but they have not solved the problems. South Florida is still under mandatory water restrictions and pumping orders. The most recent report claimed our area has a 50-in. deficit in rainfall from previous years.

This is serious because it can lead to salt water intrusion due to our proximity to the coast. Our cattle are watered by a system of drainage canals. Usually the canals are replenished every few weeks in the winter and early spring by cold fronts bringing rain.

Most of these canals now have only puddles remaining. We have resorted to drilling several new surface wells to provide water for the cattle. It was costly but a necessity.

This year has been unusually dry and unseasonably cold. Area ranches had seven or eight hard frosts this year, which is extremely rare in our part of Florida.

Between the frosts and drought our grass supply is completely gone. We almost never run out of grass and usually sell all of our hay. This year we kept 90% of our hay to feed.

I'm sure many producers from colder climates hold little sympathy for our situation. But, in our defense, we do not adjust our stocking rates for winter conditions because we rarely need to do that. This year has been a tough lesson for us in feeding hay and rotational grazing.

Fires And Alligators

Wildfires have added more anxiety to this challenging time. On average, we have battled one blaze per week. Fires are extremely dangerous this time of year due to the strong sea breeze off the Atlantic. These breezes last most of the day, only dying down at night.

The fires coupled with drought make for a scary situation. We've already lost much-needed pasture to fire. The only upside is the green, tender, nutritious grass that comes in with a little moisture.

Ranchers aren't the only ones hurt by the lack of rain. The resident alligators are affected, too. Many of their dens have gone dry, and this means they must relocate and search for food.

Several times in the last few weeks while checking pastures, I have seen gators making their way through the cows in search of water. As a general rule, gators are not a large threat to our calves, but extreme conditions call for extreme measures.

So, this time of year we must pay attention to larger gators that could pose a threat to our livestock or us.

Another odd twist this time of year, and a serious problem, are buzzards. They can be a real detriment to our calf numbers if not controlled.

The buzzards migrate south in the winter in huge numbers and prey on our calves. If a cow has a problem calving, the buzzards will try to kill her and the calf.

Buzzards are amazingly aggressive. I've seen three or four pecking at a young calf's face and a few pulling on it's tail trying to bring it to the ground.

We must acquire special permits to control buzzards because they're endangered. Buzzard control is not a fun job!

Every U.S. ranch operation has tough seasons; late winter and spring are ours. We always manage to make it through, and I am sure this year will be no different. So, while we are waiting on the summer rainy season, we will continue to process calves and prepare for shipping in mid- and late summer.

At least prices are up, and that makes everything a little easier to handle.

Mary Anne Cruse, her brother Wes, parents and grandparents operate Ru-Mar Inc., a large commercial cow/calf operation in South Florida.

Leasing cows part II

As this decade's cattle cycle moves from the turn-around phase into expansion, expect a renewed interest in beef cow leasing. Typically, leasing increases when producers are looking to expand herds but can't or don't want to borrow the money.

In addition, senior ranchers wishing to retire need to minimize the tax consequences of the sale of herds. By leasing the cows to a working rancher, a retiree can spread the investment transfer payments over several tax years and substantially reduce his income tax and social security consequences. In fact, I have one client exploring the use of leasing as an estate transfer tool.

Last month, we discussed how to develop a beef cow lease that is equitable to both parties involved. This month, we'll review the economic underpinning of beef cow leases.

Leasing livestock is a form of borrowing capital. Rather than borrow from a bank, however, the working rancher borrows from the cow owner. Leasing cows allows the working rancher to acquire control over the use of the beef cow assets without an actual capital outlay. Instead, he pays the cow owner a share of the calf crop as payment for use of those beef cow assets.

Leasing beef cows on this basis is advantageous to both parties involved. Some of the advantages to the working rancher include:

  • Obtain control of beef cows without going into debt to buy breeding stock.

  • Share some of the risk of the beef cow operation with the cow owner.

  • Gain equity in the total herd when the working rancher provides the replacement heifers.

  • Borrowing investment capital at a fair rate (provided the lease is equitable).

Meanwhile, the advantages of leasing to the cow owner include:

  • Ability to maintain a breeding herd without providing the labor and feed required to run the cowherd.

  • Provides an economic return (sometimes substantial) from investment capital.

  • A means of transferring ownership over a period of years.

  • Spreads the income from selling the cowherd over several years, thus reducing the income and social security tax consequences of the cowherd transfer.

  • Allows the next generation to gain control and ownership over the cowherd assets by having the working rancher provide replacement heifers as needed.

  • A means of estate transfer from one generation to the next.

With a properly designed lease, beef cow leasing can be a win-win situation for both sides involved. Unfortunately, however, I've analyzed as many leased herds with unequitable leases as with equitable leases.

When calf prices were high, these unequitable leases sort of worked for the working rancher, but the leases tended to favor the cow owners. When calf prices were low, these working ranchers just worked hard. In fact, the economic reality for these working-ranchers was typically substantial economic losses.

My analysis of leased beef cowherds reveals two common problems:

  • The first is that working ranchers tend to not know their potential costs of production when entering into a lease. Meanwhile, cow owners typically have a good handle on their costs.

Frequently, the perception among these working ranchers is that the biggest cost of running cows is the capital investment in the cows, and that is paid by the cow owner. But when the capital cost is annualized and it has to be annualized this perception is just not true.

The biggest annual cost of running beef cows is feed, which is typically paid by the working rancher. Just having a good handle on production costs can go a long way towards negotiating an equitable beef cow lease.

  • The second major problem is that the two parties tend to use a “community standard agreement” similar to what farmers use for leased farmland. They use this format to avoid the work of determining each party's economic contribution.

In the Northern Plains, this community standard agreement for leased beef cows has been 60/40. Under this standard, the working rancher gets 60% of the calf crop and the cow owner gets 40%.

However, when the cull cow income is added to the cow owner's 40% of the calf crop, the cow owner actually collects more than half of the beef cow income. A typical cow owner, however, simply does not contribute half the economic costs of running a beef cowherd.

I recommend that the beef cow lease be re-evaluated twice during a typical 10-year cattle cycle. Do this once for the expansion phase of the cattle cycle and again for the contraction phase. Typically, the equitable share-lease agreement will be different for each of these cattle cycle phases. Properly done, leased cows can be a win-win business decision.

Harlan Hughes is a Professor Emeritus at North Dakota State University. Retired last spring, he is currently based in Mankato, MN. He can be reached at 701/238-9607 or [email protected].

Evaluating Market Alternatives For 2000 Calves

These planning price projections (Table 1) are based on both the futures market price and Western North Dakota sale barn prices for the current week. The price projections in Table 1 were used to evaluate six marketing alternatives for year 2000 calves shown in Table 2.

The “buy/sell margin” in Table 2 is the buying price of animals going into a lot subtracted from the selling price of animals coming out of the lot. Since selling price is normally less than purchase price, the buy/sell margin is normally negative. The negative buy/sell margin represents the marketing loss/cwt. on the purchase weight of the animals. The cost of gain (COG) represents the cost of the added weight while in the lot. Profit/head represents the combined marketing losses and profits from gain.

Table 1. Suggested planning prices

Lbs.

Fall 00

Wk May 23

Mar 01

Spg 01*

Fall 01*

400

$119

$107

$120

$107

$108

500

$105

$103

$110

$103

$103

600

$96

$97

$102

$97

$97

700

$90

$91

$93

$91

$92

800

$88

$85

$85

$85

$85

900

$89

$78

$78

$77

$78

Slaughter

$72

$77

$79

$75

$75

*Projected week of May 23, 2001

Table 2. Traditional marketing alternatives

Marketing Strategy

Buy/Sell

COG

Profit/Hd

1. Sell at weaning

N/A

$0.70

$149

2. Bckg high ADG

-$17

$0.49

-$16

3. Fin bckg steer

-$16

$0.46

$22

4. Grow and finish

-$11

$0.42

$43

5. Steers on grass

-$11

$0.45

$3

6. Fin grass steer

-$10

$0.45

$57

The six marketing alternatives evaluated here are: 1) selling 565-lb. calves at weaning, 2) backgrounding 565-800 lbs. sold after first of the year, 3) finishing backgrounded steers 800-1,200 lbs., 4) growing and finishing 565-1,175 lbs., 5) steers on grass 625-800 lbs., and 6) finishing grass steers 800-1,250 lbs

.

Mandatory madness

Mandatory price reporting will evolve into something more workable, but not overnight.

Be careful what you ask for, they say you just might get it. The cattle industry asked for mandatory price reporting (MPR) and, as ugly as it's been to date, it's here to stay. But, the sooner it can get a face lift, the sooner our reporting system can start working better for everyone.

MPR's debut couldn't have been worse. From the beginning, the reports compiled by USDA's Agricultural Marketing Service (AMS) were laced with data holes big enough to ride a horse through.

• The 3/60 rule is often faulted for this decrease in information. The rule allows release of information only when at least three packers are trading in the market and no packer supplies 60% or more of the market.

Then, it was learned that from April 3 to May 11, AMS had miscalculated the reported cutout values for beef carcasses and primals. Prices for “no-roll” product Standard and lower grades were being incorporated into both the Choice and the Select cutout values.

No-roll product typically sells for $2/cwt. less than Select. For 29 market days, daily Select and Choice cutout values averaged higher than originally reported. One day's Choice report was off by $7.69/cwt.

USDA calls it a computer glitch, but it cost the feeding industry millions of dollars; producers and cattle feeders will feel the pain for some time. We'll never know for sure how much money was lost directly or indirectly, who lost it and who found it.

Meanwhile, USDA is facing some serious class-action lawsuits and may be in the mood to provide some type of settlement.

The Confidentiality Clause

The frustration and outrage over this software glitch is understandable. But a more chronic glitch has cattle producers even more confused about what MPR is doing for them. Producers feel they're receiving less market information than under the old voluntary price reporting system.

They can thank the 3/60 provision for that. This provision isn't unique to livestock and meats price reporting. Other government branches use it to protect the confidentiality of private business information and to prevent collusion.

But, 3/60 will be a short-lived component of MPR. In fact, had USDA not had to stop and clean up the mess from the miscalculated cutout prices, the 3/60 rule may already have been replaced with something else.

USDA has evaluated data from regions where release of information is restricted due to 3/60. The agency now must determine how to reconfigure regions so the data still has meaning to producers. It's also looking at other methods for releasing data that still protect confidential information.

Don't Expect Miracles

Given the complexity, it's not surprising there have been problems in the transition from voluntary to mandatory reporting.

While MPR provides daily morning and afternoon reports, that doesn't mean there is always trade to report. The majority of fed cattle trade still occurs in a narrow window one or two days a week. Trade can only be reported after it happens, whether it's mandatory or voluntary.

We must remember two things:

• MPR doesn't change the way livestock and meat are traded. It only defines the transactions required for reporting once trade occurs.

The system provides commitment and delivery reports for cash, formula and contracted cattle. It also reports prices for formula and contract transactions, and price ranges that reflect the value differences for various qualities of cattle. We are getting much more complete information on boxed beef and cutout prices.

Under the voluntary system, this information was not available or in the case of boxed beef, very thin.

Generally, good cash cattle prices for the five regions are being reported. In time, they will improve in availability and timeliness.

• The price reports you see are just that reports. They're not price determination, and they're not real-time. They can be used in downstream price determination but only a seller and buyer who are communicating can determine a price.

Using price reports, we can have an indication of value. But the three tenets of value time, place and form are different with every transaction.

Reports also can be used to track trends and bias in a market and predict markets. But, reports are not the market.

In the short run, MPR has meant less price information in some markets. But, MPR has the potential to provide more detailed price information, segmented by livestock weights and quality levels. It also could fill some data gaps, particularly in meat price reporting.

As tough as it has been to date, increased price transparency will evolve from MPR. In today's concentrated packing industry, however, the 3/60 provision blacks out too many areas. It can't be allowed to defeat the purpose of MPR.

Dollar-based genetic selection

Figuring out how much emphasis to place on carcass traits in commercial bull selection, relative to their value in the real world, just got easier.

The American Gelbvieh Association (AGA) is the first breed organization to unveil an expected progeny difference (EPD) for grid merit.

“We believe seedstock producers in general and commercial producers in particular have a hard time understanding what carcass traits mean to the bottom line,” says Nick Hammett, AGA director of seedstock marketing. “So we wanted to design a system that makes it easier for them to use.”

In a nutshell, the grid merit EPD embraces basic animal index selection theory and hopefully ushers in a new age of genetic evaluation tools for economically relative traits, rather than just predictor traits. In this case, the grid merit EPD simply predicts the value difference, in dollars, between sire progeny marketed across what most folks would consider a mainstream pricing grid.

“According to our best ability, we looked at where we thought the industry would be five years from now and made some assumptions,” says Don Schiefelbein, AGA executive director. “All things being equal, on average, in the future we believe cattle with more marbling will be more valuable than cattle with less marbling. And, we believe cattle with more muscle and leanness will be more valuable than cattle with less muscle and leanness.”

In addition, the grid utilized in calculating the new EPD narrows the carcass weight window to 600-850 lbs. It also places more premiums on Prime and the upper two-thirds of Choice than most grids today.

With that in mind, look at the bulls in the latest AGA Sire Summary (see Table 1 example). These bulls are described for carcass weight, ribeye area, marbling, fat thickness and the new grid merit EPD that accounts for the economic value of the other carcass EPDs.

So, using the bulls in this example, Twinkle Toes is expected to sire calves that, on average, should bring $9.55 more grid premium than those sired by Guts ‘N Butts.

Folks familiar with the joys of cattle feeding won't be surprised to find that the sires ranking highest for grid merit tend to be fairly balanced and positive but non-extreme in the specific carcass traits.

However, Schiefelbein says, what will surprise some is how much this indexing approach confounds traditional eye-logic when it comes to ranking bulls.

For instance, he and his family have fed cattle for years. Yet, he says, “When you use an index like this, it's amazing to see how inept you've been at ranking animals based on their overall carcass merit, relative to a grid.”

He adds that AGA could create the EPD much of it through the efforts of Patrick Doyle, AGA director of research and education because of the database AGA has created through the Gelbvieh Alliance. This feeding and carcass data, tied to specific sires and pricing grids, gives them the population distributions necessary to calculate such an index.

Perhaps even more powerful than the tools itself, though, are the application spin-offs that such dollar-based selection technology makes possible. As an example, with AGA's Value-Bull software, producers can plug in specific carcass EPDs for bulls they're considering, along with a specific pricing grid they're interested in. Then, with a keystroke calculate the predicted grid merit of the progeny.

Schiefelbein does caution, however, “There is a lot of sexiness in making an index like this specific to a value-added program. But, because cattle breeding is such a long-term proposition, I think producers should be careful and compare bulls based upon mainstream grids rather than those that represent a niche.”

Doyle also calls for keeping the new tool in perspective. “As with other EPDs, the grid merit EPD may be used to estimate how the future progeny of one animal will compare to the future progeny of another animal within the same breed.

“However, carcass traits are just one component of a balanced selection program. It's never a smart management strategy to select sires based on a single trait,” he adds.

Indeed. But hopefully this is the type of real-world, consolidated, selection information producers can hope to access more in the future.

“As we move in the direction of genetic evaluation tools that allow producers to see the economic impact associated with a combination of traits, we're confident that they'll be more comfortable in taking advantage of them,” says Hammett.

Table 1: Example of Gelbvieh Grid Merit EPD

Bull Carcass Weight
(acc)
Ribeye Area
(acc)
Marbling
(acc)
Fat Thickness
(acc)
Grid Merit
($)
Twinkle Toes +10
(0.73)
0
(0.70)
+0.32
(0.71)
0
(0.68)
+$15.87
Guts 'N Butts +23
(0.42)
-0.02
(0.39)
-0.01
(0.41)
-0.01
(0.37)
+$6.32
(Source: American Gelbvieh Association)

The Power of One

Individual animal identification and management systems are starting to save and make producers hard cash.

Lost amid the emotional shuffle of a national, standardized, individual cattle identification system is a powerful and growing recognition: tracking and managing individuals can increase economic returns.

“There's so much benefit that can come from this. If you can use this as a management tool to improve the bottom line, why wouldn't you use it? It's valuable even if the government never makes individual identification mandatory,” says Tigh Cowan of Highmore, SD.

Cowan and his brothers Treg and Tork put their collective shoulder to this conviction three years ago. That's when they established Stock Link (see below, “How One System Works”) as a means of enhancing the profitability of their own sizable stocker operation by tracking and managing individuals rather than groups.

“We're already using this to our advantage to make money,” says Tigh. “This isn't a theory; we've done it.”

By tracking stockers individually via electronic identification (EID) tags, then collecting and sifting through the data using AgInfoLink's BeefLink information system, Tigh says they and Stock Link clients have saved $35-$60/head. That's net savings after the $6 cost for the EID and enrollment in the Stock Link system.

Those savings are based on the ability to manage the cattle more appropriately relative to their actual performance rather than eyeball estimates. They sort off poor performers and sell them. This leverages the returns on the grass left behind and dilutes the overall cost per head of the retained stockers by reducing the interest paid on the poor doers.

“It allows you to manage while there is still time to manage,” explains Treg. “You can go in and look at the cattle by eye and they look good, but by the scale they don't.”

And, as Joe Carmody, another key in the Stock Link team, says, “The scales don't ever lie.”

Tork says that benefit is over and above the management benefits the system allows, “things like evaluating mineral supplement or the nutritional quality of different pastures.” Or, the labor savings associated with health management.

“With this system and sorting the cattle, we don't have to ride and doctor. We can go through and treat them. The doctoring is easier to do treating them one time through rather than riding and doctoring all summer long,” says Treg.

On ranch-fresh calves of known origin, and even with put-together stocker cattle, Tigh says the system allows operators to market more uniform groups of cattle with a documented health management history, at least through the stocker phase.

“Leverage that history with data from the cow/calf pasture and the market value increases exponentially,” he adds.

Information Adds Potential

Just ask Jerry Kusser of the neighboring K Lazy K Ranch, which signed on as one of Stock Link's first clients in 1998. He combined several years of carcass history with Stock Link data to bargain last fall for $115/cwt. on 550-weight steers 10¢ slide up and down, no shrink off the ranch when the Cattle-Fax average for a similar class of steers was $102.75/cwt. Even compared to other top-drawer country cattle, the steers were $5-$10/cwt. ahead of the pack.

“We were tired of taking an average price at the sale barn,” says Kusser, explaining his willingness to dive into a new system even though he didn't know much about it. “You take the top 70-75 percent of the cattle at the sale barn, and there isn't a dime's difference between them. It's what the market is that day. You're at their mercy.”

Of course, buyers can feel just as helpless bidding on cattle they know nothing about other than what their eyes and experience tell them.

“They may be damned good cattle, but they're commodity cattle if we can't validly tell you where they're from or prove what's been done to them,” says Tigh.

That's one reason Lyle Billips of Billips Farms at Hill City, KS, was willing to pony up the premium on Kusser's calves.

“I paid more for them because they had carcass data and the health program on them was just tremendous,” says Billips.

Moreover, the folks at Stock Link used the past carcass data to estimate what the calves should be worth coming out of the feedlot on the Angus GeneNet grid.

Keep in mind, the carcass history didn't come cheap or easy. Frustrated that buyers would never return the carcass data to him as they had promised, Kusser began paying for it about five years ago.

“When we started paying $6 per head for carcass data, the neighbors thought I'd totally lost my mind. They said I'd never get paid for it,” he says.

But, besides the marketing value of individual information, it's the management potential that intrigues both Kusser and Billips.

“The reason I'm interested in it is that when you look at the data we're getting back (on the Kusser steers), the cattle are pretty much like peas in a pod to look at, but the individual carcass values on the rail bounce hundreds of dollars up and down. That's a lot of difference in what the cattle are worth at virtually the same weight,” says Billips.

“You can't tell by looking at them, but you think you can. There is a combination of genetics out there that if we could just identify them, it could revolutionize cattle feeding. The only way to do it is with electronic identification,” he says.

Across the board, Glenn Smith, USA country manager for AgInfoLink explains, “Comparing one pen to another in the feedlot, you don't typically see a huge variation in production looking at averages, maybe a range of $10 per head or about 1 percent variation. But if you look at the variation within each pen, it can be well over $300 or 40-50 percent.”

With that in mind, Smith adds, “You can safely say managing individual cattle in the feedlot is worth at least $50 per head.”

He says that number comes from increasing efficiency and gains by sorting poorer performers from the superior ones at re-implant time, reducing lightweight and heavyweight carcass discounts with commingling, reducing the cost of duplicate animal health management, reduced labor cost and increased odds for hitting higher value pricing grids.

Narrowing The Window

As an example of just how much variation exists before the cattle ever leave home, consider 525 of Kusser's steers. They averaged 417 lbs. overall, ranging from 411-430 lbs. on average across different pastures. But the top 77% of those cattle averaged 441 lbs., ranging in weight from 382-612 lbs. The bottom 23% averaged 339 lbs., with a range of 198-382 lbs.

“We're finding out more things all of the time (with the data),” says Joe Kusser, Jerry's dad. “You get a calf with a sore eye or one that is a little gimpy, and you find out those cattle never catch up, not in this program anyway. That one at the bottom takes at least four from the top to get you back even with the board.”

The Kussers also utilize individual data to narrow the variation gap through selection.

“Everyone culled by the eye before, and to a certain extent you still have to. But without this information I imagine we were keeping some of the poorer doers and sending some of the better ones to town,” says Jerry. “Unless you have all of this information, going to the sale barn, I don't think you can survive on average price. Average prices don't pay for new pickups, tractors and fuel.”

Bottom line, Treg says, “The more information you have, the better decisions you can make. As producers, most of us think we have good cows. We try to buy good bulls, and we work to make the calves the best they can be. Then, we just throw a dart when it comes to marketing.”

Or, Tigh says, you can take control of your marketing destiny.

“Our thought is that there will be a huge value difference paid between documented cattle based on the validity of the documentation. And, certainly we think there will be a huge value difference paid between documented and commodity cattle.

“In the last six months, I've realized there's more opportunity in the cattle business than there has been for a long time. It's just a matter of whether you're willing to change enough to take advantage of the opportunities,” Tigh says.

For more information about the Stock Link program call Stock Link at 605/852-2097.


How One Individual Management System Works

“It's no different than scanning a box of corn flakes at the grocery store,” says Tigh Cowan.

He's describing the electronic identification (EID) tags that are smaller than a coat button (see A), the tag readers that look like a flattened, rubber Billy club (see B) and the electronic Work Cards (see C). Together, these elements allow the Cowan family's Stock Link system to automatically collect individual animal identity, weights, phenotypic descriptions and specific management protocol at the rate of about 200 head/hour.

Most talk of EID the past few years has centered around the tags, says Glenn Smith. He's USA country manager for AgInfoLink, which supports Stock Link with software and hardware.

“But, the tag is just one component. It carries an animal's unique individual identification number and nothing more,” he says.

It's the information system tied to the tag that makes individual management possible on a timely basis, Smith adds.

In the case of Stock Link, producers fill out Cattle Cards (left) with such information as birth date, birth weight, color, sex and the like. The EID tag in the calf's ear corresponds to that particular Cattle Card and returns data to Stock Link.

As the animal progresses, health, weight and performance data is submitted automatically. The producer receives updated performance information and documented history on the cattle.

Or, a producer can choose to have Stock Link handle all processing for them, using a fully portable tub and chute, complete with electronic scales (see photo above). This system and its three-ton chutes make it possible for the Cowans to take the system to wherever the cattle are, rather than having to bring the cattle to the system.

As information is collected, complete with a chute-side audio verification system that tells the person scanning the information what was just scanned in, average daily gain is automatically calculated. What's more, the system includes a trickle-calculator for shrink so that the first calf run through the chute is weighed under the same conditions as the 1,500th calf.

The data that can be collected using the system is limited only by a producer's imagination. If it can be measured or diagrammed, it can be automatically collected and reported on. Using the electronic Work Cards, the person doing the scanning simply runs the tag reader over the appropriate descriptors and a transponder collects the data.

Before diving into any individual management system, however, Smith suggests, “Begin with the end in mind. What is it you want to do? What management decisions do you want to be able to make with individual animal data?”

It's that answer, he says, that determines what data points need to be collected, how they must be collected and in which industry segments they need to be collected.

“Once you sort through all of that, then you can evaluate the kind of system you need,” Smith says.

BRD Task Force

Researchers are collaborating to learn more about bovine respiratory disease and how to manage it.

For more than 25 years, a group of university and USDA researchers have leveraged their strength in numbers to take on bovine respiratory disease (BRD).

Classified as the “NC-107” research group by the government from which much of the group's research monies come the collaborative effort includes scientists from 20 state land-grant universities as well as USDA laboratories in Ames, IA.

Goals for the group include:

  • developing and testing methods to diagnose BRD,

  • determining how management tools can impact BRD control methods,

  • determining how BRD is produced,

  • determining how cattle resist BRD, and

  • keeping abreast of any changes in the nature and cause of BRD outbreaks in feedlots, ranches and dairies.

The researchers cooperate on projects ranging from clinical trials to molecular investigations, says Ricardo Rosenbusch, an Iowa State University veterinary professor and member of the group.

No one single action or change can be expected to eliminate or even control BRD, he explains. BRD is typically caused by more than one pathogen and is influenced by human decisions like marketing practices, management practices and economically justifiable treatments.

Studying BRD management strategies is part of NC-107's five-year plan, Rosenbusch says. Specifically, the researchers will look at the use of antibiotic treatment on arrival and vaccination plans prior to commingling or as a part of preconditioning.

To monitor any changes in the nature or cause of the disease, the group also plans to summarize BRD pathogen data from 13 state diagnostic labs.

“This should confirm the role of known pathogens and alert us to any changes,” Rosenbusch says.

Using capabilities for fingerprinting specific strains of BRD, the researchers also will track the evolution of multiple pathogens through large BRD outbreaks.

“Some of these capabilities are very sophisticated and may only be available for one or a few pathogens in any given lab,” he explains. “By stressing collaborative efforts, a more comprehensive study can be made in specific, pre-planned scenarios.”

The group, formed in the 1960s, shares its findings with veterinarians in private practices and diagnostic laboratories.

Several major accomplishments in BRD research involve the work of NC-107 members, Rosenbusch says. One of the most notable, he says, is the affirmation of Mannheimia haemolytica as a major pathogen in causing BRD. Studies on the immunology to this agent led to early vaccines, and studies on the toxin produced by the agent led to improved vaccines.

“These improved vaccines are extensively used by cattlemen, together with multiple other vaccines, therapies and management practices,” Rosenbusch explains. Other accomplishments include:

  • developing and testing treatment-on-arrival protocols in feedlots,

  • discovering key steps by which some viruses can remain hidden in normal cattle over time, and

  • discovering and studying new or emerging agents of BRD, such as BRSV, BVD type 2, bovine respiratory coronavirus and Mycoplasma bovis.

The group's research is supported by USDA. It's also funded through competitively acquired grants from various government agencies, private industry and commodity groups.

NC-107 leaders are: Robert Fulton, chair, Oklahoma State University; Ricardo Rosenbusch, Iowa State University; Glynn Frank, USDA's National Animal Disease Center; Eli Asem, Purdue University; Fred Cholick, South Dakota State University; and William Wagner, USDA's Cooperative State Research, Education and Extension Services.

A Land Or Livestock Business?

A Kansas rancher recently told me he was considering buying a section of land adjacent to his ranch. The price was $300/acre. He figured the carrying capacity was about 10 acres/cow. He asked if he should buy it.

“That all depends.” I said. “Are you in the land business or the livestock business?” There's an important distinction.

  • Some people own vast tracts of ranch land but run no livestock themselves. You could say they are in the land business but not in the livestock business.

  • Some ranchers run hundreds or thousands of cattle on leased ground but own virtually no land. They are in the livestock business but not in the land business.

  • Those who own livestock and the land on which they graze are in both the livestock and the land business.

We don't usually think of our businesses this way. If this last category describes your situation, however, you would be well served to think of your operation as the “XXX Land & Livestock Co.”

Asset Rich; Cash Poor

The majority of ranchers earn a very low rate of return on their equity. At the Ranching for Profit School and in our Executive Link program we challenge our clients to achieve at least a 10% return on investment (ROI).

There are two ways to achieve a greater ROI. The approach most take is to try to increase the return. We've succeeded. Our cows are more productive than ever before, weaning more and bigger calves all the time.

However, the increase in production and income has been outpaced by increases in costs. As a result, increasing production has actually decreased profit.

The other, and most often overlooked way of increasing ROI, is to reduce the amount you have invested.

The bulk of most ranchers' money is tied up in the land they own. Ranch land produces lots of values. The wind that blows over it, the water that flows through it, the wildlife that lives on it and the minerals underneath it all have value. Yet the majority of land-owning ranchers harvest only one of the values the land produces: the grass.

A highly successful client recently asked me if I thought the name “Ranching for Profit” was misleading. He said he'd learned to make a 10% ROI on livestock (after paying rent). But when he added the value of his investment in land, the total return dropped to about 4% (that's still about 400% better than the industry average).

The answer lies in either developing other revenue streams from the other values the land produces or reducing the amount invested in the property (e.g., selling the development rights, mineral rights, selling the ranch and leasing it back, etc.).

How Much Is The Grass Worth?

Stan Parsons' rule of thumb is that grass is worth the value of the animal that it supports. For example, it takes about 10 acres of land in Kansas to support a cow. If the cow is worth $800, then the productive value of the land for grazing would be about $80/acre for grazing ($800 cow/10 acres = $80/acre purchase price).

When I worked this out with that Kansas grazier, he shook his head and grumbled that the land was over-priced. I disagreed. If someone will pay $300/acre, then by definition, that is what the land is worth to that buyer.

The other $220 of value must come from values other than the ability to support a cow. If he's willing to build his business to capture some of those values, it might make a lot of sense to buy that land. If he's not willing to do that, buying the land is probably not a good business decision (though it might be a good lifestyle choice).

Of course, there may be reasons other than the immediate economic return for buying this land. Perhaps it helps consolidate his holdings, allows him to simplify his operation or provides security, protecting the rest of his property. These are all good reasons to consider the purchase, but don't expect the cows to buy that section if you're really 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].