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From ‘happy accidents’ to intentional beef quality

 

by Miranda Reiman

Doing more with less. In the cattle business, that’s more than a nice idea; it’s the new survival plan.

“In any manufacturing system, if the number of units is reduced, the revenue per unit must increase,” said Pete Anderson, director of research for Midwest PMS, a U.S. livestock feed company.“The cattle industry must focus on maximizing revenue from each animal produced.”

Larger carcasses? Certainly, he said, but also increasing the value of each pound sold.

Anderson presented his paper, “External Influences on North American Beef Production: How Will the Cattle Feeding Industry Adapt?” as part of the Plains Nutrition Conference in San Antonio, Texas, last month. The full paper is available at https://cabcattle.com/research.

“Premium carcasses like CAB [Certified Angus Beef] or Prime used to be a happy accident that occurred at the outer end of the population distribution, just because there were millions of cattle fed,” he said.

Packers “creamed the coolers” to find quality they could sell for a higher value, but today real-world examples show ranchers reaching 50% Certified Angus Beef ® (CAB®) brand and Prime on large numbers of cattle, with better than average feedlot performance.

“Economic signals are telling us that we need to do more of that,” Anderson said: even with a spike in grading, the Choice-Select spread remains relatively strong and premiums for CAB increasing.

Pete Anderson

“While U.S. per capita consumption has declined with supply, increasing prices are as sign of solid demand; a growing population will continue to consume beef,” he said, but the opportunities aren’t limited to domestic growth.

Exports accounted for $307 per head in 2013, according to the U.S. Meat Export Federation. By 2030, North America and Europe will have just 18% of the world’s middle class population, compared to 63% in the Asian Pacific.

“North America should get in, stay in and dominate the premium beef market,” Anderson said. “Our resources are best utilized creating big, high-quality cattle that produce an enjoyable eating experience and maximize revenue per animal.”

The cattle that fit that description will only get more valuable, he predicted.

“We will not manage $2,000 cattle the same way that we used to manage $900 cattle,” Anderson noted. “While in the past, cost of production was the primary focus, emphasis will shift toward growing revenue.”

That requires a more specialized approach than the feeding industry typically uses today, he said, one based on individual records, sorting, and performance projections with applied management and marketing.

“Value for ‘known’ feeder cattle will shift from simply reputation and feeding experience to include measureable diagnostics that improve predictability,” Anderson said.

The economics of tools, such as DNA testing, change when comparing 30 million head of feeder cattle worth $700 each to 24 million worth $1,300 apiece.

Of course, creating a premium product generates more revenue, but does nothing to produce more product.

“Despite a shrinking cattle herd, beef production in tons has increased since 1950,” he said. Cattle numbers have dropped, “but productivity increased dramatically so that we now get more beef and more milk from 90 million cattle than we used to get from nearly 140 million.”

Growth genetics are a large part of that success story, and Anderson expects that to continue.

In the PMS Midwest database for the last quarter of 2013, nearly 25% of the steers gained more than 4 pounds (lb.) per day and converted at less than 6 lb. of feed per lb. of gain. The average “out” weight was 1,469 lb.

“The proliferation of big, high-performing cattle changes the economics of cattle feeding and creates new opportunities,” Anderson said.
In addition to improved potential, the use of technology and a marketing shift (from live weight to carcass-weight basis) accelerated this trend across the industry.

How big is too big? “It is hard to bet against a straight line for 40 years, but there are reasons to expect the increase to pause for a while.”
Those include beta-agonist and implant usage leveling off, along with drought implications.

Experts predict heifer retention will increase soon increase cow numbers, but Anderson said this “maximize-each-head philosophy” will still apply.

“The recent USDA projection of a 16% increase in the U.S. cowherd by 2023 seems more like the upper limit of possibility than a realistic forecast,” he said.

Challenging times give the beef industry an opportunity to write its own story.

“Cattle producers are subject to external influences to a greater degree than ever before,” Anderson said. “Responses to these forces will shape the industry and determine its future.”

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Kuner Feedlot named CAB 2013 Progressive Partner

 

by Miranda Reiman

No one is automatically insulated from the effects of a shrinking national cowherd, but Kuner Feedlot, one of 12 in the JBS Five Rivers Cattle Feeders group with 1.6 million annual marketings, goes for proactive rather than reactive ways.

The management team’s unique approach caught the attention of the Certified Angus Beef ® (CAB®) brand, which named the Colorado yard Progressive Feedlot of the Year at the CAB annual conference in Palm Desert, Calif., on Sept. 18-20

“We knew last fall that it could get tough to find cattle and we’d be forced to be creative,” says Nolan Stone, general manager at the 100,000-head capacity yard located near its namesake town along the South Platte River. They quickly gravitated toward developing replacement heifers.

“The idea was, ‘Let’s do something that will separate these heifers from what else is out there,’” he says.

They purchased 4,500 head of known Angus females and then used all available tools to make them a value-added group of replacements. Blood samples were collected during processing, to evaluate each heifer for gain and grade potential using CAB’s GeneMax™ (GMX) genomic test. The first decision on which to feed versus breed was based on those GMX scores.

“They wanted to base their selection on something that was more objective and had direct feedyard and carcass economic meaning attached to it,” says Kent Andersen of Zoetis, the genetics company that developed GeneMax in collaboration with CAB and Angus Genetics Inc. “They looked enough alike where it wouldn’t have been so easy to do that initial sort on phenotype.”

Using the 100-point combined measure for both gain and grade, the team at Kuner sorted off anything that didn’t make at least a 50. Then Colorado State University assigned docility score and evaluated the females for depth and width. Those that didn’t make the cut went into a natural feeding program.

Then they used timed AI (artificial insemination) on the remaining 1,250, followed by a second round of heat-detected AI at the feedyard. The remaining 1,100 heifers were then sent just south of Steamboat Springs, Colo., to Saddleback Ranch, which Five Rivers leases. Fifteen cleanup bulls, all 15/16 brothers leased from John Raftopoulos of Diamond Peak Ranch, Craig, Colo., completed the breeding program.

Andersen helped select the four AI sires.

“We went straight to the American Angus Association sire selection tool on their website,” he says, noting the Kuner goals of a double-digit EPD (expected progeny difference) for calving ease direct (CED), a “sensible” birth weight and “as much growth and grade as possible.”

Using the Sire Match feature of GeneMax, several sets of heifers were identified by known sires, including some Mytty InFocus and SAV Final Answer daughters. Only 39% of the heifers with unknown sires were selected, compared to 60% of those with superior genetics.

“We wanted to pick three or four AI sires that represented enough diversity that we could match to the heifer groups and accentuate strengths or cover any weaknesses, as well as minimize inbreeding,” Andersen says.

The average $W and $B indexes of the AI sires were $41 and $87, respectively. That puts them in the top 5% of the breed for those indexes.

That’s an advantage to any of the bred-heifer buyers, but also has a greater industry benefit.

“We felt like we could do a small part to improve the cowherd. We’ll be creating a set of feeder cattle down the road that were selected for things like dollar-B ($B),” Stone says.

He would like to see what could happen if others follow suit.

“We’ve told people our goal is not to just market these 1,100 heifers, because that’s not much in the whole scheme of things,” he says. “We’d like to tell people ‘here’s how we did it’ and hopefully others will do it and make better cattle.”

 Andersen says it’s perfect timing.

“We could expect pretty substantial increases in heifer retention in the next one to five years,” he says. “This project really served as a very large scale prototyping effort for how we can use all technology at our disposal to select the best heifers possible and then breed those to the best, proven, genetically superior Angus AI sires possible.”

“We’re also hoping to avoid the costs associated with heifers that aren’t going to make good cows or produce progeny that gain and grade,” Andersen says.

That’s become a bigger concern for Stone, who has worked for Five Rivers for 14 years, the last seven as the Kuner general manager.

“We’ve really learned since we started feeding naturals,” he says. “We do mass sorting on the traditional cattle, but the natural cattle, we generally leave in their contemporary groups and they don’t receive the benefits of all the available technologies, so you see huge gaps in performance.”

Some 3,500 head come and go at the feedyard each week. As the traditional cattle come in, they’re individually weighed and stay in holding pens for 30 days while they’re stepped up to a finishing ration.

Although the Kuner Feedlot tracks performance, grade and profitability on every pen, the co-mingling makes it hard to relate back to individual ranches.

But the natural cattle are mostly kept together by source.

“Feeding them really made us realize the better cattle are worth more money,” Stone says. “We’re interested in cattle that have better genetics. We can’t just buy the best cattle, but if people understand we’re paying attention to it, maybe it will become more of a management style than it used to be when everything was just a commodity.”

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$20,000 in beef scholarships

CAB’s Colvin Fund helps education dreams come true

 

by Miranda Reiman

October 21, 2011

Pursuing a passion for agriculture through further education—that’s the top requirement for the Louis M. “Mick” Colvin Scholarship offered by the Certified Angus Beef ® (CAB®) brand.

This year, $15,000 will be split among five undergraduate scholarships, in the amounts of $5,000, $4,000, $3,000, $2,000 and $1,000.

College juniors and seniors who have shown commitment to the beef industry, either through coursework or activities, are encouraged to apply by the Dec. 2 deadline. Applications are evaluated on involvement and scholastic achievement, communication skills and reference letters.

A new opportunity, an additional $5,000 graduate level scholarship will also be given to a full-time masters or doctorate student conducting research related to high-quality beef production. Applications for that award are due Jan. 13, 2012.

“The graduate level scholarship will build on what the Colvin Scholarship has always done,” says Mick Colvin, who co-founded Certified Angus Beef LLC (CAB) in 1978 and served as president for 22 years. “We will be able to groom the next great scientist supporting premium beef.”

The funds given have more than doubled since 2009.

“It’s very, very gratifying to see the amount we’ve offered grow over the years,” Colvin says. “Our partners have really pitched in and they’ve made this scholarship what it is today.”

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Those supporters raised a record $92,000 in scholarship monies at a golf outing and auction held during the brand’s annual conference this year in Sunriver, Ore. The dollars go into an account that generates the interest proceeds used to fund these scholarships each year. That ensures the longevity of the program and its impact on the industry.

The 2012 golf outing sponsorship was purchased by Palmer Food Services/G&C Food Distributors, Rochester, N.Y.  The following companies also supported the live auction: Holten Meat Inc., East St. Louis, Ill; Cargill Meat Solutions, Wichita, Kan.; Tyson Fresh Meats Inc., Dakota Dunes, S.D.; Sysco Columbia LLC, Columbia, S.C.; Cattleman’s Choice Feedyard Inc., Gage, Okla.; Niman Ranch, Denver, Colo.; and from Canada, Retail Ready Food Products Inc., Mississauga, Ontario; GFS Montreal & Quebec; and Boucherville Quebec.

The top two recipients also win an all-expense-paid trip to the 2012 CAB Annual Conference, September 19-21 in White Sulphur Springs, W. Va.  This is an opportunity to interact with leaders throughout the production, packing, retail and foodservice industries.

“I can’t say enough good about the past winners,” Colvin says. “They’re great, great students and I’m proud to be associated with them.”

The Colvin Scholarship Fund began in 1999 when Colvin retired as CAB executive director. The scholarships recognize his role in making dreams a reality and inspiring others to be their best. Colvin co-founded the CAB program in 1978, leading to establishing the world’s leading brand of fresh beef.

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New demand index points to profit potential

 

by Miranda Reiman

The leading Angus brand has increased the number of pounds sold every year since 2005, but does that really mean demand for the product is soaring?
Economists said there was not enough information to tell, so Kansas State University’s Ted Schroeder and Master’s student Lance Zimmerman analyzed additional data and found that the answer is, “Yes.”
The methodology and results are explained in their research paper, “Defining and Quantifying Certified Angus Beef ® Brand Consumer Demand.”

“The demand for CAB has outpaced Choice product since 2002,” the paper says. “Demand for CAB increased 56% over the eight years and Choice demand increased 20%.” In both cases, the biggest increase was from 2009 to 2010 (see Figure 1).

“Much of the 2010 demand growth had to do with export market opportunity,” Schroeder says, but also a return of restaurant visitors in 2010.

“We were a victim on the foodservice side and beneficiary on the retail side,” says Mark Polzer, CAB vice president of business development. In 2009, CAB’s foodservice business was down almost 5.5% and retail was up 9%, but 2010 brought good news in both sectors: foodservice increased 10% and retail by 20%.

Ted Schroeder

CAB sales increased by more than 100 million pounds compared to 2009, and the brand’s cutout value increased more than $5 per hundredweight in deflated U.S. dollars. The paper notes, “There was not another year in the model where both per-capita consumption and real cutout prices increased relative to the previous year.”

Demand for Choice beef and demand for CAB products are closely related, but certainly not identical.

“The commodity product seemed to be more dramatically affected by negative macroeconomic factors, such as trade barriers and overall economic health,” the research states. “It is also worth noting that demand for Choice product appears slower to rebound during times of recovery than CAB demand.”

The index showed that strong international sales years (2003 and 2010) were also the two highest years for wholesale brand demand. International increases remains strong, on track to break the 2003 record this year as it claims more than 10% of the brand’s total sales.

“Future dramatic growth will depend more and more on our international side,” Polzer says. “But there are so many variables outside of the cattle industry that affect international demand.”

 

Regardless of where it’s sold, these increasing numbers bode well for producers. It can be hard to make a direct connection between farm-level prices and retail beef price stickers, but earlier research from John Marsh, Montana State University economist, looked at that.

He studied total U.S. beef demand from 1976 to 1999 and noted a 66% decline. That translated to a 40% reduction in fed cattle prices, and feeder-calf prices dropped 48% during that period.

The recent K-State research says, “Improving demand at the consumer and wholesale level can have an equally dramatic, positive influence on farm-level prices and production, and these effects can be illustrated by the success of CAB and the Angus breed.”

That’s backed by numbers: CAB premiums in the $5 per hundredweight (cwt.) range, video sale Angus breed premiums of $6.55 and 63% Angus-influence in the 2010 U.S. steer and heifer harvest mix.

“To fulfill that need, premiums for that product will flow back down from the processor to the packers, back to the feedlot and ultimately to the cow-calf producer who is influencing those genetic selections,” Schroeder says.

Although not 100% of the premiums are passed through the system, a portion is still significant.

“If feeders see that they can get $4 or $5 per hundredweight (cwt.) premiums from CAB-qualifying carcasses, they’ll very quickly bid that back into their purchases for calves that they think will have a high likelihood of attaining that,” Schroeder says.

“Beef demand woes historically have surrounded quality issues with beef products,” Schroeder says, recalling the 1980s and ’90s. “We needed to start offering customers a more predictable eating experience or we were going to see continually declining demand.

“Higher quality and branded products do that or they don’t last,” he says. “If they don’t deliver consistently they’re out of the game.”
To learn more, visit www.CABpartners.com.