Plan beef herd genetics on consumer desires

by Hannah Johlman

Cattlemen have focused on quality from the beginning. Their success at delivering cattle that perform for the next owner kept them in business through market ups and downs. The approach seems to work, but can it keep working in an era of relatively higher beef prices?

Mark McCully, vice president of production for the Certified Angus Beef^® brand (CAB^®), challenged producers at the inaugural Canadian Beef Industry Conference to consider looking at their business in reverse.

“We know genetics are important,” he said. “We know health management is important at the ranch and at the feedyard – but they’re also critically important to consumer satisfaction, which ultimately drives demand for that product.”

And that, he said, brings profitability to the whole system.

“Let’s start with the consumer and work our way backwards,” McCully said in the August 11 presentation in Calgary, Alta. “That’s how we will most effectively hit the consumer target.”

Showing a perfectly grilled and plated steak, he encouraged ranchers and feedyard operators to evaluate how their management decisions affect the end product. He reminded everyone that marbling is the basis of quality grading systems and highly correlated to consumer satisfaction.

“Adding that takes nothing away from cow herd performance but adds much to the value of the end product,” he said.

Improved marbling starts with genetics, as carcass traits are highly heritable. McCully shared data from the USDA Meat Animal Research Center that shows Angus cattle surpass all other breeds in ability to marble, even though there is much variation within all breeds.

That’s why producers use expected progeny differences (EPDs) as comparison tools, he said, noting recommendations in CAB’s “Best Practices Manual” available online. DNA-based tools can also help select heifers with increased marbling potential.

Once calves are born, beef quality is maximized with proper care.

“It boils down to what those things are that impact marbling,” McCully said. “Health and management, nutrition and creep feeding in particular. Know and be aware that the nutritional management of the calf while he’s still on the cow can affect weaning, and that calf’s marbling ability.”

A slide of a steer chasing men over a cliff demonstrated the importance of selecting for docility.

“We all know disposition is important from the family aspect,” McCully said. “They’re also hard to deal with, they’re hard on equipment and they produce a low-quality calf in the end.”

He encouraged producers to establish benchmarks and measure progress, keeping records even after the sale.

The market price shifts have more ranchers looking at retained ownership through the feedyard phase, but if that’s not a possibility, McCully said there’s no reason to waste any of the hard work and planning that went into their cattle.

“A feeder usually gets a set of cattle and knows almost nothing about them,” he said. “There’s no owner’s manual with that set of cattle.”

Such cattle are often capable of better, but can be mismanaged in the feedyard, simply for lack of information. To prevent that disconnect, McCully suggested ranchers and feeders work together. Those who sell should share health and genetic background, and those who buy should give feedback on performance and carcass merit.

“Typically, with no background on the cattle, they are managed like the average,” he said. “What we should be doing in an efficient system is managing those cattle to their genetic ability. Do we take them a little bit farther, to maximize their marbling? Or at what point are we just wasting feed on those cattle that don’t have the ability to hit a high-quality target.”

Missed opportunities only detract from profitability throughout the system.

Beyond marbling, McCully discussed options to improve beef tenderness

“While historically we’ve dealt with the issue through aging and other post-mortem techniques, identifying and eliminating those problem genetics should be a goal for cattlemen,” he said, noting the ability to measure and select for tenderness will improve with new technology.

Finally, McCully suggested being mindful of the size of cattle.

“We do get a lot of questions about carcass size and ribeye area,” he said. “Cattlemen need to think about ramifications as we look further down the chain.”

Showing steaks cut from different size ribeyes, he said, “The thinner steak from the bigger ribeye is probably harder to prepare to the perfect degree of doneness. Overcooking this steak jeopardizes the consumer’s experience.

Not suggesting a switch to smaller animals, McCully simply said the concern calls for balance.

“We have to have pounds for this to be a sustainable business. That’s ultimately what we’re selling,” he acknowledged. “All these things are important. But we have to make sure we’re not losing sight of the consumer’s eating satisfaction.”

New manual guides stocker-backgrounder to quality

by Laura Nelson

When it comes to beef quality, the stocker industry is sometimes considered oblivious, or driven only by pounds. But market dynamics have continued to build the case that quality matters to these entrepreneurs, and of course, they matter in any discussion of beef quality.

That’s why Certified Angus Beef LLC (CAB) recently published its Best Practices Manual (BPM) for stocker operators and backgrounders, a guide to targeting the Certified Angus Beef^® brand.

“The stocker segment has historically been considered a low-cost, margin operator,” says Mark McCully, CAB assistant vice president for supply. “The reality is they have a huge influence on end-product merit, and those best management practices need to be identified and kept in mind.”

The BPM highlights strategies that guide stockers to maximize profit and quality. “It covers everything from genetics to cattle procurement, from health and nutritional management to marketing. All of these areas are critical to the bottom line as well as product quality,” McCully says.

Pfizer veterinarian Robin Falkner says the booklet doesn’t just give producers tools to improve their animals; it opens their minds to new ideas.

“This publication raises the stocker’s awareness that what he does matters down the production line,” Falkner says, noting they are often farmers or grassland managers first and beef producers second.

“A lot of stocker operators are simply looking to turn grass into gain. But they could be part of a more elegant system that allows them to capture additional values in a branded beef program like CAB while doing that,” he says.

McCully says there has been a “knowledge void” on management practices to help stockers capture that value, which led to the development of the stocker BPM. The stocker industry is changing, and its producers need more information.

Falkner points out: “We’re moving from a commodity stocker industry where every 750-pound yearling is worth 80 cents to an industry where some of them are going to be worth a dollar, some 60 cents, and some may be unmarketable. This is the type of manual that starts opening people’s minds to how they can make sure their cattle are those desirable ones.”

The manual breaks down each production step that affects just how desirable those cattle will be in a quality-driven market. Greg Highfill knows the stocker industry has a unique set of needs and challenges. The Oklahoma State University beef cattle specialist says BPM serves as a practical tool to meet those challenges.

“The Best Practices Manual addresses the issues that reduce stress, while improving health and production efficiency,” he says. “Those things come together to yield a higher-quality end product.”

Stockers are often challenged to take calves from diverse backgrounds and improve them for a profit. This often means straightening out health and dealing with weaning stress, Highfill says. “The manual does a nice job of addressing weaning and the stress that comes with putting cattle together from different backgrounds. It helps identify ways of treating them that will improve stocker health and addresses appropriate animal handling guidelines.”

Another beef cattle specialist says the manual gives stockers a condensed but information-packed guide to “understanding how everything from nutrition to implanting to sourcing their cattle affects quality grade and CAB acceptance.” Justin Rhinehart, Mississippi State University, says the manual’s discussion on growth implants outlines practical and applicable information on how different products affect quality.

The BPM also addresses marketing ideas that affect production profits. Highfill says it’s a tool that increases information sharing between cow-calf producers, stockers and feedlots, which lets each segment reap the benefits of better management.

Rhinehart points to the CAB Feeder Calf Value-Discovery System as an important marketing tool. “Everyone should know by now that if we do all these management practices and then sell them as commodity cattle, we’re just backing up,” he says. “Utilizing the marketing tips in the manual is so key.”

For all of its great information, cattlemen must still customize the BPM to maximize its use, Falkner says.

“While there are a lot of people who will look at this manual for answers, the really astute stocker cattlemen are going to look at this to get better questions,” he says. “It’s a thought-provoking starting point that asks, is my operation where it needs to be? How do we need to manage cattle for better quality? What do I need to be aware of in the future that I haven’t been in the past? Every answer is not in there, but there is enough to stimulate the thinking that will ask the right questions.”

To start asking these questions in your business, e-mail Marilyn Conley at mconley@certifiedangusbeef.com or call (800) 225-2333 to order your free copy of the Best Practices Manual for stockers and backgrounders.

Ranch homework for feedlot partnerships

by Laura Nelson

As a cowherd operator, you can produce a quality calf. The feedlot manager knows what it takes to finish that calf on feed so it can earn carcass premiums.

Combine the two sides as partners or retain ownership and the opportunities for herd improvement and profit may just multiply. But this equation only balances when you meet your “perfect” cattle feeding counterpart.

There are thousands of feedlots, and hundreds could work for you, so finding the best partner can be a problem, especially the first time. Once you add up your needs, however, that formula should narrow the field. Finding the answer will lead to more math, but the feedlot and carcass data can help make the herd more predictable and add dollars to your bottom line.

Rather than selling calves or backgrounded feeders for a commodity price, partnering or retaining ownership with a feedlot lets you enter a new world of price discovery. Finished cattle may be sold through value-based, “grid” markets that pay on the individual carcass merit of each animal. That opens the door to selling branded beef and producing for the Certified Angus Beef^® (CAB^®) brand.

Meanwhile, you can track individual calf performance and progress on feed. Feedyards can report rates of gain and feed efficiency as well as carcass data.

“For cow-calf producers who want information to take back to the ranch for their sire selection and cull-cow programs, this data is so critical,” says Mark Sebranek, manager of Irsik and Doll Feedyard, a 32,000-head CAB-licensed yard near Garden City, Kan. “That carcass information tells a lot of stories producers can’t get any other way.”

The drawback to retained ownership is the initial financial re-arranging.

“One of the toughest deals we run into with first-time feeders is that they have their money set up at home with their bankers for payment at certain times of the year,” Sebranek says. “Selling fat cattle instead of feeders changes when you get money to your banker by several months.”

Income taxes are another concern, as that transition can span across two calendar years. The solution may be found in partnerships on a pen basis, sharing a percentage of ownership. The financial compromise can let you sell enough interest in the calves to cover loan payments and split income across tax years.

Fifty-fifty is the most popular arrangement, but some feedyards will consider any percentage.

Dan Loy, Iowa State University feedlot management professor, says it’s especially useful for first-time feeders. “Partnering on a pen of cattle gives producers confidence that the feedlot is willing to share in both the risks and rewards of a retained ownership relationship,” he says.

Many feedlots also take on some banking functions, financing cattle, feed, transportation and other expenses at competitive interest rates with no payments due until finished cattle are sold, according to beef cattle specialists with CAB. Paul Dykstra and Gary Fike say these services can be necessities.

“Without the right financing scenario, it may not even be feasible to retain ownership,” Dykstra says. “But partnering is one of the surest ways to establish trust.”

Once you decide to establish that link to cattle feeding, it’s time to formulate that list and find a feedlot partner you can trust, Fike says. The first variable to consider in this formula is hard to quantify: feedyard reputation.

You can ask Extension agents, veterinarians and cattle feed nutritionists, work through feeder and rancher associations or browse the Web. You could take a more personal approach.

“Ask for recommendations from your neighbors, friends and other people with the same type of cattle and experience in feeding,” Fike suggests. “Ask about the yards and managers they are comfortable with and that have a record of consistent performance.”

Sebranek gladly provides references. “If I know someone in your area, I’ll ask my customers if they mind new customers calling them, because they want to see what their cattle can do here.”

Establish special marketing needs and exactly what you expect, Dykstra recommends. “If you age-and-source verify or raise natural animals, make sure the feedlot will capture those premiums and aggressively pursue all marketing opportunities for your cattle,” he says.

Some yards will return data on pens of cattle only; others will provide individual animal data. Make your data needs clear from the start, and get a firm commitment from the manager.

“The feedlot should be experienced in accessing carcass data, so it’s part of the normal business of the lot,” Dykstra says. “If a manager says, ‘We can sure try to get you some carcass data,’ that’s not good enough. It’s already clear he’s not sure about it.”

Feedlot performance may be of more immediate concern, Loy says.

“A feedyard must provide the services a producer thinks are important, and they have to do it in a cost-effective way,” he says. To show what they can do, feedlot managers should provide detailed performance reports, closeouts that explains yardage and feed charges, chute fees, typical medical costs and any other financial obligations. Producers should ask to see closeouts that exemplify cattle similar to their own size, type and background.

Itemized charges and fees vary from yard to yard, so don’t worry about the small things, Loy advises.

“You may be comparing different costs on kind of an apples-to-oranges basis,” he says. “Focus on comparing the bottom line and total cost of production.”

When the numbers add up, the only decision left is that first one: who can you trust? Sebranek says, “If you’re not comfortable with a feedyard, then it’s not going to work, no matter if they do a great job for you or not.”

Personal visits will convey a feeling for the feedlot’s maintenance, animal treatment and staff integrity. “We’re in the people business as well as the cattle business,” Loy says. “One thing about cattlemen is they have a sense about business relationships, and many times they just need to go with their instincts. They need to find people they trust, and if something doesn’t seem right at a feedlot, it probably isn’t.”

Sidebar: Sitting down with a feedyard manager

A good feedlot manager knows his business inside and out. If you’re considering a partnership or retaining ownership, it’s your business to know it equally well.

“There’s no need to be shy in asking questions,” says beef cattle specialist Paul Dykstra, with Certified Angus Beef LLC (CAB). “Be upfront and know what you’re getting in to.” CAB offers questions to consider in the marketing section of its Best Practices Manual, available at www.cabcattle.com/best-practices or by calling 800-225-2333. Here are a few major topics for your first sit-down with a potential partner.

Feedlot history

Get the basics on the feedyard’s background. How long have they been in business? What are the manager’s goals and philosophy of feeding? What kind of cattle do they typically feed? Do they feed cattle from your area?

Feedlot manager Shelby Jones says potential customers of Ranger Feeders II LLC, Dighton, Kan., ask such questions. “They’re trying to get a big picture of what goes on at this feedyard, what we do and why,” he says. From issues of cattle comfort to the finer points of attention to detail, “accurate two-way communication is essential.”

Feeding process

This is the reason you’re entrusting the manager with your cattle, so it better make sense. What do they feed, why, and where does it come from? Do they have emergency feeding plans for when bad weather or other disasters strike? How consistent is their feeding schedule?

“Understanding how feed is accounted for eases the mind of newcomers,” Jones says. “So we usually talk about how the feed is weighed to a pen for each feeding, and how it’s recorded and posted to the pen.”

Rations are customized and change through the year and as your cattle progress toward finished weight, their intake constantly monitored for quantity adjustments. “Starter rations” may vary with calf type and age, and how much intake they are accustomed to, Jones says. Sharing that information can reduce digestive upsets and stress that may lead to other diseases.

Closeouts or performance records

Managers should be happy to show you a sample closeout record, but if you don’t understand what those figures mean, it’s not going to do any good. Iowa State University professor Dan Loy says producers should question anything and everything on a closeout.

“Some of these questions are going to seem simple, but they’re important,” he says. “What were the weighing conditions? Were they full weights, were they adjusted to a standard dressing percentage at the end? Do you calculate deads as part of the cost of production or is the death loss ignored?” Ask about how the numbers on the closeout were calculated – how do they determine the number of days on feed? What’s the markup on feed costs, if any? Be sure to clarify any acronyms or abbreviations you’re not familiar with.

Financial options

This is where numbers better start making sense if you’re going to make this partnership work. CAB’s Gary Fike, beef cattle specialist, says it’s critical to know and understand all your financial options when going into business with a feedyard.

“Ask about their financing options, what interest rates are and how much equity you need to leave in,” Fike says. “Given the beginning value on cattle, ask what opportunities exist to hedge them or enter into a basis contract. Asking about such risk management techniques doesn’t take the risk out of the market, but it does take the unknown out of what you stand to earn or lose.”

Don’t stop

Keep asking until you feel well informed in choosing the feedlot. If a manager doesn’t take the time to answer all your questions thoroughly, he’s probably not someone you want to do business with.

“The big deal in finding a feedlot that works for you is making sure you’re going to a yard, you’re talking, and you’re asking questions,” says Mark Sebranek, manager of Irsik and Doll Feedyard near Garden City, Kan. “I give potential customers all the time in the world – if they want to talk for three hours, we’re going to talk for three hours. They’re going to ask what they might feel are stupid questions, but they’re not. They’ve got to ask all those questions to make sure they’re comfortable with what we’re doing.”

Tag: Stocker Best Practices Manual

Plan beef herd genetics on consumer desires

by Hannah Johlman

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