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ADDING VALUE TO THE END PRODUCT SHOULD BE PRODUCER'S GOAL

by: Stephen B. Blezinger
Ph.D, PAS

Once you clear away all the smoke and the buzz that surrounds the beef cattle industry, we find the one single thing that everything boils down to: beef cattle operations are in the business of producing food. Unlike many other segments of the food industry the production of beef is accomplished on the grass roots level to a large degree by relatively small producers. Depending on whose numbers you wish to believe, the average cow-calf producer runs from 25-40 head of cows. This producer does this to supplement his regular income from his regular  job, as a hobby or as a form of recreation, for prestige or some other reason. But folks that run cattle as the sole source of their family's income are a fairly small percentage of the overall demographic. So what's the point to all this and what does it have to do with adding value to the beef product? The brass ring that every segment of the food industry grabs for is the production of a commodity that is of high, consistent demand and that will generate a return upon the sale of the product that exceeds the cost of production more often than not. This product has to be one that the consumer desires on both regular and special occasions because it is consistent, palatable and flavorful. This is where the problem comes in. Because of the diversity of the source of beef, i.e. one product generated from hundreds of thousands of sources one can see why such variability exists in the consistency, quality and ultimately the value of beef.

The value of the end product, to a large degree, dictates profitability of the base producer. This is the value to which this discussion is directed, the value to the producer or the profitability of each unit produced. Let's identify and discuss several of the components that contribute to this value.

Begin at the Beginning

Initially we have to go to the source. In this case, it's the cow/calf producer. Obviously this is the elemental source of all the variability in the end product. This is not a criticism, it is a fact. Consider this:

1. We have thousands of beef producers.

2. Each producer has a somewhat unique genetic base/pool. This base will change with the purchase of new bulls.

3. Each producer has a unique management program that may or may not be consistent from year to year.

4. Ever changing, unpredictable environmental conditions.

5. Time from conception to weaning averages 15-16 months.

6. Using health and nutrition programs that may change from year to year.

Given these variables we see that each of the 35 or so million cattle slaughtered each year are largely individualistic in nature. Throw also into this that while many producers may use a somewhat similar breed or combination of breeds, the variability we see within a given breed can be quite extensive, on top of the fact that we have around 80 different breeds in the United States alone.

Later Phases

So from the cow/calf stage, individual cattle go onto the next stages of production and the management variables increase. Depending on circumstances weaned cattle may follow any of these paths:

1. Feedyard

2. Grass > Feedyard

3. Precon > Grass > Feedyard

4. Precon > Feedyard

5. Grass > Growing Yard > Feedyard

6. Growing Yard > Feedyard

7. etc., etc., etc.

If the cattle weren't diverse enough, management variability after weaning is immense.

Another factor that can be stacked on top of all this is stress. Some of this stress is a result of simple management. Some managers are better than others in understanding what stress means to their profitability. This may take the form of operators who seemingly do everything they can to increase the stress level of the cattle they produce or purchase. On the other hand, you have producers that take every step imaginable to reduce stress before, during and after weaning.

Stress has profound effects on production efficiency in terms of carcass quality and feed efficiency. Another factor that plays a huge role is the location at which cattle are initially produced. We know that most feedyards are located in the plains states and the midwest (where most feed ingredients are grown). This is where the packing houses are located as well. This means that you have cattle produced more or less locally with respect to the feedyards and packing house locations. Comparatively you have cattle produced 1,500 miles away in Florida, Georgia, etc. that undergo tremendous transportation stress. Ultimately this results in a lot of variability in transportation stress levels.

Once cattle arrive at one of hundreds of feedyards they are put into the many differing feeding programs to be found. Generally cattle are fed a corn-based diet of which can and will make-up 80+ percent of the finishing ration. This reduces some of the nutritional variability but you still have a lot of variances in grain processing efficiency, forage sources, nutrient levels, implant programs, ionophore or other additive usage. Obviously a major contributor to reducing production efficiency is environmental effects.

Probably the biggest contribution to variability in the end product is time on feed and resulting carcass sizes. A couple of things drive cattle feeders to hold on to cattle for different periods of time:

*Grid Marketing --  depending on the current grids, feedyard managers may be influenced to feed cattle to heavier weights and higher levels of carcass fatness in order to collect higher premiums.

*Live Cattle Marketing --  When cash cattle prices decrease, especially before breakeven, feedyard managers commonly hold cattle longer periods of time in hopes that the market will go up. Delaying the marketing of cattle can be counter productive. In situations when cattle are held due to depressed prices (we've seen a lot of this), if done on a widespread basis, this results in more beef produced. Thus we have more beef being injected into a market that may already be depressed due to excessive supply. Consider this: if all the cattle fed in feedyards or the Texas High Plains are held one extra day it is like adding 1,000 head to the population. That is a lot of beef!

What is the Answer?

There is probably no one answer or set of answers. Not given the structure the industry has to work with. We have to remember that consumers will pay more for flavorful, tender beef products that are consistent. When they go to the store and buy chicken breasts or pork chops, they are accustomed to a meat product that will taste and perform fundamentally like what they purchased the last time. That's what we are shooting for in the beef industry. In order to accomplish this the industry has to reduce some of the variability. How can this accomplished? Here are some thoughts:

1. At the genetic level, seed stock producers need to continue working to improve consistency of performance with breeds in addition to selecting those traits that are desirable during the various production phases and in the end product

2. Commercial cow/calf producers also need to increase the consistency of their genetic base. This may mean a more highly structured breeding program that produces a calf crop that year after year increases in its genetic consistency.

3. These cow/calf producers need to adopt a consistent, effective overall management program that addresses health, nutrition and stress as well as genetics. The goal here is to optimize resources and input management so production costs are kept as low as possible while overall product produced (lbs of beef per unit of resource) is increased.

4. At all stages, production, transportation and environmental stress levels need to be closely managed and minimized as best possible.

5. Post-weaning to feedyard stages need to work to improve production efficiency at every opportunity and keep cattle healthy and growing. Producers that elect to hold cattle for given periods of time are losing dollars that they may not even realize. Cattle need to continue to grow and gain at all stages in order to perform consistently.

6. Feedyards need to resist the urge to feed cattle to increasingly high weights. This is difficult given the plethora of grids packers conjure up, many of which promote larger carcasses with higher degrees of fatness.

Conclusions

The beef industry was built by producers that are fiercely individualistic. This characteristic is alive and well today. Unfortunately this may be counter-productive in the current production environment. To add value to beef, producers have to improve consistency at all stages of production while increasing efficiency. We are not ever going to have a beef industry that resembles the poultry or pork industries (at least not in our lifetimes). Each and every producer simply needs to work on building a better, more consistent product.

Dr. Steve Blezinger is a nutrition and management consultant with an office in Sulphur Springs, TX. He can be reached at Route 4 Box 89, Sulphur Springs, TX 75482, by phone at 903-885-7992 or by e-mail at sblez@peoplescom.net.

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