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CATTLE TODAY

HUNTIN' DAYLIGHT -- SELECTING TOMORROW

by: Wes Ishmael

You can't overwhelm genetics with management and technology.

That's the response I got a couple of years ago from a higher-up at one of this nation's Big Three packers.

We were visiting about post-harvest technologies that increase carcass tenderness. I was wondering whether genetics for tenderness really mattered, if machinery, feed additives and such could make tenderness at least acceptable, especially considering the long costly journey of making incremental genetic improvements.

He told me that's exactly what his company had hoped at one time, but reality proved to them technology and management can only do so much. You might be able to fix up a wreck, but there's still going to be problems with it.

In other words, simple as it is, genetics define the future of the beef product. More than ever, genetics will also determine the ability of producers—and of the industry overall—to compete in a world vastly different than just a few years ago.

You can't overwhelm genetics with management and technology.

You can dilute their potential, but you can never make them be more than their potential.

     

Eye of the Storm

Toward the end of June, corn prices were flirting with $8 per bushel, oil prices topped $140 per barrel and the stock market dropped to its lowest in 21 months.

“The shock waves of dramatically higher energy prices are reverberating through every corner of the U.S. and are likely to continue for the foreseeable future,” said Derrell Peel, Livestock Marketing Specialist at Oklahoma State University, earlier in the month. “The impacts are obvious in some regards and much more subtle in others, but are widespread and only just beginning to be manifested in many cases.”

Whether glaring or insidious, Peel explained the sea-change of commodity price levels will ultimately lead to a dramatic change in the expectations of consumers and producers, a transition he believes occurs in three stages.

“The first stage is one of assuming the impact is a short-run shock that will soon pass,” says Peel. “Consumers make no or very minor temporary adjustments in spending habits and accept the fact the costs are higher and the money does not go as far. Producers accept smaller returns and margins but make no significant changes in the production process.”

Eventually, producers and consumers arrive at the second stage, where Peel says they understand that it's not possible to avoid making significant changes.

“Consumers, for example, may still have the gas guzzler but make changes in driving habits and recognize that they may want to buy a different vehicle when the time comes. Consumers begin to significantly alter eating habits by eating out less and changing food purchasing choices. Producers make more significant efforts to find cheaper inputs and manage production costs. However, in stage two, neither consumers nor producers have fundamentally changed their lifestyles or ways of doing business. It appears to me that many consumers and producers in the U.S. are in or very near stage two at this time,” says Peel.

By the third stage, Peel explains producers and consumers assume the change driving the transition is permanent—in this case a new and higher plateau for the prices of commodity inputs—and they begin trying to figure out what fundamental changes they need to make relative to the driver.

“For the most part we are still asking how to keep doing what we have done rather than asking how we can use an entirely new approach to do things. The process of long- run adjustments to our economy does not begin until we change the long-run expectations of consumers and producers,” says Peel. “Consider the reluctance of the airline industry to fundamentally reassess a business model that clearly is not working. For the most part we are still asking how to keep doing what we have done rather than asking how we can use an entirely new approach to do things. The process of long run adjustments to our economy does not begin until we change the long-run expectations of consumers and producers.”

Need Versus Want-to

One rational expectation is that American consumers will continue to want beef, and they'll continue to want it at reasonable prices, in relative terms. Likewise, producers will continue wanting to provide it, so long as they can stay in business. That's where the questions begin.

How much beef production per acre will be required on a given parcel of ground to make ends meet? What does that mean in terms of the minimum level of reproduction—calves weaned per cow exposed? How does mature cow size alter those metrics one way or the other? And the list goes on.

That's no different than the questions cattle producers—at least some of them—have been asking in one form or another since modern beef production began. Finding answers and understanding the truth behind them seems especially urgent, though, as the beef cattle industry traverses the beginning stages of what appears to be a fundamental shift in the costs underpinning a business that has been fueled by the assumptions of cheap feed and fuel for at least a half-century.

You can't overwhelm genetics with management and technology.

Whatever the questions, we know the answers start with genetics. They determine the foundation for everything from breeding rate, to cost of gain, to consumer eating satisfaction.

Thankfully, the need to select genetics capable of answering the questions occurs at a point in beef industry history when there are more tools for selection than ever before, and tools that offer more prediction accuracy and reliability than ever before.

Expected Progeny Differences (EPDs) have been a standard for better than two decades now, replacing the in-herd ratios and Estimated Breeding Values before them. Now, we have EPD indices and at least a few EPDs for Economically Relevant Traits rather than only for their indicator traits. Next on the horizon is Whole Genome Selection—basically being able to estimate genetic value for all traits the day a calf is born (with a DNA sample), with greater accuracy than currently offered by EPDs based on pedigree. None of these tools are perfect predictors, but all offer more opportunity than eyeball and gut feel.

Now, if we had tools as accurate at assessing whether we're asking the right questions about this newly hatching industry.

There's always an element of shock when a storm arrives, even though it's been brewing a while, and may come in a different form or with unexpected force. It's the same with the economic chaos and wonderment currently embracing the industry. Plenty of folks expected there to come a day when choosing breeds meant lots less than finding answers, when picking bulls was more about identifying solutions than following industry-wide fads, when more wouldn't necessarily be better.

Apparently that day is here.

“These adjustments are not easy or quick. Many will take up to a decade and some much more than that,” says Peel of making necessary changes amid the seismic shift in commodity fundamentals. “…The process will be painful, frightening and threatening for many people but like all changes will also offer a host of new opportunities previously unimagined by both producers and consumers.”

You can't overwhelm genetics with management and technology. That's one of the opportunities.

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