Professional sports franchises have a distinct pecking order when it is time for a decision to be made. The owner provides financial stability and calls on his staff to put together a winning combination. Closed door meetings often bring the general manager, a talent evaluator and the manger together with a financial consultant to institute policy.
They compile countless data sets to identify the missing pieces to the puzzle that separates a contender from a mediocre organization. These personnel decisions often revolve around “difference makers” and which ones it will take put the team over the proverbial top based on needs for the franchise.
Cattlemen face a much more daunting task. There is usually not that clear cut pecking order to the decision making process. More importantly, sometimes there is not the precise data set available to make the change dealing with certain traits that are costly and time consuming to gather information. Efficiency is often a word thrown around, whether from a reproductive standpoint or from a feed conversion standpoint, to sell a product. In reality both are expensive traits to evaluate and there is currently little evidence to support either claim.
Finding the “difference makers” will lead to eventual profits, but could be like stepping off into the realm of the unknown for most producers. The old-timers have always said money is made in the feedlot through the feeding process and if cattle can convert better during this time frame, they have a better chance of hitting the home run. Until now, there has been little market incentive and even fewer ways to measure feed efficiency for cattlemen looking to improve this trait.
“We have never really had the technology in place to measure individual feed intake and it has taken the industry a long time to get around to it,” say Dr. Monty Kerley, University of Missouri.
“The challenge is we have very limited data in the realm of feed efficiency. Up until now, there has been no economic incentive to gather this type of data,” says Dr. Tom Field, Colorado State University.
As costs continue to increase, feed efficiency is playing a larger role in the value equation. Not to say it is more important than other economically relevant traits, but improvements could enhance the bottom line.
“When I rank profit drivers for feedlot cattle: feed efficiency is first, followed by carcass traits and carcass weight. We feed a lot of calf feds and a difference in conversion of one pound correlates into a $90 dollar difference, based on $4 corn. Feed efficiency is huge,” says Dan Dorn, Decatur County Feedyard, Oberlin, Kansas.
“I don't know of anything that can impact the bottom line as much as feed efficiency from a dollar standpoint,” Kerley says. “There is $80 to $120 per head out there if you can select for feed efficiency and make some improvement.”
Improving feed efficiency will not automatically improve profit. Like many other selection tools, cattlemen must define their process to include multiple traits in a genetic package.
“Cattlemen can get in just as much trouble single trait selecting for feed efficiency as anything else. There are some extremely efficient cattle that can't gain weight,” Kerley says. “An animal has to have the genetics to grow and perform. There is no visual phenotype that can get a read on efficiency.”
“Nine times out of 10, your higher grading cattle are less efficient. As the quality grade goes up, usually conversion will go up or get worse,” Dorn says. “There is also a misconception where people think high performing cattle are more efficient, but this isn't always the case. We have to find a happy medium between performance and carcass quality.”
“The value of feed efficiency data is a great place for the industry to use biology and genetics to help the bottom line,” Field says. “To get the needed data, the industry will have to make a long term investment in technology. To capture the genetic pieces to evaluate this trait, we'll have to trace it back to specific genes.”
As the industry searches to find a way to identify differences in feed efficiency, many tools are coming to the forefront that seem to be a step in the right direction. One of the more common measures, at this stage, is Residual Feed Intake (RFI).
“RFI measures the metabolic efficiency of a particular animal. It measures the differences it takes to get a 6 weight to 1,250 pounds and there are noticeable differences from top to bottom. Unfortunately, large scale facilities to measure RFI are few and far between,” Kerley says. “How to put that number in a form producers can use is the million dollar question. We know the heritability in feed efficiency is somewhere between 35 and 40 percent.”
“We use the Grow Safe system which works off RFID tags and a bull can eat at any bunk. The system identifies the bull and weighs the feed eight times per second,” says Kent Abele, Green Springs Bull Test Nevada, Missouri. This is one of the few facilities in the U.S. currently using this system.
Individual evaluation brings to light differences that could be testing new waters for some producers. As margins continue to get tighter, the need to identify cattle that can meet expectations in a variety of areas has never been more pronounced.
“It is amazing the differences we find with individuals in groups of similar genetics. A lot of people think since they have similar genetics, cattle should perform close to the same, but that isn't always true,” Dorn says. “The value of feed efficiency is at least four times greater than quality grade. The key is finding cattle that can be efficient and grade Choice. From most efficient to least efficient, there is easily $120 difference in cattle of the same quality grade.”
“In our 112 day test we find a $120 difference in feeding cost from top to bottom,” Abele says. “RFI is a great tool because it measures how much more or less a bull has to eat to perform above average.”
“Producers are motivated faster with lost profit. Look at the swine industry. In 2007, it saw increased sow slaughter,” Field says. “I wouldn't be surprised to see the pork industry remove entire sow lines from the production chain based on feed efficiency. We have to find a way to gather information to improve efficiency.”
The ethanol boom is here! And the beef business is struggling to get a handle on how to deal with its increased demand for corn. Current world economies are also demanding more of the product. As these factors continue to hinder the profitability in every segment of the beef industry, cattlemen are searching for ways to remain competitive.
“As feed prices continue to rise, more efficient animals are going to use less feed. Some producers are incorporating other foodstuffs, but as corn price goes up, they walk up with it” Kerley says. “None of these ingredients have anything special about them. Everyone has to find the least cost nutrients. You have to have a selection process to improve efficiency.”
“We're going to have to figure out how to optimize production in the cow herd with lower quality resources and how feed efficiency works with ethanol byproducts,” Field says. “As time goes on, there will be a struggle for acres and cattle will have to perform under harder conditions. Will these same cattle work when times get tough?”
The list of variables in beef production continues to get longer. As questions arise, what steps should producers take to answer these questions? Getting started seems to be the hardest part, no matter what problem faces the industry.
“This is not a time for the industry to sit on their hands. I think this could be one of the few times where action will beat inaction, even if the action is wrong,” Field says. “There are lots of pieces. I think we're at a time where producers have to find answers. We have to get information and, for the time being, what we have may be a culling tool not necessarily a selection tool. Producers need to find a way to get rid of the bottom end.”
“Retained ownership is a good option for producers looking to identify differences in their herd. The market should gravitate to more efficient cattle. Corn price is at a new level we have never seen before and I don't see it going down in the near future, if ever,” Dorn says. “Get with a customer and send cattle to a feedyard that tracks individuals. Estimate a break even and then evaluate data to see how close you were to your goal. Where were the losers? Eighty percent of your loss always comes from the bottom 20 percent. Don't select for extremes, but eliminate the losers. These tests are a proving ground. Taking data back to the herd will encourage changes.”
“Right now, all we can do with RFI is measure contemporary groups. I don't think the emphasis needs to be on the top one third, but there is not a lot of danger in putting selection pressure on that bottom end,” Kerley says. “Differences in feed efficiency are more pronounced in the cow herd than in the feedlot.”
Some companies are currently touting DNA markers to help identify this trait. At the time, this data might not tell the whole story, but give breeders an indication of where the program rates. Unfortunately, as with many evaluation tools, for now, there is no right or wrong answer.
“Feed efficiency is hard to measure, but the only way to make improvements is to test for it in one way or another,” Dorn says. “We can't manage what we don't test. Technology is coming and DNA markers could help quicken the process.”
“The industry has to unite to answer the question. Breed associations need to make partnerships with private companies,” Field says. “Make it a priority to identify these DNA markers so we can use the technology.”
Good honest data is of utmost importance no matter what trait the industry is trying to evaluate. Health and environment can skew these numbers. Producers must take steps to identify problems in the data gathering process so they do not over manage a problem that is not necessarily there.
“Without question, environmental factors and health programs have to be considered in our evaluations,” Kerley says. “We have to have good data. It can't be skewed by health or poor management.”
“Any outside event can hurt feed efficiency. Sickness can be a real drag on an animal,” Dorn says. “Once you have tested the cattle then it's time to manage. Ask questions like did the non-efficient animal get sick or was weather a factor?”
The beef industry has seen many crossroads. Finding value in production alternatives is nothing new. It has not been too long ago many producers were asking the same questions on how to improve carcass traits.
“We have to invest in good data. Twenty to 25 years ago the industry was informed it had to improve carcass traits,” Field says. “Once we figured out how important it was to beef demand, we got a lot accomplished. I think feed efficiency will follow a similar course. Once we make a concentrated effort from an industry standpoint.”
Improving feed efficiency is not just relegated to feedyard cattle. Just like carcass traits, the overall worth will be measured in how a producer can take this data to the cow herd. According to Kerley, some big differences may be seen during the non-lactation period.
“At the research farm on campus, we compared the top third to the bottom third and it took 20 percent less forage for the top end,” Kerley stated. “If you're short of hay or short of grass you're going to feel it at the end of the year. Small improvements in efficiency can make the difference. Selecting heifers based on efficiency could lead to, basically, running one cow for free once efficiency is improved within the herd.”
“I am not sure we can evaluate feed efficiency from a standpoint where animals are fed high energy diets,” Field says. “I am curious to see whether or not in the long run, this data will translate into the cow herd. No doubt there is money there when we identify differences. The challenge is the expense we'll have developing the selection tools.”
The market is sending signals for improved feed efficiency. This has been foreshadowed by other signals that left producers scratching their head wondering where the paycheck is for doing a better job. Revenues for improved feed efficiency may not be as cut and dried as a carcass premium or a bonus for pre-conditioned cattle.
“Cattlemen spend money daily to buy semen or genetic packages to improve a desired bundle of traits and expect to get paid. Improving feed efficiency may not necessarily improve sale price, but you're producing more with the same input costs,” Kerley says. “Improved efficiency means reducing feed costs. Whether it's the land it takes to run cows on or purchased inputs.”
“The RFI tested bulls will usually sell for more money, but they are typically the better bulls,” Abele says. “I charge $100 per bull to gather the data and can't guarantee they'll get that back in the sale price. We have a group of buyers who own cattle from conception to consumer who will only buy RFI tested bulls. It is comforting to know there are producers who have enough foresight to measure RFI.”
“There are many individual points that need to be evaluated to determine value. The Choice/Select spread will play a role because if it's low then there may be an advantage to a more efficient animal that grades Select,” Dorn says. “A small difference in conversion could be $30 a head profit, with $4 corn.”
The talent evaluators of a professional franchise, like cattlemen, must take a lot of things into account before they spend the money to try and improve their team. Many intangibles, like background checks or “the tale of the tape,” figure into this decision.
Cattlemen must rely on the tools available to try and improve. In professional sports, they have decisive numbers to appraise what that player will bring. In the beef business, there is always a time lapse for certain elements to catch up. Once in place, these numbers often change faster than the production cycle. Finding “difference makers” will help position the herd to take the next step. Profitability, not championship rings, could hang in the balance.
“As time goes on, producers are going to have to look for a combination of genetics that will bring the most value. We have to figure out which cattle are more efficient,” Dorn says. “The perfect carcass in the market place is a yield grade 1, Prime that weighs 999 pounds. The question is was he efficient to get there. Higher marbling cattle, typically, are less efficient. Efficient cattle in the feedyard will also be efficient cattle at the ranch. Do we want to be old school and sit at the coffee shop bragging about our cattle or do we want to make money? Once technology catches up, we can make accurate decisions and find combinations that work.”
“It's no easy task to put together the right genetic profile that is profitable, but we cannot afford to give up heterosis. There is no doubt, in my mind, it will take multiple breeds,” Field says. “The industry would be well served to take an aggressive stance, rather than a passive one, for feed efficiency. It is a tremendous challenge to find balanced solutions for profitability and it will take a concentrated effort.”