HUNTIN' DAYLIGHT -- TRADING UP

by: Wes Ishmael

It's plumb tough to calculate what a bull is truly worth to the commercial cow-calf operation.

Plenty of attempts have been made and equations concocted. For instance some say a bull is worth four or five weaned steer calves or three yearlings.

Could be.

Others say a bull's price should be equivalent to some number of bred heifers.

Might be.

More elaborate equations account for such things as the difference between current herd average weaning weight and the predicted performance of the prospective bull, accounting for the heritability of weaning weight, the average projected price of feeder calves during the next three years, given the local basis and…you get the idea.

Then you contemplate that bulls account for about 80-90% of genetic herd improvement over time when replacements are retained, according to various research. Then you think what the extra pounds and breed-back is worth in next year's calves out of this year's bulls. Then you think about how much it costs to develop a heifer…

Bull Value Higher than Ever

No matter how you calculate the worth of a bull, it's difficult to imagine there being another time in history when commercial bull buyers had the chance to buy more value for the money.

First off, the breed race has been run, which means breeds and breed combinations can be chosen easier and with more confidence than the experimentation required in the 1960's, 1970's and 1980's.

Though you can argue the point, unless you're producing calves for a niche-market requiring the use of what I term non-mainstream breeds, there are really only a handful of English and Continental breeds with the history, critical mass and breadth of necessary genetic prediction data that allow commercial producers to adequately find the genetics they need to straight-breed, outcross and crossbreed.

Arguably, these are also the breeds that present more trait balance and fewer genetic trade-offs. Think here of Angus, Hereford and Red Angus on the English side of the fence. On the Continental side, it's primarily Charolais, Simmental and what has been a horse race—at least in terms of registration numbers—between Gelbvieh and Limousin.

Similarly, the Bos Taurus hybrids gaining use the past decade—the ones with registered stock, genetic evaluation and widespread breeder emphasis—stand primarily at Balancer (Gelbvieh X Angus) and Sim-Angus (Simmental X Angus).

Likewise, outside of specialized situations, the use of Bos Indicus genetics revolves mainly around using Brahman (yep, that's a wide umbrella) in combination with one of the breeds mentioned earlier, or a Bos Indicus composite. Depending on the part of the country, that composite tends primarily to be Brangus, Beefmaster or Santa Gertrudis.

Before you get your bloomers bunched, yes, you can find genetic trash in these breeds and breed combinations, just as you can find genetic diamonds in the breeds and breed combinations not mentioned. In geographic pockets around the country, the most popular breed, hybrid or composite might not even be cited here. Overall, though, as beef cow numbers continue to dwindle, and as the number of operations with beef cows continues to decline, I believe the list holds true.

This breed concentration has helped accelerate the genetic trend within these breed populations.

What's more the technology associated with genetic evaluation within breed and between breeds has never been more accurate. In addition to actual and adjusted performance data, there are Expected Progeny Differences (EPDs), EPD indices that account for performance by trait area, as well as economic indices weighting the relative value difference between bulls for traits affecting grid performance. For some, the genomic profile—identification of specific gene markers for various traits—is growing, as is the use of genomics tools to declare bulls free of genetic defects or lingering pathogens like the persistent infection of Bovine Viral Diarrhea Virus (PI-BVD).

That's not counting genomic tests for color and polledness. This short list also excludes evaluation of newer traits such as residual feed intake or hoped for development of trait diagnostics such as identifying the genes that make calves sired by one bull less predisposed to Bovine Respiratory Disease (BRD) than calves out of another.

None of this is to pay short shrift to the value of visual evaluation in selection, especially structural soundness where feet and legs and udders are concerned.

Seedstock Competition Increases

Forget the bright-light sales and nosebleed prices that capture headlines and imaginations, the fact is that the seedstock business, just like the commercial cattle business, has never represented easy, deep profits. As in the commercial business, margins continue to narrow for seedstock producers as input costs increase.

The producer attrition and declining cow numbers mentioned earlier mean fewer bulls are needed. Since most every seedstock producer has access to the same genetics, that means more in the seedstock business are using service to differentiate themselves from the competition.

If you want free delivery, you can find it. If you want help marketing your calves, herd consultation, guaranteed free bull replacement beyond the initial breeding season, even for acts of God, you can find that, too, for free or at obscenely low prices.

All of that spells opportunity for commercial producers.

     

The Value of Salvage

Now, consider the net cost of trading bulls these days.

According to USDA, prices for cull bulls (1,500 lbs. and over, FOB) have been mostly $70-$76/cwt. since January 1. Basis an 1,800 lbs. bull, that means having $1,260-$1,368 in gross salvage value. That's as much as some folks have long averaged buying cow fresheners rather than breeding bulls.

There's lots of ways to work the numbers, but suppose that $1,260 made a new $4,000 bull cost $2,740. Suppose that bull lasted three breeding seasons and you got 25 calves out of him each year. That's $36.53 per calf, straight cost, not including keeping the bull around. At $140/cwt. that represents 4.7 percent of the value of a 550-weight calf.

Nope, that's not chump change. But it's also more than reasonable, especially if you consider the added returns that come with effective sire selection, such things as increased weaning weight, fewer calving problems, increased herd fertility, etc. Those can be magnified if the new bull represents a first round of crossbreeding.

That's before considering additional marketing possibilities. As short supplies drive calf and feeder prices higher, the fact is there is more variation in price across same sex, same weight calves, not less.

Bottom line, if there was ever a time to spend more time evaluating the next herd sire, comparing seedstock providers, and spending more to get a herd bull, this is it.

(The opinions expressed in this article are those of the author and do not necessarily reflect the views of CATTLE TODAY.)







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