Give that stampede string an extra tug. The track of beef industry transition is fixing to hit warp speed.
Guess who is about to know more about your cattle than you or they ever dreamed of before? Every packer who decides to take USDA up on its recent decision to accept instrument augmentation for determining yield grades.
Although hearing that USDA will accept technology to estimate ribeye size—one of the four yield grade components—as long as its accuracy is deemed up to snuff might sound ho-hum at first blush, embracing instrumentation could quickly change the way cattle are valued, forever.
In a nutshell, according to Bo Reagan, Executive director of the National Cattlemen's Beef Association (NCBA) Center for Research and Technology Services, technology that is currently available would enable USDA graders to more accurately assess carcasses to a tenth of a yield grade than they currently can assess them to a full yield grade. So, technology will allow them to say whether a carcass is a yield grade 2.1 or 2.3 and be more accurate than they can be currently in saying whether a carcass is a Yield Grade 2 or a Yield Grade 3, without benefit of the technology.
Reagan explains the higher accuracy level comes with an instrument that can reliably estimate ribeye size at chain speeds—the toughest component for the human eye to get right—while scales would still be recording the hot carcass weight and the graders would still be calling fat thickness, then adjusting KPH up or down.
And, value differences across the full spectrum of a single yield grade are huge! In fact, Keith Belk, an assistant professor at Colorado State University, who has conducted a mountain of research on instrument grading systems says according to their analysis if packers did nothing else but adopt the new yield grading system the resulting improvements in accuracy and sorting capability could serve up an additional $4-$5 per head immediately.
Of course, whether or not packers decide to adopt the new technology is anyone's guess, but the economic incentive is certainly there. And Excel, the nation's second largest beef packer already has instrument-grading equipment installed in each of its harvest facilities.
At press time, NCBA was hosting a meeting between USDA, the major packers and other industry players to design the protocol and minimum standards for equipment that will be acceptable. From there it goes out for public comment. Both Reagan and Belk believe it is possible that all of the hoops could be jumped through so that packers could begin using the new system before 2001 and has barely got off the dime.
If the major packers decide to capture more economic potential with the new system, and if it's rational to assume that the majority of the 30 million or so odd cattle harvested in this country each year will be more accurately defined in terms of yield, then the impact at ranch level could come faster than a smoke ring in a hurricane.
For one thing, logic says if the buyer knows how many more dollars can be generated from a Yield Grade 2.1 than a 2.7—and knows because he can accurately define where they fall—then the buyer will pay accordingly. Consequently, a wide-open range of prices may quickly replace the long criticized averages.
Likewise, logic says this new system is tailor-made to grid pricing or its successor—sorting cattle for true rather than perceived value. With that in mind, it's not a stretch to believe that adoption of this system might even accelerate an industry move toward individual animal identification.
Keep in mind, on both counts, adoption of the new technology would mean there would be a lot fewer bushes for producers to hide behind than there are currently. The buyer will know exactly what each head of cattle is for yield and where they came from. Consequently, the safest money looks to rest on the producers who are figuring out what they're sending to the feedlot and on to the packer.
Plus, this scenario only considers the implementation of yield grade instrumentation. There is already technology being tested that would offer up objective measures of quality grade or its components.
Picking Middle Ground
Short of knowing exactly how their cattle are performing in the feedlot and on the rail currently, plenty of research suggests a producer's best hedge to this value transition may be shooting down the middle for a product that both yields and grades. No different than it's been since Smokey the Bear started filling his first squirt gun.
“The most obvious thing we have learned is something I think most commercial producers already know. As we evaluate the most effective breed combinations for the feedlot and the packing house, it boils down to a half English half Continental animal,” says Don Schiefelbein, Executive Director of the American Gelbvieh Association (AGA). He's describing the facts unearthed in Gelbvieh Alliance data, which accounts for about 200,000 head of cattle. These cattle have brought just over $9 per head premium on average, going across the Gelbvieh Alliance grid. The top 25 percent are bringing around $30 per head premium.
For perspective, crossbred British X Continental cattle in their data set convert feed more efficiently and post a more optimum combination of acceptable yield and quality grades than either high percentage British or high percentage Continental cattle.
Crossing the Line of Acceptance
Of course, the good news is that this is the same combination of genetics—plus a dash of ear where needed—that serves up a smooth $100 per cow per year in the pasture, compared to straight-bred females, according to data from the USDA Meat Animal Research Center. The gain comes at the hands of hybrid vigor and breed complementarily that serves up increased cow efficiency, longevity and lifetime productivity, along with increased calf and weaning weight. Never mind the fact that maternal heterosis offers the opportunity to achieve and maintain reproductivity at a lower cost per head.
Certainly, plenty of commercial producers already employ some sort of crossbreeding. Unfortunately, many of those same producers leave economic potential on the table by combining different breeds but not doing so in a strategic way.
For instance, Harlan Ritchie, distinguished professor of animal science at Michigan State University explains, “About 80 percent of the commercial herds in the U.S. use some sort of crossbreeding. Of course a high percentage of that would be willy-nilly bull-of-the-month breeding.”
Indeed. Take a quick trip down the alley of about any commercial feedyard and there is a whole rainbow of cattle type, shape, color and potential. And, to be fair, there are some valid reasons for it. Namely, using a structured crossbreeding system is fairly complicated, even for the largest commercial operations. More bulls and breeding pastures are needed. More management. A wide swing in biologic type from one generation to the next is a byproduct of maximizing hybrid vigor. And the list goes on.
That's one reason Ritchie is so excited about the opportunity provided by composite or hybrid genetics, which are really nothing more than a package of combined genetics that a producer can use with the same management ease of straight breeding.
“Composites offer herds of any size a way to exploit heterosis and breed differences easily,” says Ritchie. “It offers simplicity, breed complementarity, heterosis, and it can help us avoid genetic antagonisms.”
Plus, when it comes to bull power, Ritchie explains, “Compared to purebred bulls, hybrid bulls have slightly earlier puberty, higher sperm concentration and motility, and they achieve a slightly higher pregnancy rate.”
As always, this concept is not new. However, it seems to be generating renewed interest, judging by the number of hybrid and composite bulls being offered for sale, and by the prices these same bulls are commanding.
Moreover, the AGA and the Red Angus Association of America have begun promoting a new line of hybrids called Balancers, which are 25-75 percent Gelbvieh and 25-75 percent Angus. Rather than just throwing genetics together, though, and attaching a fancy label to them, these genetics come with the same pedigree documentation and performance evaluation as their purebred parents. In fact, these Balancers must be the result of mating registered parents.
“The case for crossbreeding in the beef industry is irrefutable. If you're an honest breed association the next logical step is to figure out how your breed fits into a crossbreeding system,” says Schiefelbein, explaining the AGA members' decision to build and promote Balancer cattle.
“Really, producers just need to ask themselves if they're producing cattle that have the most value to the most people,” says Schiefelbein. Whether that ultimate value is determined with the subjectivity of a human eye or the objectivity of technology, he explains, “For most producers, they just need to get the basic breed combinations pretty much right, and their growth and reproduction pretty much right, then herd health and carcass traits pretty much right.”
(The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication.)