by: Wes Ishmael

Consistently hitting the wrong target typically yields the same results of never hitting the right one. We all know that.

Yet, the outcome of inaccurate aim inherent in both examples is common in the cattle business.

“It is easy for ranchers to focus on various production attributes and get caught up maximizing technical measures of production such as weaning weights, conception rates or stocking rates,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in a January issue of Cow-Calf Corner.

Similarly, Kris Ringwall, beef cattle specialist at North Dakota State University explains, “Historically, the beef industry is challenged with selection of traits that rest within the concept that more is always better.

“Regardless of trait, we want more growth, more muscle, greater average daily gain, greater feed efficiency, more marbling, more rib eye, greater percent pregnant, greater percent weaned, greater longevity, greater, more, greater, more and on and on.”

Such easily identified targets are frequently hit, especially with the selection tools and technology available today. But the byproduct of such success may overwhelm the intent. Indirectly, for instance, focusing on growth can increase mature cow size. Selecting for more milk, growth and marbling can increase maintenance costs at the same mature size. The list goes on.

The same goes for production measures rather than specific traits.

“Maximizing narrow production measures will not be economical,” Peel says. “For example, attempting to maximize conception rates will result in increasing cost to achieve the last increments of additional conception. The correct approach is to optimize by increasing conception rates until the value of the last percent of additional conception is equal to the cost of achieving that level of conception. In a more adverse environment, that optimal level of conception is likely to be lower than it would be in more moderate situations. The need to optimize rather than maximize applies to other production measures such as weaning weights, stocking rates, and the rest. The biggest weaning weights or highest calving percentages may provide coffee shop bragging rights but it is usually a costly gloat.”

Margins Grow Thinner

That's especially true in light of current cyclical trends for cattle numbers and prices.

The annual Cattle report from USDA, issued at the end of January, confirmed aggressive expansion of the U.S. beef cowherd.

There were 30.3 million beef cows in the U.S. January 1, which is four percent more than a year earlier. Beef replacement heifers (6.29 million head) are three percent more than a year earlier. The inventory of total of all cattle and calves January 1 (92.0 million head) is three percent more than a year earlier.

Keep in mind, the report included some significant prior-year revisions by the National Agricultural Statistics Service (NASS).

“Perhaps the biggest surprises were in the beef replacement heifer numbers,” Peel explained in early February. “The 2016 level was up 3.3 percent, smaller than expected, but the 2015 number was revised up by roughly 300,000 head indicating that the 2015 beef heifer total was up 9.6 percent over 2014, compared to the previously reported 4.1 percent year-over-year increase. As a result, the revised numbers have the 2015 beef replacement heifer total at 6.09 million head and the 2016 total at 6.29 million head. The 9.6 percent increase in beef replacement heifers from 2014 to 2015 is the largest year-over-year increase in replacement heifers since 1974. Beef replacement heifers are now reported at more than 20 percent of the beef cow herd for both 2015 and 2016; the highest levels since 1969.”

“As a result of increased production in 2016, prices for cattle are projected to fall from last year's levels, explained Robert Johansson, USDA chief economist, at the recent Agricultural Outlook Forum. As an example, USDA forecasts fed steers prices this year to be seven percent less than last year at $137/cwt.

Understanding Targets Relative to the System

Instead of aiming to maximize specific traits or measure, both Peel and Ringwall suggest taking the systems approach whereby each input and output—and the measures representing them—are evaluated relative to specific overall goals for the system. Of course, that means having specific system goals.

In the case of cow-calf production, for example, where land is the primary resource, Peel believes the most important measure—the one area that should be maximized—is net return per acre.

“Maximizing net returns per acre highlights that the ultimate objective of cow-calf producers is to market forage to the highest value,” Peel says. “Maximizing net returns per acre is accomplished by optimizing the array of production parameters that contribute to cow-calf production. Additionally, a focus on net returns per acre means that ranchers should think beyond narrowly defined weaned calf production and evaluate the potential for retained calves or complementary stocker enterprises in conjunction with cow-calf production to boost net returns per acre. The level of production, the method of production and the mix of production enterprises are all subject to change as input and output market values change”

Incidentally, even though net returns per cow value outputs and inputs, while combining various production measures into a single value, Peel says it is a limited measure.

“Putting values on inputs and outputs translates technical efficiency measures into economic efficiency and highlights that changes in values also affect optimal decisions,” Peel explains. “For example, either lower calf prices or higher input costs should lead to marginal decisions to use fewer inputs and adjust output despite the fact that technical efficiency of inputs has not changed.

Spun differently, Ringwall points to the value of recognizing and establishing specific breeding systems to accomplish overall operational goals.

He's quick to point out that some producers are doing this, writing a proverbial guidebook for the rest of us.

Keep in mind, when Ringwall refers to breeding systems in this context, he's not talking about terminal crossing or crossbreeding at all. He's talking about identifying, evaluating and maintaining cattle in the herd—be they new bulls or replacement females—for their contribution to achieving the goals of the system in total. Whether a herd is straight-bred or adheres to a specific crossbreeding plan, it's not what a particular breed or composite is supposed to bring to the equation, it's what the individual is supposed to bring.

“Within breed or across breed, breeding systems need to become a reality to actually design and manage profitable beef cattle,” Ringwall believes. “Breeders are struggling, breed associations are struggling and commercial producers are struggling, which is odd because more information is available today than has ever been available. However, copious amounts of data are relatively useless without goals, objectives and specific identified outcomes.”

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