Toward premium pay for quality beef

University extension launches program to create incentives for retaining ownership of cattle through feedlot to slaughter

Low cattle numbers and drought are making it difficult for beef producers to stay in business. To help cattlemen survive, the University of Missouri is providing a marketing alternative to capture top market dollar for Prime and Choice graded beef. Quality Beef By The Numbers (QB) is designed to provide producers with reproductive and genetic resources, access to marketing grids and an extensive database for management and marketing assistance. Program director Mike Kasten hopes this endeavor will assist Missouri producers keep the premium dollar paid for their beef by retaining cattle ownership in the feedlot. The QB program’s future goals and impact go beyond the Show-Me borders. Partners in this program include leading AI companies Select Sires Mid America, Accelerated Genetics, Genex Cooperative, Inc., feedlot affiliates Irsik and Doll Feed Yard and Pratt Feeders, LLC, and the Certified Angus Beef Program.

Capture the opportunity
The QB program was sparked by the success of the Show-Me Select Replacement Heifer Program, MU’s Thompson Farm beef herd and the opportunity to incorporate new technology to capture a market for high quality beef.

Since 1997, the Show-Me Select program has marketed 100,000 heifers to generate $60 million in revenue for the state’s breeders, according to Dr. David Patterson, MU extension researcher. Recently, selling heifers bred to high-accuracy AI sires has earned an extra $357 when compared to heifers bred to low-accuracy bulls through natural service.

In a four-year study done at MU’s Thompson Farm, steers out of cows bred to high-accuracy and low-accuracy AI bulls were sent to the Irsik and Doll Feed Yard. The percentage of steers sired by high-accuracy bulls that graded Choice was 4 percent higher than those with low accuracy sires and over 15 percent more steers graded Prime.

According to Patterson, producers who participate in the QB program have the opportunity to use proven technology to meet an increasing demand for high-quality beef, along with achieving higher profits.

Mike John, MFA Health Track director, has been involved with planning the QB program and provided insight as both a producer and industry leader.
“We’re going to see technology usage and traceability and all the things that are happening in DNA, electronics and computers. It is going to revolutionize the transparency in our industry that has basically not existed up until recently,” said John. While not advocating permanent or mandatory traceability, John said “[For] producers who choose to go that route and want to increase the quality of their herds and the value of their products, programs like [QB] will help.”

Despite high retail prices for beef, the demand for high-quality product is global. At the QB program kickoff meeting held in Columbia in late August, Robert Turbow, vice president of Specialty Meat Group for North America’s leading food supplier Sysco, reported his company was having difficulty obtaining enough Choice graded cuts to meet its marketing requests, emphasizing the need for producers to raise more high-quality beef. WalMart, the nation’s largest grocery chain, is marketingChoice graded beef. High-end restaurants are experiencing more sales. And, export markets are doubling, opening the door for cattlemen to provide quality beef and be paid accordingly.  

The genetic factor
High feed costs, low cattle supplies and increasing global demand for Prime and Choice-graded beef make the QB program an attractive marketing channel for producers. They can use fixed-time AI protocols and marketing grids and evaluate their herd’s performance to earn top dollar for their calves.

“I think the cost both for input and values of the finished product are going to change dramatically,” said John. “Producers that don’t adapt to the new processes and technologies will probably struggle.” He added that not identifying best management practices and value-added programs will probably cost producers. “You’re going to have to concentrate on efficiency and getting as many of the cows bred to high-quality bulls, to having carcasses with value,” John said. He has used fixed-time AI protocols in his own herd and has been active in Dr. Patterson’s research through the MFA research beef farm. “Frankly, the AI component is giving every producer in our market area, or in the country for that matter, the best bulls there are—ones with proven EPDs and high accuracies,” John added.

AI company representatives remind producers that while fixed-time protocols increase genetic improvement with efficient practices and minimal cost, users must set realistic expectations before pursuing the practice. Stan Lock, area sales manager for Genex Cooperative said people don’t like the concept of 50 to 65 percent conception rate, “Until I tell them to imagine getting 50 to 65 cows bred the first day of breeding season.”

Adding quality genetics through high accuracy sires is repeatedly proving itself to be profitable. Dr. Jerry Taylor, animal sciences professor at MU, has spent years researching beef genomics and showed it is possible to genotype traits such as marbling with at least 73 percent accuracy. Selecting genotyped bulls can speed up the production process of quality animals. “We produce a lot of high-quality beef, just not enough to meet demand,” Taylor said.

It’s what’s under the hide
As demand for higher quality beef swells within the US borders and abroad, it is just as critical to produce the beef as it is to convince US consumers to purchase it. Canada, Mexico, China and the Pacific Rim are all willing to pay more for beef than our domestic market and will buy the cuts we don’t want, making the export market one of the largest outlets for US beef.

In order to obtain the top market return, producers have to be willing to put forth the risk and investment. Producers at the kickoff meeting asked what benefits shipping steers to a feedlot and retaining ownership provided when they could just go to the local salebarn and get a top market price.

According to MFA’s Mike John, “When you’re selling an animal as a calf or feeder animal, you really don’t know what the top-dollar possibility is. If that animal ends up being a Select, a 680-pound Select or Standard carcass, it doesn’t have that much value. If it ends up being an 840-pound Yield Grade 1, Prime carcass, it has a tremendous amount of value and there isn’t anyone out there who can sit in the ring and watch those feeder cattle go through and know which one it is.

“The only way you can capture all of that value is to own them all the way through the feedlot. That’s one end of the spectrum and selling them at the salebarn is the other. Hopefully this programs fits somewhere in the middle,” he concluded.

Still, it may be hard for some producers to fully capitalize on the feedlot opportunity.

“It’s certainly going to be more difficult for someone [like a small producer] to participate than someone who can build potloads of steers,” John said. “That doesn’t mean it’s impossible or can’t be done. People are just going to have to do things differently than they’ve done them in the past. I think everybody can figure out a way to play in a system that collects data and adds to the transparency. I think it helps everyone.” John said.

Larry Corah, vice president at CAB, reported the branded beef program sold 807 million pounds of beef in 2011, about 10 percent of which originated in Missouri. Corah is excited about quality being emphasized in the state. “Missouri has unlimited potential,” he said. But Corah followed by saying producers will have to create more predictability.

MFA’s John said the database is a selling point to producers.
“It’s going to be pretty hard to measure the value of your genetics at the carcass level if you don’t somehow market that carcass where data is collected and assigned to the individual animal.” John said, “I think that participating in a program that gives you that kind of downstream feedback is what you need to make the right decisions for the future.”

John said this will help expand the program out of Missouri. “One of the things that’s important about this program is that they’re actually going to compile genetic information and the results of those genetic pairings. Producers who are interested in capturing that kind of value and getting that kind of information, will embrace the AI technology because they’ll see the difference.”

Producers who wish to participate in the QB program will pay a $300 membership fee every year plus a per-head fee to ensure data retrieval. Participants must be BQA-certified and calves must undergo specific pre-weaning management and health requirements.