5State Beef Consortium

1
5-State Beef Consortium
Western Michigan Discussion Group
Dan Buskirk, Ph.D. Dept. of Animal
Science Michigan State University
2
How will you compete with others that produce the
same commodity?
3
What does the future hold?

• 5 years ago, fewer than 5 of finished cattle
  were sold using a value-based marketing system.
  Today, between 42-45 are sold that way.

Within 3 years the majority of the nations
cattle could be sold using a value-based
marketing system. Once the industry is at 70,
there will be no way to escape the impact of
selling to a value-based system. At that point,
everyone from producers to feeders will feel
financial pressures to perform or get out of the
business. Don Schiefelbein - Exec. Dir., American
Gelbvieh Assoc.
4
What does the future hold?
Cattle that are part of system, alliance,
cooperative marketing arrangement,
Cattle that are outs, misfits, extras, small
lots,
5
The industry is obviously moving away from
producing a commodity
6
Résumés for cattle
Want access to the competitive value-based
market of the future? Better start getting
together a résumé for your cattle. John Sticka,
CAB Dir. Packer Feeder Relations

• Whats in a resume?
• Documentation of
• Genetic history
• Management practices
• Feedlot and carcass history

7
The Emerging Information/Beef Industry

• What is the source of the product?
• How was the product managed previously?
• How is the product predicted to perform?
  (backgrounding, finishing, carcass, eating
  quality)

8
(No Transcript)
9
5-State Beef Consortium
10
5-State Beef Initiative Members

• Land-Grant Universities
• Cattlemens Associations
• Departments of Agriculture
• Farm Bureaus
• United Producers and MLE Marketing Southern
  States

11
Timeline
12
Timeline, continued
13
Consortium Goal

• To strengthen economic opportunities for the
  Eastern Corn Belts beef industry by providing
  added value to the consumer through a responsive
  production and marketing system

14
Consortium Objectives

• To create a collaborative education/outreach
  effort that will facilitate development of a
  coordinated high quality beef production,
  marketing, and information system in the Eastern
  Corn Belt.
• To create a collaborative regional research
  effort that will examine and develop solutions to
  impediments in a coordinated beef production
  system.

15
Objective 1. To create a collaborative
education/outreach effort

• Development of a regionally-coordinated education
  network
• Development of a regionally coordinated
  Integrated Resource Management (IRM) network
• Creation of a regional Coordinated System
  Resource Management (CSRM) program
• Refinement of production units
• Food safety
• Animal health
• Improved reproductive efficiency
• Coordinated genetic change
• Assist in environmental stewardship
• Certification of production units
• Database management system
• Disseminate information by electronic media and
  regional education network
• Assist in contractual arrangements

16
Objective 2. To develop a collaborative research
effort

• Economic research
• Develop and calibrate simulation model
• Risk and return implications
• Achieving a steady flow of quality product
• Pricing mechanisms
• Tenderness research
• Develop an objective measure of tenderness
• Database research
• Examine interactions among management practices,
  product quality and profitability
• Animal health research
• Evaluate preconditioning programs
• Mini-grants program

17
Initial Consortium targets to ensure sustained
profitability and product quality US
Benefit of Target Commodity Consortium Produc
t Trait Beefa Target Economic
Quality Productivity, lb retail product / cow
bred 354 gt400 ? Calf-feds, feedlot daily
gain, lb 2.5-3.5 3.25 ? Yearling, feedlot
daily gain, lb 2.8-4.0 3.5 ? Calf-feds,
feed efficiency, lb feed / lb gain 6.0-7.5 6.0
? Yearling, feed efficiency, lb feed / lb
gain 6.5-8.0 6.5 ? Carcass size,
lb 500-950 750 ? Subcutaneous fat
thickness, in. .20-1.0 .25 ? ? Harvest
age, mo. (USDA maturity) 22 (A60) ? 18 (?A40)
? ? USDA marbling score Small ? Modest00
? ? Tenderness (lt 6 kg shear force, d
14), b 86 100 ? ? Total production
cost of carcass, /cwtc 108.95 98.00
? aCarcass data from Smith et al.,
1995 bSchackelford et al., 1997 cCattle-Fax
18
5-State Beef Consortium Management Organization
Ron Lemenager Executive Director
Stakeholders
19
Action Teams, Chairs, and immediate action

• Animal Health - Steve Loerch, OSUPursue common
  preconditioning protocol for the region
• Certification - Ron Lemenager, PUDevelop
  certification criteria and procedures
• CSRM - Steven Rust, MSUEstablish specifications
  and targets for each segment as well as the
  entire Consortium
• Data Management - Dan Buskirk, MSUIdentify
  potential data management partner
• Economics - Lee Meyer, UKDevelop a simulation
  model representing all segments of the production
  chain

• Genetics - Matt Claeys, PU, Nevil Speer,
  WKUSet seedstock criteria
• IRM - Rich Knipe, UIAdapt common IRM programs
  for cow/calf and feedlot within region
• Product quality Phil Anderson, ICADetermine
  palatability critical control points for
  incorporation into system
• Reproduction - John Johns, UKDevelop regional
  reproductive strategies for beef improvement

20
Management of the data
Tracking individual cattle will generate lots of
data
The objective of the Consortium is to turn this
data into information!
982000003715761, 5001, K28, MI499, 2/14/2000, 85,
1, No difficulty, no assistance,
12345678910111200, 9504, Angus, 5, BG10,
12345678910111200, BK0, SM12984373626, Simmental,
Black, Steer, Ralgro, 4/12/2000, CattleMaster 4,
10/1/2000, Bovishield 4, 10/15/2000, 30 days
creep, Sav-A-Caf Scours, 3/2/2000, none,
Cydectin Pour-On, 10/15/2000, 545, 10/15/2000,
595, 11/30/2000, 580, 12/1/2000, Oxytetracycline,
Revalor-G, 12/1/2000, 4 Once Bayer, 12/1/2000,
Dectomax Injectable, 12/1/2000, none, 855,
1/20/2001, 845, 1/20/2001, Micotil, 300,
Synovex-S, 1/20/2001, Revalor-S, 3/23/2001, 1050,
0.20, 12.0, 4.0, One Shot Pasteurella, 1/20/2001,
none, Nuflor, 1/30/2001, 1310, 6/2/2001,
6/3/2001, Moyer Packing, 233101, 843.0, 2,
Choice, 420.5, 422.5 , 2 .3, 0.40, 0.45, 16.2,
MD20, 4, A, 1.7, 6.9
21
Management of the data
Currently evaluating 3 commercial companies to
aid in collection, storage, and summarizing data
Using electronic identification (EID) to uniquely
identify and track animals
22
Genetic Action Team

• Genetic Action Team is drafting a selection
  strategy
• Performance and Carcass Power Scores
• Performance Power Score (BW WW YW MM)
  / 4
• Carcass Power Score (RP IMF) / 2
• Minimum would be 65 for performance and 80 for
  carcass
• Phased in over time

23
Integrated Resource Management (IRM) Action Team

• IRM Action Team has adopted a common IRM record
  keeping system
• The Team is developing a simple IRM system to get
  new participants started
• They are creating new modules in the program for
  stocker and feedlot segments

24
Whats in it for me?
TOP TEN
25
Benchmark financial information
Source Illinois IRM-SPA Participants
26
Improve efficiency by reducing duplication
(deworming, vaccinations, implants,
transportation, etc.)
Economic benefit of a coordinated system vs.
traditional Commission 6.25 Trucking
7.00 Health 6.25 Feed 29.27 Yardage
6.00 Interest 4.55 Total savings 59.32/Animal

Source Rust, Michigan State Univ., 1996
27
Willingness of Consumers to Pay for Guaranteed
Tender Steaka
Producing what can be marketed rather than
marketing what can be produced
Tendernessb Tenderness Item not
revealed was revealed of consumers
preferring guaranteed tender steak 72 90 of
consumers willing to pay more for guaranteed
tender 36 51 /lb more that consumers
would pay for guaranteed tender 1.23 1.84 Est
. cost of tenderness evaluation,
/lbc 0.11 0.11 aLusk et al. 1999. Research
Institute on Pricing. Res. Bull. 3-99. Virginia
Tech. bTenderness levels were guaranteed tender
and probably tough were ? 15 kg and ? 35 kg
slice shear force, respectively. cAssuming a cost
of 4.36/carcass, 700 lb carcass, 20 middle
meats, and 29 of carcasses would classify as
guaranteed tender.
28
Use standardized health protocol
Superior Livestock Auction Cattle (June-Oct.
1997) Health protocol of lots Premium Vac
34 440 1.61 Vac 45 85 3.89 Some
vaccination 631 .72 No vaccination 567 0
Overall, 10.4 of the lots of calves offered for
sale were not sold by the seller. Calves that
were not in a value added health program were
twice as likely not to sell compared with Vac 34
or Vac 45 calves.
Source M. E. King and K. G. Odde, Colorado State
Univ. and Pfizer Animal Health,
1998
29
Benefit from reproductive strategies
Synch AI Bull Pregnancy rate 90 90AI
pregnancy 51AI cost Drugs 650
Semen 924 Labor 400 AI total
cost 1974 Bull cost (2_at_865) 1730
(4_at_865) 3460 Total breeding cost 3704 3460 Ad
ded value Age advantage 2527 Growth
advantage 688 Total 3215Cost/calf
(90) 5.43 38.44
Source R. Wallace, Select Sires Costs based on
100 cow herd
30
Make sire decisions based on farm and system
information
Angus Carcass Data Top 10
Bottom 10 Quality Grade Prime, 7.7 0.7
CAB, 47.4 14.7 Choice, 38.5 32.7
Select, 6.01 35.0 Standard,
.2 16.9 Carcass weight 748.6 645.7 Carcass
value 822.27 616.36
Source Dolezal and Dolezal, Oklahoma State
Univ., 1999
31
Managing cows and heifers as individuals
Cow Herd Appraisal Performance Software (CHAPS)
Economic Impact Study Top 1/3 of CHAPS
participants compared to national average Calves
weighed 114 lb more at weaning 32.54 / cow Cow
reproductive advantage in weaning 21.28 / cow
32
Improved marketing options due to virtual size

Nichols Genetic Source Feeder Auctions Nichols
Genetic Source feeder calves are selling for 8
to 10 per cwt. more than the same weight calves
in the area. These calves are preconditioned,
weaned, sorted on weight, frame, color,
condition, and muscle and sold in 50,000 lb
lots. 2 to 4 per cwt. of the above premium has
been attributed to selling the cattle in pot
load lots
Source Dave Nichols, Nichols Farms, Bridgewater
IA.
33
Performance benchmarking
Step 1 Assess statusStep 2 Identify
opportunitiesStep 3 Start discovery, "Hunt for
cluesStep 4 Develop strategies to improveStep
5 Monitor progressStep 6 Improve process
1 ValueUnits Standard Change Per
head Live sale price, /cwt. 69 69.69 8.28
Weight gain, lb./day 3.214 3.246 3.11 Feed
intake, lb./day 21 20.79 2.25 Death loss,
.06 1.6 -5.63 Carcass weight,
lb 762 769.6 8.28 Defect rate,
4 3 1.52 Choice, 70 71 0.38
Source VetLife Economic Calculators, Live and
Carcass. Based on 750-lb steers fed 140 days.
Select discount 5/cwt., defect discount 20/cwt.
Defects include YG4, dark cutters, etc.
34
Receive carcass information on your cattle
(résumé)
This Select is often worth 5 to 15 per cwt. of
carcass less than this Mid Choice
This Yield Grade 4 is typically worth 20 per
cwt. of carcass less than this Yield Grade 2
35
The secret of getting aheadis getting
started! For More Information on how to become
involved in the 5-State Beef Initiative contact
your local Beef Area of Expertise Agent
5-State Beef Initiative