Steve Suther: Black Ink 10-21-13
November 12, 2013
It's time to prime your herd to produce Prime beef. That herd is a well of potential that can meet consumer demand for high-quality beef.
Any intact male will provide some variety of calves, all worth more than ever. If they make it through the finishing phase, consumers will eat them all, even though the beef will cost more than ever. If they are disappointed, will they go back to that well?
With the fewest cows in 60 years and the cattle cycle primed for rebuilding, a long-range view will ensure consumer demand. When today's replacement heifers are in their prime, they must profitably produce not only more but the best beef.
Say you can get $1,000 for a calf right now. Can somebody else make money on it in the months ahead? Can the beef industry make money on it in the months after that? With Choice boxed beef at $200 per hundredweight (/cwt) and Prime $30 or $40 higher, the buyer will pay more to make sure he or she won't be disappointed.
A few years ago, Prime beef made up less than 2 percent of the fed cattle supply, and there were $10/cwt premiums over Select. Most producers ignored that incentive, even when it shot up to $40/cwt. Prime was a freak of nature, not a target for logical producers to think about.
The supply of premium Choice brands stayed below 15 percent for decades, which led to dismissal.
Why would I focus on 2 percent or 15 percent of my cattle when I could work on the other 98 percent or 85 percent?
Go for more pounds and don't chase quality, we were advised; any target so rarely hit will never be an important factor in the market.
What's true on average for commodity beef is reality, so don't expect more from your herd.
But wait a minute.
In the last 10 years, Prime boxed-beef has often risen to more than $50/cwt above Select, and grid premiums offer much of that to cattle producers. Variable-price grids often pay more than $5/cwt for carcasses that qualify for premium Choice brands, which you could think of as a consolation prize.
Even when such premiums appeared, it was not uncommon to hear the reasoning that an extra $200 per head is not worth thinking about when you take it times the 2 percent likelihood in a typical herd.
Those who ignored the premium targets may still be in business, but it's a limiting view of the cattle business. It is too limiting when consumers are expected to pay so much more for any beef.
Irish playwright George Bernard Shaw wrote in 1949 what the Kennedys famously quoted in the 1960s: Some men ask why. I dream things that never were and ask why not?
Fortunately for the U.S. cattle business, a lot of producers asked, why not? Bringing selection pressure to bear on not only bulls but cows, based on records, progeny data, ultrasound — and lately DNA testing — hundreds of them moved up to 5 percent, then 10 percent, 20 percent and more than 30 percent Prime.
Feature stories have shown us English-breed cattle that produce 75 percent Prime and gain faster than industry average. Those cattle are worth at least $200 above average and their "consolation prizes" still beat the heck out of average. Such herds are owned by some of the most forward-thinking, profit-minded ranchers in the business.
It's logical that most producers don't think about such premiums. They don't sell finished cattle.
There are many ways to prime the pump to deliver more quality and turn around a 60-year decline in numbers. Tag calves with an information link to each cow. Weigh cows and calves to chart efficiency; then get a benchmark reading on what comes after weaning.
Use the steer futurities, help a neighbor complete a feedlot load, partner or negotiate with a feedlot that returns individual data. If you can't tag calves now, be more selective of bulls and add to your herd with proven females.
More and more of us need to think about those premiums, or there will continue to be fewer and fewer of us.
Commodity beef will never compete with chicken, pork or fish on a price basis. That's just biology. If we want consumers to pay $200 or more per year for beef over other proteins, we need to take another look at how to produce calves that are worth $200 more to everybody in the chain. ❖