BIF 50: Efficiency leads to profitable beef production
June 29, 2018
For beef producers, efficiency is more than a buzzword but the key to profitable beef production. At the 50th annual Beef Improvement Federation Research Symposium and Convention in Loveland, Colo., Michael Genho of Elanco Animal Health addressed efficient red meat production.
Genho, an MBA by training, offered a standard definition of efficiency as the optimal result within a given set of resources. Within the industry, Genho said the gold standard for measuring efficiency is Feed Conversion Ratios and Residual Feed Intake. Despite these metrics, he said the key that is missing for producers attempting to measure efficiency are the factors that affect the cost and value of input and output, and what optimal actually is within the given context.
Genho offered the example of a steer fed on the northern Plains (northeastern Colorado or western Nebraska) in February at a placement weight of 700 pounds and assuming a dry matter intake of 21 pounds. After calculating economic inputs, historically the median days on feed for the steer would be 175 days. Using Elanco's calculator, this individual would ideally be fed an additional four weeks.
Elanco's Benchmark Performance Database includes data from 245 feeding locations, comprising 5.4 million head feeding capacity both transmitting data either daily or weekly. Given this data, Genho said the potential to improve feed efficiency lies in the genetics of each individual animal.
“If we are actually concerned about climate change, American agriculture and American beef is not really a place to focus yet that prevailing narrative, that perception, exists even though the data says something opposite.”
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"Efficiency is best measured in the context of what's optimal," he said. "If we just isolate it down to feed conversion and the metrics we've traditionally selected for, we're going to miss an economic driver of efficiency."
Measuring optimal performance, he said, must be done within the context of desired endpoint targets as efficiency is the single biggest profitability driver for feedyards.
"It is a big opportunity," he said. "It's one of the areas of improvement in the future in the feeding sector is how we optimize efficiency within these endpoint targets."
Mark McCully, vice president, Certified Angus Beef, spoke to beef quality from his vantage point representing the producers in the CAB program who produce over 1 billion pounds of beef annually under the label.
McCully said quality can have a wide definition but quality grade as set forth by the U.S. Department of Agriculture is a good universal measurement.
"The quality grade system has served the industry well over the years," he said. "It does a pretty solid job of predicting consumer eating satisfaction."
In terms of consumer eating satisfaction, McCully said producers think of palatability as defined by tenderness, flavor and juiciness. Tenderness, according to recent surveys, has improved greatly in recent years due in part to genetics, technology, aging and an improvement in merchandising cuts. For example, top sirloin, a cut with great variability, is rarely presented in the meat case as such but rather in cuts that ensure a more tender steak for consumers.
To this end, he said quality grade has improved significantly over the past 10 years from about 55 percent of fed cattle grading choice in 1996 to about 80 percent last calendar year. McCully credits genetic selection with much of this progress.
The other factor that has led to this improvement, he said, is an improvement in grading technology and accuracy. In 2010, 13 million pounds of Prime beef were being produced weekly as compared to 25 million pounds in 2017. Conversely, the amount of beef grading Premium Choice increased by 37 percent and beef grading Select dropped by 40 percent, a 50 million pound decrease.
"Today we sell more boxes of Prime and branded beef than we do Select," he said. "I'm not sure that if we would have stood up here 10 years ago and said that was going to occur, there would have been many in this room that would have believed that. I sure wouldn't have, myself."
Economically, the best indicator of demand is the spread between the cutouts, he said. The cutouts is the value of the "parts and pieces being sold by the packer rolled up into a carcass value." They're weighted based on their contribution to the value of the carcass, and that value is expressed as the cutout.
There is about a $40 spread between Select and Prime. Over the past three years, as production of Choice and Prime cuts has increased, the spread has remained strong and steady.
"To me, that is an incredible indication of the demand that's out there when we look at the quality marketplace," he said. "It's an adjusted marketplace today that is definitely sending a signal to produce more of the quality."
McCully cited a study conducted by Five Rivers Cattle Feeding in Kersey, Colo., to determine whether or not feedyard performance is being sacrificed as quality is pursued. Five Rivers studied 600 pens of conventionally raised steers placed in the yard at 750-850 pounds at placement with a June to October of 2017 closeout. The high grading cattle were 10 percent Prime whereas the low grading cattle were 0.6 percent Prime. Despite this difference in grades, McCally said the difference in Average Daily Gain was less than 0.05 pounds per day. Feed conversion difference was 0.09.
Other significant trends, he said, include retailers moving toward marketing higher grades of beef than they have in the past, including Walmart and Costco, making higher quality cuts ever more accessible. Additionally, ground beef is no longer grade neutral and is being marketed, in some instances, as Prime, changing the face of that cut substantially from the hamburger marketed 10 years ago. It is quality grade differences, he said, that retailers are using to differentiate themselves and their products, including burgers, in a crowded marketplace.
An additional demand driver, McCally said, is the move consumers are making away from meats that are best cooked "low and slow," the middle meats with traditionally less marbling. Consumer trends show a tendency toward quick, grilled meals and McCally said marbling plays a big role in consumer enjoyment of those meats and the demand for the higher grading, heavier marbled meats.
"It's a changing marketplace out there that's asking for quality," he said.
Rounding out the discussion, sustainability was addressed by Sara Place, Ph.D., senior director, Sustainable Beef Production Research, National Cattlemen's Beef Association.
Place cited McCally's mention of Prime burgers and compared that to the consumer who, in an effort to seek out sustainable products, chooses plant-based burgers.
"These products market themselves as made from plants so therefore better," she said.
A USDA study shows U.S. agriculture is responsible for about 8 percent of U.S. greenhouse gas emissions, with beef comprising 2 percent of the total. This, she said, is offset by the carbon emissions from trees annually.
"If we are actually concerned about climate change, American agriculture and American beef is not really a place to focus, yet that prevailing narrative, that perception, exists even though the data says something opposite," she said.
In response to the argument that the number of cattle is increasing, Place presented statistics that show the number of cattle globally increased 57 percent since 1961 while chicken numbers have increased 481 percent in the same period. By 2050, she said the population is assumed to be 9.8 billion and, if cattle numbers continue on the same trend, the global cattle herd will increase 7 percent to meet demand. If U.S. cattle production achieved annual beef productivity improvements, the global herd would decrease by 27 percent and if universal production achieved productivity equivalent to the U.S., the global herd could be reduced by 53 percent. While the third scenario is unlikely, she said it is a clear demonstration of the U.S. cattle industry's advantage in productivity and efficiency.
"That's a lot less environmental impact, a lot more sustainable, a lot less natural resources used to produce the same amount of nourishment," she said. "Productivity is tied to sustainability where it's usually tied to profitability as well." ❖
— Spencer Gabel is a freelance writer from Wiggins, Colo., where she and her family raise cattle and show goats. She can be reached at email@example.com or on Facebook at Rachel Spencer Media.