Most corporations and some small businesses conduct periodic planning meetings where management examines past trends and then attempts to determine what their markets will look like in 20 years based on history. Once they are comfortable with their future market forecasts, they plan how the company will deliver consumer-desired products during the ensuing 20-year period.
Cattlemen should go through the same planning process to help ensure their operations are equipped to deliver consumer-desired beef products 20 years from now.
David Lalman of Oklahoma State University was senior author on a presentation for the 2016 Texas A&M Beef Cattle Short Course titled “The 2016 and 2036 Cowherd.” Most of this article is taken from that presentation.
In long-range planning, we need to ask ourselves the questions: “What are the opportunities for 2036 and how do we take advantage of them? A long-range business plan is built around the answers to these two questions.
Relative genetic trends for weaning weight of Hereford, Angus and Red Angus have increased steadily during the past 40 years (1972-2012). Weaning weights were collected by the Charolaise, Gelbvieh and Limousin breed associations for only the past 15 to 20 years and their shorter-term data show upward trends as well.
Weaning weight genetic trends in Simmental rose slightly from 1972 to about 1991, but afterward, there has been very little change.
Data collected by the Livestock Information Center (Oklahoma National Stockyards in Oklahoma City) reveal that finished cattle weights are increasing at a rate of 9.4 pounds per year and carcass weights are increasing at a rate of 5.7 pounds per year. This shows that United States cattle have tremendous capacity for post-weaning growth and carcass weight.
According to Livestock Information Center, cattle also have tremendous capacity for marbling.
Amount of marbling in the rib-eye, combined with animal age, determines carcass quality. Forty-eight percent of processed cattle graded USDA choice and above in 1995. In 2006, 51.7 percent graded choice or above, 62.7 percent in 2009 and 78 percent in 2015.
Although carcass quality has improved over the past 20 years, cutability or yield grade has declined slightly (Table 1, p. 15).
Cutability is the amount of boneless, closely trimmed retail cuts from the high-value parts of the carcass: the round, loin, rib, and chuck. U.S. Department of Agriculture yield grades are rated as 1, 2, 3, 4, and 5. Yield Grade 1 denotes the highest-yielding carcass and Yield Grade 5, the lowest.
Average weaning percentages, pregnancy losses, calf death losses, weaning weights and pounds weaned per exposed female have remained relatively stable during the past 24 years in the commercial cow-calf operation sector. Standardized Performance Analysis data show that average weaning percentages hover between 80 and 85 percent while weaning weights stay between 500 and 550 pounds. Pregnancy loss and calf death loss run between 2 and 3 percent. (See Table 2 for more information on reproductive losses.) On average, pounds weaned per exposed female has remained steady at 400 to 450 pounds. Past trends show that most production changes have occurred post weaning.
Clay Mathis and Jason Sawyer, both of New Mexico State University, discussed “Beef Cow Efficiency in the Southwest” in Guide B-217 (aces.nmsu.edu/pubs/_b/B217/). Mathis is now at Texas A&M University Kingsville while Sawyer is with Texas A&M University in College Station. Two of the topics discussed in the publication were cow size and cow milk yield.
Energy is a large portion of a cow’s nutrient requirements. Amount of energy required to maintain body weight can represent 70 to 75 percent of the total energy consumed annually by the cow herd. A cow’s size or body weight does not influence her energy use efficiency. Researchers have shown that smaller cows can wean more pounds of calf per pound of feed than larger cows.
Efforts to develop larger framed cattle during the past 40 years has helped decrease cow production efficiency.
Milk yield is related to preweaning calf growth, but milk production requires high levels of energy input by the cow. Researchers in Nebraska have shown that energy use is less efficient in higher-milking cows.
The low energy-use efficiency of higher-milking cows means they require more energy per pound of body weight than do lower-milking cows of similar size during lactation and dry periods.
During the past 40 years, breeding for improved milk production has progressed past the break-even point for cow efficiency.
Production data from the past 20 to 40 years show that cattle have become larger and carcass quality grades have improved. How do these trends affect profitability and financial performance of cow-calf operations?
Stan Bevers, professor and Extension Specialist Emeritus for the Texas A&M AgriLife Extension Service, used Standardized Performance Analysis data from Texas, Oklahoma and New Mexico to show that cost per hundred-weight of produced calf has accelerated from 1991 through 2015 at the rate of $5 per year. During the same time period, calf prices have accelerated at an average rate of $5.25 per hundred-weight per year.
“These data suggest the relationship between cost of production and weaned calf value has not changed much when viewed from a general trend over time,” Bevers said.
Dustin Pendell of Kansas State University surveyed 79 operations with data from 2010 through 2014. He sorted the operations into three different groups based on their net return per cow. Pendell found one-third of the operations that comprised the highest income group, to average $415 more net return per cow than the one-third in the lowest profit tier.
Gross income was responsible for the higher return in 32.2 percent of the operations. Higher profitability herds had slightly higher average weaning rates, weaning weights and calf sales prices. Reduced costs contributed to higher net return per cow in the remaining 67.8 percent of the operations. Controlling costs were substantially more important in profit improvement than increasing pounds of cattle sold as calves and cull cows. Cattle prices also had less effect than cost control. For every one-pound increase in calf weight, total cost per cow increased by $0.86.
To quantify additional weaning weight value, Pendell and his team evaluated 234 weekly sales reports from Livestock Information Center. These reports covered a four-year period from 2010 through 2014. Average value of additional weaning weight in the 550-pound to 650-pound range was $85.90 plus or minus $33.20.
Economics of beef production are generally improved when primary portions of the cow’s diet is forage and use of supplements are minimized. Cattle must be forage efficient, however, to maximize returns. What are the past trends on forage efficiency of cattle? Hay acres per beef cow in Oklahoma increased from a half acre in 1974 to two acres in 2014. Amount and use of hay per cow is increasing at the rate of 66 pounds per year.
Over the next 20 years, the commercial cow/calf segment should shift focus from increasing herd production toward minimizing cost. Suggested improvement targets are forage utilization efficiency, cow fertility and reduced calf death loss.
Forage utilization efficiency should be addressed in both breeding and pasture management programs. Select animals for their ability to maintain good body condition scores and maximize production on a year-round diet of only forage. Manage pastures, whether native or improved, to provide ample nutritious forage year-round.
To increase cow fertility, find and improve the weak link. Is it genetics, nutrition, animal health or overall herd management? For reduction of calf death loss, consider selecting animals for calving ease, matching bull size with cow size and maintaining good animal health and nutritional programs.
Once management areas that need improvement or change are identified, then goals and strategies can be added to the long-range plan. Long-range planning will help determine characteristics of the 2036 herd.