This article first appeared in the December 2015 issue of Drovers Cow/Calf.
Scientists have long studied genetics and the advantages of genetic selection largely within the scope of production and productivity. Beef cattle production is no different, and the body of scientific and laymen’s articles is extremely thorough. Looking at genetics through an economic microscope — to continue our “scientist” discussion, despite the reality that many would scoff at the idea of an economist being a scientist — has only recently started to gain traction.
The primary reason for the delayed response from economists is that the data required to properly analyze the economic gains, or possibly losses, related to genetics was lacking. As more scientific measurements have been recorded, this hurdle has slowly shrunk. Two recent economic studies from agricultural economists at Oklahoma State University indicate there is added value in knowing and selecting for the proper genetics.
In the first study, a protein hormone called leptin that controls the appetite and metabolism in numerous species, including cattle, was analyzed. The analysis studied the outcomes of 1,668 head of feedlot cattle and determined that that there are significant differences in the value of cattle with different leptin genotypes.
Specifically, the particular DNA sequence that influenced an individual animal’s leptin production could potentially add $14 of value per head. However, the added value ranged from a loss of 30 cents per head for the least desirable leptin-controlling DNA to a $14.25-per-head value gain for the most desirable leptin traits.
In a recent follow-up study, researchers used a similar approach to analyze the economic value of genetic marker panels for seven economically relevant traits. Unlike tests for a single gene like leptin, these marker panels include numerous markers — often hundreds or even thousands — throughout the genetic sequence, providing a much more accurate depiction of the traits they characterize.
Using feedlot outcomes for 5,353 head of commercially fed cattle, results again indicated that knowledge of genetic information had the potential to generate value. However, the value of this information varied depending on the genetic trait being evaluated. For example, the ability to select cattle with higher genetic potential for average daily gain and marbling generated added value of more than $20 per head in the study. On the other hand, selecting specifically for tenderness generated value of about $6 per head.
Even though these reported values are specifically at the feedlot stage, selecting breeding stock for traits that are valuable to feedlots likely have value within other sectors. Furthermore, based on these findings, the jury is more than likely still out in regard to the reality that having and utilizing genetic information will provide steady positive returns to feeders, backgrounders and cow-calf producers.
At the current cost of genetic testing services, it does not appear to be consistently profitable for any one sector to utilize this technology. However, these results are promising and testing costs should eventually decline.
Nevertheless, with knowledge comes power, so proven genetic performance should be a valuable asset in the cattle marketing chain. Armed with results from these types of analyses, as the viability of testing becomes more mainstream, feedlot operators may start knocking on the doors of cow-calf producers that utilize genetic selection with premiums in hand.
John Michael Riley is assistant professor in the Department of Agricultural Economics, Oklahoma State University.
Nathan Thompson is a graduate researcher at OSU.