Whether you think in terms of premiums, discounts or basic access to cattle markets, source, age and process verification are becoming part of the price of doing business, says Al Svajgr of
Svajgr backgrounds cattle and is a part owner of Darr Feedlot, a 40,000-head commercial operation near Cozad. He typically purchases calves at 500 to 700 pounds and retains ownership through backgrounding and feeding. He also spent 2005 as chairman of the Cattlemen’s Beef Board and has seen firsthand how demand issues reach back through the production chain, influencing the ways producers will need to manage, market and document their cattle in the future.
Feedyards need certification through USDA’s QSA program for access to export and other markets, Svajgr says. So they need to go back to cow-calf producers to assure that cattle meet program requirements coming into the feedyard.
For the cattle Svajgr purchases, he uses electronic identification tags and visual tags to link them to their ranch of origin and to follow them through harvest. He is selective about the cattle he owns, saying he goes back to the herds with the quality, health and documentation he wants. “I don’t buy calves without source and age verification,” he says. Through backgrounding and feeding, he says he needs cattle with good growth potential and good health. At the packer, carcasses need to fit various programs. They need cutability plus quality grade without excess fat.
Svajgr collects performance data through backgrounding and feeding and carcass data at the packer. Through this process, he knows the source of cattle that generate the best, or the poorest, returns.
Perhaps just as importantly, verification adds value in its own right by opening up marketing options. Virtually all of the branded or niche-beef programs now require source, age and process verification, he says. There can be differences in the specific records they require, but most are similar. By using animal ID to collect and maintain those records on cattle from the ranch through the feedyard, Svajgr says he maintains access to a variety of markets and can evaluate which option offers the best returns as cattle reach market weights.
Svajgr says the market for fed cattle, and thus feeder cattle, is becoming more differentiated, with wider price spreads between commodity cattle and verified cattle. “Verification is where the action is,” he says. “We’re already seeing dividends from source and age verification.” Premiums are variable, he adds, but have run anywhere from $15 to $20 to as high as $50 per head in added value for verified cattle going to the packer.
The feedyard, Svajgr says, increasingly focuses on verified cattle regardless of ownership. In the case of retained-ownership cattle, the process is relatively easy. For other cattle, such as customer pens put together from auction barns or other sources, verification becomes more complicated but remains possible.
As the cattle cycle shifts toward larger supplies and lower prices, Svajgr sees the importance of verification increasing. First, verification of source, health, age and management practices can help cow-calf producers obtain top prices for their calves. Also, documentation can improve their market access and flexibility in where or how they sell their calves. “We’re seeing periods during which packers are not buying cattle very aggressively,” he says. They get to be very selective, just purchasing those they know will have value coming out of the plant. Some weeks, having documentation on cattle simply means the difference between getting them sold or not.
Retained ownership becomes a more attractive option for producers as calf prices decline, but they need to know how their cattle perform, Svajgr says. Also, feedyards will be interested in partnering with cow-calf producers, sharing ownership through feeding. They will, however, want to manage their risk with information. Producers who can supply performance data along with source, age and health documentation likely will find feedyards most receptive to partnership agreements.