Value-based beef marketing is like constructing a modern building, requiring the combined efforts of architects and tradespeople with specialized skills. But if building construction worked like much of the beef industry, carpenters, plumbers and electricians would fabricate their portions of the building independently, then try to put them together. None of them would bother with the architect's plans.

That situation, however, is changing. Progressive beef producers now recognize that cooperation and information exchange are critical elements of a system that encourages and rewards improvements in quality.

Montana rancher Greg Gardner is one of those producers. So is Tom Holtorf, manager of Schramm Feedyard, Yuma, Colo. Charolais breeder Chuck Stipe also fits the bill having included end-product quality in his selection criteria for more than 30 years. Consulting veterinarian Lynn Locatelli plays the role of architect helping build a communication pathway from seedstock producer to commercial cow- calf producer through the feedyard into the packing plant and back.

This article is the first in a series that will document how these individuals will work together, collecting and sharing relevant information to facilitate improvements in quality, production efficiency and profitability at each production stage. The series will follow a group of Mr. Gardner's calves, products of Stipe Charolais genetics, as they ship from his Poslon, Mont. ranch to Schramm Feedyard. It will describe the quality-oriented management practices Schramm Feedyard will use to optimize the performance and value of the calves and the selection of marketing strategies to capture that value. Future articles will include closeout and individual carcass data and explore how each participant applies the information toward future improvements.

The series will provide real-life illustrations of the challenges and the opportunities producers face as they adapt to a beef market based on quality and value.

Challenges and opportunities

Ever since the beef industry began focusing on quality, the issue of value-based marketing has served as a major barrier. "Sure," producers have said, "we're all for producing a better product for consumers. But will cattle buyers pay us enough to justify increased production costs?"

The formation of marketing alliances and development of value-based pricing grids have partially addressed the issue, but problems remain. Substantial discounts for "out" cattle easily can negate any premiums earned on pens of high-grading cattle. And for many cattle, overfeeding to reach a high quality grade is a losing proposition. They eat up any potential profits in the feedyard regardless of carcass premiums earned at the packing plant.

Much of the answer lies in better communications and information transfer. Producers need to know which cattle perform poorly in the feedyard or earn discounts from the packer. They need the ability to correlate breeding decisions and management practices with the ultimate quality and profitability of their cattle.

Armed with the right information, feedyards can select profitable management strategies and an appropriate value-based market for a given set of cattle. They can meet their buyers' specifications with a high degree of accuracy, earning premium prices and avoiding discounts. The same information, applied to breeding and management decisions, can help seedstock and cow-calf producers increase the value of their products.

From the beginning

Based in Charlo, Mont., seedstock producer Chuck Stipe emphasizes carcass quality along with production efficiency in his Charolais breeding program. Mr. Stipe and his sons, Marv, Vern and Doug, concentrate on breeding consistent Charolais cattle for profitable production on the ranch, in the feedyard and on the rail. As early as the 1960s, Mr. Stipe fed out his steers and heifers and followed them through a local packing plant. Today, he feeds his calves at Schramm Feedyard.

Two years ago, Mr. Stipe added a new tool to his chest, bringing Dr. Locatelli from Twin Forks Clinic in Benkelman, Neb., to conduct ultrasound scanning on his yearling bulls and replacement heifers. This procedure allows him to add marbling and backfat measurements to the list of traits recorded for each animal. Dr. Locatelli also scans the herd's progeny in the feedyard, where Mr. Stipe's cattle average better than 80 percent Choice, compared with a breed average around 50 percent. They achieve that quality level while maintaining the excellent growth, muscling and performance typical for the breed.

The Stipes emphasize practicality and calving ease along with carcass quality. "Every one of our bulls has to calve on yearling Charolais heifers," Mr. Stipe says, "but still compete in weaning weights and overall performance."

One of Mr. Stipe's regular bull customers, Greg Gardner and his wife Lynn operate the G and G Livestock in partnership with John and Betty Gordon of Cascade, Mont. Mr. Gardner uses about half Charolais and half Angus bulls in his Angus-based cowherd selecting for calving ease, growth and marbling. The Charolais bulls, Mr. Stipe says, "Add muscling and leanness without sacrificing any marbling."

Since purchasing the ranch in 1990, Mr. Gardner has worked to improve the health, performance and carcass traits of his herd, but like most producers with bills to pay, he has sold at weaning. Consequently, he has not had much opportunity to see the results of his efforts. This year will be different.

At Schramm feedyard, Mr. Holtorf's experience with Stipe genetics stimulated an interest in feeding more Stipe-influenced calves from commercial herds. His inquiries led him to Mr. Gardner at G and G Livestock, and in late October, he will take delivery of 93 of the ranch's crossbred steer calves.

Leading up to weaning and delivery, Mr. Gardner provides a comprehensive nutritional supplementation and vaccination program. And although he is selling the calves, his involvement will continue for months to come. As part of the purchase agreement, Mr. Holtorf will provide detailed, individual performance and carcass data for application back on the ranch.

Upon arrival at the feedyard, Dr. Locatelli will tag each of the G and G calves with electronic identification (EID) eartags. The feedyard will electronically enter each animal's identity into the BeefLink software system, along with their in-dates, weights, implants and other health and performance criteria. At re-implant time, further technology will come into play as Dr. Locatelli uses ultrasound scanning to measure backfat, muscling and marbling. Using those readings, she will sort the cattle into outcome groups with their marketing date set to approximate the most cost effective endpoint for each animal. At the end of the feeding period, the feedyard will add individual gain and health figures to the database. Individual carcass data from the packing plant will complete the data set, providing Mr. Gardner with a life history of each of the calves, linking performance, carcass quality and selling price for an objective assessment of profitability for every animal.

Drovers will be there at every stage, documenting the calves' arrival for processing, ultrasound scanning, marketing and grading. We will follow the data back to the Gardner Ranch to see how Mr. Gardner applies the information to his breeding and management decisions.

The second installment in this series, scheduled for December, will document the arrival of Mr. Gardner's calves at Schramm Feedyard. We will explore the management practices intended to optimize their health and performance through the feeding period, and maximize their profitability at marketing time. Subsequent articles will document their feedyard performance, marketing decisions, carcass characteristics and profitability.