With each passing year, cattle feeders learn more about what factors contribute to an animal’s performance in the feedyard and value to the packer. They used to rely on visual appraisal, and, to some extent, reputation, to assess the value of calves and yearlings. Today, the growing use of individual identification, source verification, performance tracking in feedyards and feedback from packers provides feeders with more objective tools for determining which cattle have profit potential.
In response, growing numbers of producers are forming marketing cooperatives or alliances that specialize in targeting specific segments of the beef market in an effort to generate the highest possible returns.
In the past few years, in fact, the beef cattle industry has seen the emergence of more than 100 marketing alliances across the country. Some are breed specific, while others shoot for specific carcass targets in terms of quality and yield grade.
“Most of them have some breed or genetic criteria,” says Clem Ward, an extension economist at Oklahoma State University in Stillwater, adding that new cooperatives and marketing alliances are popping up with increasing frequency. “There are a lot of really small ones, sometimes with only a handful of producers,” Dr. Ward continues. “I don’t think we really have any clue how many of those there are.”
But one thing is for certain, he says: Many of the feedyards that participate in cooperatives or marketing alliances are fine-tuning their cattle selection methods and are becoming increasingly selective about the cattle they purchase.
Tracing the good and the bad
“The level of sophistication is 180 degrees from just a few years ago,” says Al Perez, general manager of Better Beef, a division of Smithfield Beef Group, which operates feedyards in Colorado and Idaho and markets beef for Prime, CAB and other branded programs through its Better Beef marketing alliance.
“We now track the better cattle for a repeat purchase,” Mr. Perez says. “But more importantly, we track the problem cattle and never go back. In our organization, every buy is identified at processing, and everything from hospital records to carcass data can be tracked for each buy.”
The 75 producers who comprise the Giles County Beef Marketing Alliance in Tennessee follow a similar strategy, says James Dennis Taylor, who helped form the alliance through his capacity as director of the University of Tennessee’s Giles County Agriculture Extension Service in Pulaski. The alliance markets source-verified calves from Angus, Hereford, Charolais and Balancer sires. “Our customers want source-verified cattle that have production and carcass traits that meet or exceed the average for the breed by 10 percent,” he says. “They also like them to be bunk broke at least 45 days prior to shipment.”
In other words, he says, Giles County Beef Marketing Alliance members want cattle that are not only productive, but turnkey in the sense that they are already weaned and able to thrive immediately in a feedyard setting.
Health is critical
Mr. Taylor says alliance specifications also require that animals have at least one shot of modified live vaccine prior to shipment as well as an overall vaccination history that meets Beef Quality Assurance guidelines. The alliance specifies that shots be administered in the neck area to prevent any reduction in carcass quality.
These are, of course, only a couple of examples of the selection criteria used by today’s marketing alliances. But it’s becoming increasingly apparent that as feeders gain more experience with grid marketing and alliances, they are better able to identify sources of cattle that best meet their needs.
“Ultimately, you want an animal that’s going to perform well in the feedyard and not get sick,” says Tim Stanton, an extension feedyard specialist at Colorado State University. “That means developing sources and identifying sources of cattle.”
Identifying reliable sources of healthy cattle is critical, Dr. Stanton says, because animals that get sick often never catch up with the weight gain and overall performance of animals that remain healthy. “Sick animals don’t eat at a normal rate, they don’t gain at a normal rate. And once over the disease, they don’t gain enough to catch up to the healthy calves,” he explains.
“An animal’s ability to perform in the feedyard, to have a good feed efficiency, a good rate of gain, are always going to be valued,” he adds. “If a feedyard has experience with an owner’s cattle before and they gained well and had a low cost of gain, they’re going to want to buy those calves again on the next go around.”
Dr. Stanton adds that documentation is is becoming a valuable commodity. “You’re dealing with ownership of cattle. So you’ve got to have a paper trail on where the cattle originated and who owned them.”
Of course, there are other wildcards that can affect selection criteria, including the cost of transportation.
“Transportation is always a factor,” Dr. Stanton says. “We can talk about things we like and dislike. But with the cost of trucking, the further you’ve got to bring them, the more cost you’ve got to factor into your feedyard.”
And the costs can be significant. “The numbers I’m hearing from truckers are in the neighborhood of $2.50 per loaded mile for a full truckload of about 100 head of 500-pounders,” says Dr. Stanton. “You’ve got to factor that in as to how far out you’re going to go to find the cattle you need.”
Ultimately, however, the value received for fed cattle is a reflection of the feedyard’s own performance. Indeed, Dr. Ward notes that even the best-selected animals may not perform at their optimum rates if feedyard efficiencies are not sufficient to properly nourish and prepare the animals for the marketplace.