Most parents know the feeling. A child brings home a report card that causes concern. The grades are acceptable — not failing — but lower than usual. What, the parents wonder, are the reasons behind the declining marks? And what can they do to reverse the trend?
The beef industry is in a similar situation, with a notable trend toward producing more over-fat cattle with little or no improvement in USDA quality grades. In recent years, the market has developed clear signals, with financial incentives at each production stage for cattle that will grade USDA Choice or better. Branded-beef programs focused on quality cannot find enough cattle that meet their specifications. And the industry seems a long way from achieving its “70-70-0” goal, indicating 70 percent Choice or better, 70 percent Yield Grade 1 and 2, and zero defects or “out” cattle such as heavyweights, YG 4s or Standards.
While cattle weights have been increasing, quality grades have not, says
“At these levels of YG 4s and 5s, the Certified Angus Beef® brand misses out on a lot of cattle that would otherwise qualify,” says Clint Walenciak, CAB director of packing. Walenciak says the organization conducted a study last year, sampling from 12 plants to shed light on why CAB acceptance is at a relatively low 15.6 percent. “We found that, as expected, lack of marbling was the main reason, contributing to 85 percent of the cases where cattle didn’t qualify. But our study showed more than 6 percent of cattle have the marbling and meet the other CAB carcass specifications, with excessive yield grade as the only fault.”
With 13 million Angus-influenced cattle evaluated for the program, yield grades disqualified 780,000 head. “Of course, we can’t get all of those,” he says. But half that number would mean about 100 million more pounds of branded product sales at current utilization rates, and the overall CAB acceptance rate would return to about 18.5 percent.
Cause and effect
If there were one simple cause to the grading problem, it would be easy to fix. Unfortunately, says Jim Robb, director of the
A shift in genetics probably plays a role, as producers increasingly emphasize British and black in their breeding schemes. In addition to overly fat carcasses, a fair number of cattle receive poor yield grades because of small ribeyes, Robb says. “Those animals suggest a genetic component to the problem.”
However, the primary cause is feedyards keeping cattle longer, feeding them to heavier weights and higher-fat endpoints, he says. Feuz also stresses that economic forces play a large role. These include:
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Cheap grain means low cost of gain relative to the price of fed cattle.
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High cost of replacement cattle results in tight feeding margins.
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The price spread between Choice and Select beef has generally widened in recent years.
For pens sold on a live basis, Feuz says, it seems packers have gone fairly easy on cattle that look overweight or over-fat, just because of the short supplies. They need to see a lot of “outs” before they’ll discount the pen. Feeders marketing cattle on a grid are more aware of discounts. They don’t like to see them on the closeout report, but they know that by putting more weight on the cattle, they can come out ahead even if some fall into YG 4.
“This is a business of compromise,” says Wayne Vanderwert, executive director of the American Gelbvieh Association. Packers need to accept some YG 4 cattle to get the quality grades they want, he says, so quality-focused grids tend to forgive some poor-yielding cattle.
The genetics question
Naturally, there is no consensus on what genetic combinations might cause or solve the problem. Vander-wert favors crossbreeding and says interest is growing as producers seek to benefit from heterosis while balancing the positive characteristics of English and Continental breeds.
Composite breeds can provide the benefits of genetic differences between breeds while offering more simplicity, Gosey says. “The use of composite breeds in commercial herds might be the best solution to the genetic antagonism between quality grade and yield grade.”
Even in a straight-bred system, careful selection, management and application of data can produce calves that consistently hit the target. Speaking at the Range Beef Cow Symposium in
Since the Blairs’ original grid-marketing effort in 1998, grading percentage on their fed steers has improved from 64 percent Choice and 11 percent CAB to some recent pens that graded 80 to 90 percent Choice or better and CAB acceptance ranging as high as 67 percent. The percentage of YG 4s in their data increased at first, reaching close to 16 percent in 2000, but has since declined to about 10 percent.
The Blairs’ fed heifers presented more of a yield-grade challenge, with pens finished in 2000 and 2001 producing 20 to 30 percent YG 4s. “The YG 4s hurt because of the $12 discount,” Blair says. “But they also hurt the CAB percentage, as a large number of YG 4s in our data meet the CAB marbling requirement. Those cattle actually take a $20-per-hundredweight hit because we take the 4 discount and lose the CAB premium.” Blair subsequently shortened the days on feed and in 2003 sent fed heifers to market that graded 100 percent Choice or better with only 4.65 percent YG 4s after 95 days on feed.
Whatever the breeding program, Vanderwert stresses the importance of collecting and using information. For many producers, carcass data used to be “feel good” information, providing some satisfaction but not much application, he says. Now more producers have enough years of data, and experience, to apply the information toward improving their herds.
Market signals
In terms of economic signals that encourage over-feeding, Feuz says he does not expect dramatic changes in the short term. Corn prices historically stay relatively stable, he says. We might see some price increase, with high energy prices driving more ethanol production and fewer planted acres. The increase is not likely to change the current equation, though, since calf and fed-cattle prices will remain high relative to cost of gain.
Feuz expects packers will become more selective over the next few years as the cattle cycle moves into a period of greater supplies. “We’ll see a shift in bargaining position, with packers in the driver’s seat.” It won’t happen quickly, but by the second half of this year, he expects fed-cattle marketings to begin to post year-to-year increases. As numbers continue to increase over the next few years, packers are likely to discount out cattle more steeply.
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