Dave Nichols says the Nichols Genetic Source Feeder Cattle Sales held late each fall are not an alliance.

"It's more like an old-fashioned barn raising," says the manager of Nichols Farms, Bridgewater, Iowa. "It's neighbors helping neighbors. In this instance, our bull customers are providing feedlots with the type of cattle they desire and feeders are paying a premium for them. It's a win-win situation."

Specifically, the cattle consigned to the sales must be sired by Nichols bulls, must be weaned and vaccinated, and the work must be documented by a veterinarian. The value of Nichols genetics is enhanced tremendously by the documented health program.

"Last year the calves sold through our sale had one-half of 1 percent death loss, which is six times better than the industry average. That's why the cattle sold for $5 to $8 per hundredweight higher than the national average recorded the same week of the sale." Feedyard records also show that while the Nichols-source cattle cost an average of $35 per head more, they returned an average of $55 per head more.

Cattle sold through the Nichols Genetic Source Sale produce carcasses as good as, and in some instances better than, Nichols-sired cattle fed in retained ownership programs. One hundred twenty-one steers that were purchased at last year's Nichols sale produced carcasses grading 90 percent Choice, with 4 percent grading Prime. One hundred fifty-five retained ownership steers from four producers graded 85 percent Choice and 4.5 percent Prime.

Mr. Nichols, whose family-owned Nichols Farms is widely regarded as one of the nation's premier seedstock operations, strongly believes beef producers must work together.

"Nichols Farms can't operate as an island. Our business depends on the success of our commercial bull customers. But we discovered we must do more than just provide superior beef genetics. We must all work to help other segments gather profits downstream. The Nichols Genetic Source Sales are provided to help our customers market the superior genetics and health they've built into their herds. In turn, that helps feeders, packers, retailers and consumers."

New partners

Mr. Nichols expects 3,500 to 4,000 calves to be sold in two Nichols sales this fall, which should attract enough buyers to assure premiums similar to those found the past three years. But this year a new partner in the Nichols' program is offering a health guarantee that could boost premiums further.

"Feedyards have told us they prefer we use a single brand product in our health program," Mr. Nichols says. "This year Bayer Corp. is offering a health guarantee on cattle in our sale that have been vaccinated with Bayer products. In order to take advantage of this warranty, the preconditioning vaccine program will include only Bayer vaccines."

The Bayer health guarantee, believed to be an industry first, provides technical and product support to buyers of cattle in the Nichols sales. In other words, if any of the cattle become ill, Bayer will provide treatment medications and veterinary assistance at no cost. Such a guarantee shows the faith Bayer has in its products, but also indicates the value of a regimented health and weaning program.

Also new to the Nichols' program this year is an individual animal identification system. An electronic identification tag will be attached to each calf to provide health information, feedlot performance and carcass data back to the individual producer. The data will be collected and processed by AgInfoLink.

A feeders' perspective

Wayne Newton is one satisfied customer who believes verified health and genetics must become a standard industry practice.

"We pay more for the cattle because the known genetics and health take all the mystery out of feeding them. Economics have driven the us in this direction."

Mr. Newton, who manages a unique cooperative of farmer feeders called BEIFF (Benton and Eastern Iowa Farmer Feeders) that marketed 38,000 cattle last year, often procures cattle through auctions that are 700 or more miles from the cooperative's members. He calculates that calves bought through the Nichols' sales are worth $9.44 per hundredweight ($66.45 per head) more than those put-together cattle (see chart).

"We'll always have 20 to 40 cows in a lot of places," Mr. Newton says, "and somebody's always going to upgrade those cattle into 50,000-pound units. Some people have made a science out of sitting in the bleachers putting loads of cattle together. But it doesn't matter how well their genetics are matched up, if the cattle come from 15 different farms they've got at least 15 different viruses and bacterial levels. That's tough for us to deal with."

While the importance of properly vaccinated calves-vaccinated with a booster vaccination two weeks later-can't be over-stated, properly weaning calves prior to sale is just as important, says Mr. Newton. "I don't have any orders for bawling calves. Our farmer-feeders don't have time to babysit calves. So, as far as we're concerned, the price for calves that aren't weaned is zero."

Producer partners

Although feeders can easily calculate the value of preconditioned calves and communicate that to producers, earning premiums for calves requires producer commitment.

"We view Nichols as a partner," says Joan Lafrenz. "They've helped us improve the genetics of our cow herd, and now they're helping us get paid for the improvements we've made."

Joan and her husband Vernon raise corn, soybeans, hay and manage 135 cows near Atlantic, Iowa. As long-time Nichols' customers they've seen first-hand the value of genetic improvement. But like many other commercial producers, they were frustrated come sale time because their cattle sold on averages just like others. In 1996 they jumped at the chance to sell their calves in the first Nichols sale.

"We've been very pleased," Mr. Lafrenz says. "We've received a premium for our management and labor which is found in the genetics and health of our calves. It's good for everyone involved."

Additional labor is required by producers to vaccinate the calves and wean them on the farm. Today the premiums earned on preconditioned calves are important to producers such as Joan and Vernon Lafrenz.

"Our corn and soybean checks won't be much this year. But at least we'll have a good payday on our calves," Mrs. Lafrenz says.

Mr. Nichols is thrilled the sales are producing satisfactory results. But he also recognizes the beef industry needs more cooperation between segments.

"I hope this project will motivate other industry allies to become involved in programs such as ours," Mr. Nichols says. "The feedyard data shows we can nearly eliminate the health risks and capture more of the genetic value of our cattle. Our industry must continue to seek ways to work together to improve our product and our profitability."

Nichols Genetic Source Feeder Cattle Sales will be held Dec. 15, 1999, and Jan. 5, 2000, at the Creston Livestock Auction, Creston, Iowa. For more information contact Nichols Farms: 515-369-2829.