Discounts vs premiums

[Ky hills]

Since the same ol argument about CAB/black hide premiums came up in another thread, it got me to thinking about the wording in the market reports from several stockyards around here back around October.
Those who make the argument that non black cattle are not discounted and that the black hided calves simply receive a premium are wrong.
The archived reports do not include the comments about each individual sale day. The original reports contain a brief description of the market trends.
We watched those reports pretty closely back heading into and through October 22 when we were planning to sell our calves.
The wording in the reports from several different area stockyards, compiled by individuals from the KY Dept. of Agriculture were stated as to the effect of " discounts for off colored calves, bawling and fleshy calves. "
There were also some statements to the effect of "preference shown for long weaned packages"
They clearly stated discounts for non black calves.
There is a lot more at play here than CAB, to be concerned about. I keep up with the R Calf stuff via Facebook. It said beef imports were higher this year than since 2002 or somewhere there bout.
We've been told that the US doesn't produce enough lower quality beef is why we have to import, something's are not adding up if it's a simple matter of supply and demand.

 

[Otha]

This may not be totally on topic but the CAB deal is interesting. Firstly because it just has to be black not angus to fall under CAB from what i've heard, not seen with my own eyes.
But the real questions are; is black angus beef better? or do they perform better in the feed yard and on the rail?
And it is better and they do preform better is it because were originally superior or because more effort has been put into improving the breed?
Or am I completely missing the point here?

 

[Travlr]

The real problem in the industry is a lack of genetic diversity. Artificial insemination narrowed down the gene pool by making top bulls available to everyone. CAB has only made the problem worse by making fewer breeds profitable.

 

[Son of Butch]

Those who make the argument that.... black hided calves simply receive a premium are wrong.
The wording in the reports from several different area stockyards.... stated " discounts for off colored calves (non black) bawling (unweaned) and fleshy (overly fat) calves. "
"preference shown for long weaned packages" (demand for large groups of long weaned calves) They clearly stated discounts for non black (off color) calves.
beef imports were higher this year than since 2002....
We've been told that the US doesn't produce enough lower quality beef (ground beef)... and (supply) is why we have (demand) to import, some things are not adding up if it's a simple matter of supply and demand.

It is supply and demand. What doesn't add up?

Unless you're selling grade and yield, there's no such thing as a premium.
There's only market top and then excuses/reasons to discount from the top price.

 

[Travlr]

It is supply and demand. What doesn't add up?

Unless you're selling grade and yield, there's no such thing as a premium.

There's only market top and then excuses/reasons to discount from the top price.

Two animals walk into the same slaughter house. They are identical in every respect except one is black and the other is not. After they are slaughtered they weigh and grade the same. They cut the same, and yield the same. The steaks eat the same. The guy that raised both animals put the same effort and investment into both animals... but at the sale barn he got $ more for the black steer ONLY based on the color.

Whether it's a "premium" being paid for black, or a "discount" for non-black it amounts to the same thing.

And once the hide is removed the animals are identical.

AND there is no legitimate reason for price differences based on color. Red and white and whatever can and do yield and grade the same and should bring the same prices. Some breeds even outperform black angus in the feedlot as an average... yet they get discounted as standard procedure. That's wrong on all levels.

 

[simme]

The real problem in the industry is a lack of genetic diversity. Artificial insemination narrowed down the gene pool by making top bulls available to everyone. CAB has only made the problem worse by making fewer breeds profitable.

Having a hard time understanding this. Is the conclusion that the industry would be better off if fewer people had access to top bulls and majority were therefore forced to use lesser quality bulls?

Not much genetic diversity in pork and chicken. Would those industries be more profitable if they were still producing dominickers and Poland China's?

 

[Son of Butch]

one is black and the other is not. After they are slaughtered they weigh and grade the same. They cut the same, and yield the same. The steaks eat the same. The guy that raised both animals put the same effort and investment into both animals... but at the sale barn he got $ more for the black steer ONLY based on the color.

Whether it's a "premium" being paid for black, or a "discount" for non-black it amounts to the same thing.

And once the hide is removed the animals are identical.

Who says the black one brought more at the sale barn? The hide was removed.
I've seen mixed groups of blacks and reds sell that set the market top at the sale barn.

 

[M.Magis]

This is a pointless argument. Call it whatever you want. Black calves in general bring more than colored because they are worth more money in the end.

 

[Travlr]

Having a hard time understanding this. Is the conclusion that the industry would be better off if fewer people had access to top bulls and majority were therefore forced to use lesser quality bulls?

Not much genetic diversity in pork and chicken. Would those industries be more profitable if they were still producing dominickers and Poland China's?

There have been some real problems in the last several years due to a lack of genetic diversity. Black angus had a hugely popular top bull, GAR Precision 1680, that was responsible for "curly calf syndrome" when those using his semen bred related females back to him, or to related bulls from him. There have been other less publicized anomalies as well.

Any time there is a pyramid built on popularity for breeding, people tend to take chances. We see great cows, related to the top bulls, being flushed and the top bulls producing 80% (?) of the commercial herd sires, and all the animals in every successive generation more related to each other.

Now every breed not black is being dinged at the point of sale, so they scramble to get black to survive against black cattle and the cycle repeats with those breeds as well... with the addition that their black genetics are sourced from the same places that are already having diversity issues.

 

[Son of Butch]

This is a pointless argument. Call it whatever you want. Black calves in general bring more than colored because there's more demand for black calves and demand determines worth.

Fixed it for you

 

[Travlr]

This is a pointless argument. Call it whatever you want. Black calves in general bring more than colored because they are worth more money in the end.

No... they aren't. The market is being manipulated to sell black angus bulls and it's detrimental to cattle in general, and to producers specifically.

 

[Travlr]

M.Magis said:
This is a pointless argument. Call it whatever you want. Black calves in general bring more than colored because there's more demand for black calves and demand determines worth.

Fixed it for you

I can agree with that... but it's still a bad thing for the industry when the demand is for reasons that don't improve cattle.

 

[Son of Butch]

I can agree with that... but it's still a bad thing for the industry when the demand is for reasons that don't improve cattle.

I'm not sure if it is a bad thing if it increases processor's profitability.
Uniformity increases efficiency and efficiency increases profits.
Government taxes the profits and repairs the highways to and from the sale barn.

 

[mwj]

Two animals walk into the same slaughter house. They are identical in every respect except one is black and the other is not. After they are slaughtered they weigh and grade the same. They cut the same, and yield the same. The steaks eat the same. The guy that raised both animals put the same effort and investment into both animals... but at the sale barn he got $ more for the black steer ONLY based on the color.

Whether it's a "premium" being paid for black, or a "discount" for non-black it amounts to the same thing.

And once the hide is removed the animals are identical.

AND there is no legitimate reason for price differences based on color. Red and white and whatever can and do yield and grade the same and should bring the same prices. Some breeds even outperform black angus in the feedlot as an average... yet they get discounted as standard procedure. That's wrong on all levels.

This only apply s in the CAB program. There are thousands going on the hook that this does not apply to. There are many aspects that will bring a carcass premium. If you produce select grade beef do not expect a premium for prime. CAB program is much more than color of the animal.

 

[Travlr]

I'm not sure if it is a bad thing if it increases processor's profitability.
Uniformity increases efficiency and efficiency increases profits.
Government taxes the increase in profits and repair the highways to and from the sale barn.

Short term profitability at the expense of those that get discounted.

Uniformity does increase efficiency, but there are downsides. The question becomes which are more advantageous in the end. Human beings aren't long term thinkers.

And maybe your tax dollars are filling potholes... but yesterday I drove a couple hundred miles and I think I may need a new suspension.

 

[Travlr]

This only apply s in the CAB program. There are thousands going on the hook that this does not apply to. There are many aspects that will bring a carcass premium. If you produce select grade beef do not expect a premium for prime. CAB program is much more than color of the animal.

The grading system promotes quality. The CAB program promotes color at the expense of quality.

 

[simme]

Some facts. GAR Precision 1680 was a carrier of AM (curly calf), but he was not the source. His Maternal grandsire Rito 9J9 of B156 7T26 was determined to be the source of AM in angus. It was a genetic issue that originated in the mating that produced the 9J9 bull.

Also, recently there have been found AM defects in Ayrshires in Canada. Those did not come from Precision or 9J9. Defects sometimes form in genetics. I don't think that lack of genetic diversity causes the defects, but does lead to a more rapid propagation, but also a more rapid detection and solution.

Curly Calf Syndrome in Ayrshires - Lactanet

A new genetic abnormality has recently been identified in the Canadian Ayrshire population. The formal name of this genetic defect is Arthrogryposis Multiplex (AM), but it is commonly known as Curly Calf Syndrome. Calves with this genetic defect are born deformed with stiffness in multiple...

lactanet.ca

 

[mwj]

The grading system promotes quality. The CAB program promotes color at the expense of quality.

Please read up on requirements to qualify as CAB. Quality of the beef is what the program is about. If it was about color they would require a 100% black hide.

 

[Ky hills]

Some facts. GAR Precision 1680 was a carrier of AM (curly calf), but he was not the source. His Maternal grandsire Rito 9J9 of B156 7T26 was determined to be the source of AM in angus. It was a genetic issue that originated in the mating that produced the 9J9 bull.

Also, recently there have been found AM defects in Ayrshires in Canada. Those did not come from Precision or 9J9. Defects sometimes form in genetics. I don't think that lack of genetic diversity causes the defects, but does lead to a more rapid propagation, but also a more rapid detection and solution.

Curly Calf Syndrome in Ayrshires - Lactanet

A new genetic abnormality has recently been identified in the Canadian Ayrshire population. The formal name of this genetic defect is Arthrogryposis Multiplex (AM), but it is commonly known as Curly Calf Syndrome. Calves with this genetic defect are born deformed with stiffness in multiple...

lactanet.ca

GAR Precision 1680 was apparently the start of NH neuropathic hydrocephalus defect in Angus cattle as well.

 

[Travlr]

Some facts. GAR Precision 1680 was a carrier of AM (curly calf), but he was not the source. His Maternal grandsire Rito 9J9 of B156 7T26 was determined to be the source of AM in angus. It was a genetic issue that originated in the mating that produced the 9J9 bull.

Also, recently there have been found AM defects in Ayrshires in Canada. Those did not come from Precision or 9J9. Defects sometimes form in genetics. I don't think that lack of genetic diversity causes the defects, but does lead to a more rapid propagation, but also a more rapid detection and solution.

Curly Calf Syndrome in Ayrshires - Lactanet

A new genetic abnormality has recently been identified in the Canadian Ayrshire population. The formal name of this genetic defect is Arthrogryposis Multiplex (AM), but it is commonly known as Curly Calf Syndrome. Calves with this genetic defect are born deformed with stiffness in multiple...

lactanet.ca

That's great information. I was working with older information, https://www.cattle.com/read.aspx?id=39, (and others) and it would not be unusual that conclusions have evolved over time as more research has been done. Still, the point remains that as cattle become increasingly closely related we can expect more genetic anomalies to crop up. The angus people have made great efforts to contain the problems in their cattle and to rid themselves of problems, but the nature of our industry breeds popularity and thus too many animals bred from identical lines and in turn bred to related others.
I suspect Ayrshires have succumbed to the same failings as others by generating too many related cattle.