Interesting article on PROFIT!

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MikeC

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Are You Putting Profit First?
Why are you in the cattle business?
Nearly everyone answers this question by claiming they want to make some money. But we wonder sometimes. From where we sit, a lot of folks seem to be more interested in following the thundering herd than they are in really optimizing profitability. And when it comes to crossbreeding, the actions of the majority tell use that beef productivity is starting a long downward spiral.
Tell Me It's Not a Fad
The Angus Association and Farm Journal Inc. got together and hired a polling company to ask ranchers about bulls. I don't know exactly how they phrased the questions, but the answers tell us something.
A total of 400 commercial cow-calf producers participated in the survey. The average cow herd size was 117, and the average acreage they had was 1,627.
When asked what breed of bull they had bought in the past 12 months 59% said Angus, 13% said Charolais, and 8% said Simmental. When asked which breed of bull they planned to purchase this year, 56% said Angus, 14% said Charolais, and 8% said Limousin. When asked what major breed their cow herd primarily consisted of, 43% answered Angus, 43% answered crossbred, and 11% answered Charolais.
Then the article contained a quote from Richard Spader of the Angus Association. He purred, “Commercial producers are beginning to see that the trend toward black-hided cattle wasn't a color issue, it was a quality issue, which resulted in increased demand for the performance, maternal, and carcass traits found in the Angus breed.”
With all due respect, Mr. Spader, your report proves the “black-hided cattle thing” is a fad.
For starters, it proves for a fact that many of the “cattlemen” in the survey either don't care about the economics of their operations or they don't know about the advantages of hybrid vigor. All other factors being equal, breeding bulls to cows of the same breed guarantees a lower performance in total pounds produced.
Another indication it's a fad is that the Angus breed can't produce enough top-quality bulls to fill the demand. With so much demand you can be assured that some Angus breeders will retain bulls that should never be used and sell them to unsuspecting commercial types who are buying into the fad.
Consequently, the mushrooming demand for Angus bulls has resulted in driving down the overall performance of the national Angus cow herd for two reasons: diminishing hybrid vigor and poorer performing bulls. This happened when the nation went berserk over Herefords decades ago, and it will happen with Angus.
Rather than being good news for the future of Angus, if the survey is representative of cattlemen across the nation, it should be a major concern for good Angus breeders. Because when fads die, people are repulsed by their former excesses. And after that happens even the best Angus breeders will have a hard time selling bulls for all the right reasons.
But diminishing hybrid vigor and a watered down gene pool are not the only potholes in the road for Angus producers. There is also the meat issue. Getting the carcass right has always seemed to drive folks wild over the years. It's not a new goal. And the Angus Association has used its popularity to beat the drum over their “quality,” which they virtually claim as their sovereign domain. Yet scientists are rediscovering that just like when all other breeds (including Herefords) became too popular, the “meat quality” thing was a selection for inferior economic performance, not increased earnings.
Today's fad to increase intramuscular fat in the finished carcass is so strong, just about all breeds of cattle, including Herefords, are chasing the Angus in developing EPDs for carcass traits. Therefore, this fad is not just an Angus thing. It's global, yet it doesn't pay!
Show Me the Money
Growth is where it's at after the calf is weaned. Before that the money is in fertility, a live calf, and mothering ability. In the Noble Foundation's November 1999 issue of its NF-Ag News and Views newsletter, John Winder wrote a piece reviewing the Retained Ownership Program the foundation has been promoting. The program was designed to evaluate the performance of calves from weaning to slaughter. Much emphasis was placed on quality and yield grades and the benefits of value-based marketing on grids and formulas. The final analysis came down to overall profitability. And when one reads the results its interesting to know that the Noble Foundation created is own “perfect” composite breed to ring the bell on carcass traits.
This is how John described overall profitability: “Gross feedlot margin was selected as our measure of profit or loss and was derived by taking the value of the carcass and subtracting the value of the animal upon arrival at the feedlot and the cost of all inputs (feed, medication, processing, freight).”
And what did the data show was the greatest profit provider?
Well, the data showed that feedlot average daily gain and carcass weight had the closest relationship to gross margin. And, well, let's quote again: “Both are measures of growth, with average daily gain reflecting rate and carcass weight reflecting accumulation. An increase in either average daily gain or carcass weight was associated with an increase in gross margin. Traits such as marbling, back fat, and ribeye area had very weak relationships with gross margin.” (The emphasis is mine.)
Fat, Profitability Not Linked
Consequently, the pitch voiced by Extension, the various breed associations, and other sources about sending cattle to the feedlot to see if their quality grade measures up sets an unjustifiable goal. And even USDA scientists are coming out with reports that eating experience has a very low (no more than 10%) correlation with intramuscular fat. So not only doesn't quality grade (quantity of intramuscular fat) provide a reliable measure of the eating experience, but it's even worse as a predictor of profitability.
And one last point. Many other beef breeds are seeing breeders quit or reduce their numbers. As they do, they sell the bottom end first so the quality of those breeds is increasing dramatically. Consequently, as the Angus breed waters down its performance gains as it rapidly expands its numbers, the other breeds are rapidly and dramatically improving their overall capabilities. If the breeds were even to start with, the performance gap that may be opening up in favor of the other breeds versus the Angus breed may take decades to close.
I like good Angus cattle and I recommend them as a cornerstone of the industry. They are one of the great breeds and will always play a important role in the beef business. But they are just one tool in the breed toolchest. Most other beef breeds produce cattle that will work. And just about all cattle can produce a good eating experience, even Holsteins! So the move to black is a fad. It is unsustainable and, in time, it may even damage the reputation of a good breed and some great breeders.
 

mgman

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Great article Mike! Makes some very valid points.
I just attended a 3000+ head auction of feeder calves last week...and was amazed at how few non black calves sold. The thing that I found interesting is that the black calves didn't bring any more $$$ than the non black calves that sold-as a matter of fact my buddy's calves (red angus cross) brought top $$$. It's like so many people have stated here previously-buyers are willing to pay for quality-regardless of it's color!
 

dun

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Anything that has been around as long as the black "fad" and has had the implact on so many other breeds, could hardly be called a "fad". Fads are short lived like the hoola-hoop or extremely large or small FS in cattle.

dun
 

tapeworm

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I will ahve to try to read it all again someday because its a little to much to get all at once..for me anyhow. But I think Alabama Mike makes some good points..some not so good. I dont agree about the quality thing but i also see the need for cutability cattle..well never be rid of both kinds of carcasses..there will always be a place for each due to indiviuals tastes


I agree about there being to many Angus breeders and to amny cattle turning black tho....theres almost an angus breeder on ever corner now. One day therell be so many that cab will spec close to 100% angus blood with gene testing I think...theyll be able to do that because theres so many angus breeders now that a bunch of em will ahve to start feeding that registered junk they sell now for bulls and replacement heifers..killings to good for some of em...so your right that we might suffer some in the future. Leastways thats my opinion. But the quality grid money right now is in angus..no getting around taht. Anybody that cant make money now with angus cattle wont ever make it..any cattle far as that goes
 

Susie David

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Good article and post....unfortunately up here black hided cows sell higher. We sell beef on the hoof so black isn't a big deal, good gain and finish on the lean side buys the groceries around our farm. DMc
 

docgraybull

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Thanks for posting that article MikeC. It was interesting. To preface the rest of this post, I'm not a seedstock producer, and I prefer to raise crossbred cattle and utilize various crosses. However, when I sell "freezer beef" it is easier to get a premium from potential buyers when their eyes glaze over when I mention that the beef is Black Angus influenced! So, I have a few questions/comments.
MikeC":1vss8m7u said:
All other factors being equal, breeding bulls to cows of the same breed guarantees a lower performance in total pounds produced..
"Guarantees" seems like such a strong word. Are there some data to back this up. I mean other than just repeating that hybrid vigor or heterosis produces better cattle? Some of the Angus sires I've seen listed with WW of 700-800 lbs (or more) and YW of 1200-1500 lbs (or more) and ADG (on test) of 5-6 lbs per day sure seem like that they would be hard to beat with the crossbreds (even 3 breed limited) that I'm familiar with.
MikeC":1vss8m7u said:
And when one reads the results its interesting to know that the Noble Foundation created is own “perfect” composite breed to ring the bell on carcass traits.
What was it? That's what I want to know.
MikeC":1vss8m7u said:
If the breeds were even to start with, the performance gap that may be opening up in favor of the other breeds versus the Angus breed may take decades to close.
Were the breeds "even to start with"?
MikeC":1vss8m7u said:
I like good Angus cattle and I recommend them as a cornerstone of the industry. They are one of the great breeds and will always play a important role in the beef business. But they are just one tool in the breed toolchest. Most other beef breeds produce cattle that will work.
Agreed.
MikeC":1vss8m7u said:
It is unsustainable and, in time, it may even damage the reputation of a good breed and some great breeders.
In your opinion is this something that is impending? Do you think that the pendulum will swing in the next year or two, five to ten years, fifteen to twenty years.....? If it is in fact unsustainable, what will the next "greatest" breed(s) be?
 
OP
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MikeC

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docgraybull, I found the article while surfing the net and have no opinion on whether the statements in it can be substantiated or not. I don't even have a clue of who wrote it. There were no credits given.

On your question about "guaranteeing", I think it is well documented that heterosis will in fact produce more lbs. of beef than straight-bred cattle and for you to question the validity by comparing the weaning weights and yearling weights of registered "up-and-coming" bulls to commercial cattle is like comparing apples to oranges.

Marc data shows that breeding continentals to british breeds (or vice-versa) produces the most nearly "perfect" calf for the beef industry. I think this article is merely a re-iteration for those that don't get it.

Google the article "Gone Flabby" (in BEEF magazine). The BQA (Beef Quality Audit) will somewhat clarify the above authors' stance and opinions.
 

Brandonm2

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I don't agree with everything in Mike's article; but when it is touting the advantages of crossbreeding it is simply stating long recognized scientific fact.

According to the Article "Heterosis and the Baldie Female" in the October 'Hereford World'....

" It is generally agreed that heterosis is most important for female productivity. Research suggests that the lifetime productivity of a crossbred cow exceeds that of a purebred by about 25%. Data from the U.S. Meat Animal Research Center (MARC), Clay Center, Neb., showed that breeding straightbred cows to produce crossbred calves offered an 8.5% advantage over straightbred calves, when comparing pounds of weaned calf per pound of cow exposed. But crossbred cows producing crossbred calves have a 23.3% advantage. ......."
" According to University of Nebraska Extension Beef Specialist Jim Gosey, maternal heterosis accounts for nearly two thirds of the total crossbreeding advantage'
"Maternal heterosis has more impact because of the effect on reproductive performance through earlier puberty, higher conception rate, faster breed back, greater longevity, and the maternal impact on calf performance." said Gosey
Individual heterosis, of the calf accounts for the other one third of the potential 25% increase in a cow's lifetime productivity. THis is realized through early vigor, resulting in more live calves, plus a higher rate of early growth."
(by Troy Smith.)

Crossbreeding research as far back as the 50s showed that an Angus/Hereford/Shorthorn cross (then really the only three breeds with numbers in the inventory) outperformed any of the three straightbred, and I think most crossbreeding research through the years has found similar data to what the MARC people claim.
 

Frankie

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to docgraybull. The Noble Foundation created a breed they called "The Noble Line". It was a composite of, first Red Brangus and Gelbvieh because they wanted the cattle to be red. John Winder believed the red colored cattle would produce better in the Noble cooperator area. But they had trouble finding enough Red Brangus AI sires, so somewhere along the line they started using Brangus (black) with the Gelbvieh to produce an animal that was 1/3 Brahman, 1/3 Angus, 1/3 Gelbvieh. That was the Noble Line. John Winder left the Noble Foundation before the breed was "completed", but they did eventually set up a breed association, had some sales, and turned the breed over to the cooperators. I haven't heard anything about bull sales or feed tests in several years, so I'm doubtful that it's still being promoted.
 

Frankie

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I wouldn't disagree with much in the article. Heterosis is proven over and over. But things have changed a lot since this article was written. It's too bad Mike didn't provide us with a link or a date. It's obviously several years old and there have been a lot of changes in the cattle industry since 1999.

1. You don't have to give up muscle to get marbling with Angus cattle. Both the Angus and the Limousin Assns have research showing backfat is not strongly linked to marbling. You can get high quality beef without giving up yield grade. Feeding has a great impact on backfat.

2. Demand for CAB continues to grow.

3. Black hided premiums have been around too long to honestly be called a "fad."

4. One of the biggest complaints by consumers about beef is lack of consistency. I believe straightbred cattle will be more consistent than crossbred cattle.

5. My Angus bulls' weaning and yearling weights are comparable or better than the crossbred calves running through my local sale barns.

6. I'm honestly disappointed in other breeds refusal to compete with Angus. Instead, many of them have just turned their cattle black and made them smaller.

7. All the, "ifs", "ands" and "buts" that our mysterious author mentions may come true. But if the survey he mentioned was done five years ago (1999), they haven't come to pass yet. Demand for Angus bulls, registered and commercial Angus females seems to get stronger every year. In fact, the Angus Assn did much the same survey this year and came up with much the same answers.
 

RainMan

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I'm guessing I'll get a lesson here, but...

If I breed my ba cows to ba bulls of a differing gene pool each year aren't I producing heterosis? I would guess the level heterosis may vary, but doesn't it with crossbreeding as well?

In my area black sells. Went to an auction on the 8th and picked up a couple quality red steers for 30 cents a pound less than what I sold my black heifers for. With that thought, I'll eat red and sell black.

I don't buy into the black is best theory, but if it puts money in my pocket then it would seem stupid for me not to sell black. IMHO
 

dun

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RainMan":111phpl4 said:
I'm guessing I'll get a lesson here, but...

If I breed my ba cows to ba bulls of a differing gene pool each year aren't I producing heterosis? I would guess the level heterosis may vary, but doesn't it with crossbreeding as well?

Even with bloodlines that are closely linebred within any given breed there is very little heterosis when crossing them. Even crossing Red and blck Angus there is very little heterosis.

dun
 

BRG

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That is not exactly right. No not as much as crossing 2 separate breeds, but you do get quite a bit of heterosis crossing Black and Red Angus. Alot of ranchers are starting to do this when they want to keep their herds Angus, and it is working. You also do get some the way RainMain said. Not a whole lot but some.
 

dun

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BRG":3lqyepkf said:
That is not exactly right. No not as much as crossing 2 separate breeds, but you do get quite a bit of heterosis crossing Black and Red Angus. Alot of ranchers are starting to do this when they want to keep their herds Angus, and it is working. You also do get some the way RainMain said. Not a whole lot but some.

I discussed this issue at length several years ago with the folks at ABS, Red Angus accociation and a well known name from MARC. Guess they're all wrong. Using a different color angus may improve the calves but it probably isn;t from heterosis as much as just a difference in selection criteria.

dun
 

docgraybull

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MikeC":cy2etm0q said:
docgraybull, I found the article while surfing the net and have no opinion on whether the statements in it can be substantiated or not. I don't even have a clue of who wrote it. There were no credits given.
Mike C, if you're still following this thread, I'm sorry, I made the assumption that if you were posting it without commentary that you agreed with it.

MikeC":cy2etm0q said:
On your question about "guaranteeing", I think it is well documented that heterosis will in fact produce more lbs. of beef than straight-bred cattle and for you to question the validity by comparing the weaning weights and yearling weights of registered "up-and-coming" bulls to commercial cattle is like comparing apples to oranges.
I don't see the disparity in the comparison. If crossbred cattle have heterosis, and heterosis "will in fact produce more lbs. of beef than straight-bred cattle", then it stands to reason that crossbred cattle should produce heavier WW and YW in their offspring than registered cattle. Right?
 

dph

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4. One of the biggest complaints by consumers about beef is lack of consistency. I believe straightbred cattle will be more consistent than crossbred cattle.

Bingo, Frankie. The next change to come about in the industry will, IMHO, be focusing on creating a more consistent product. I don't believe it will focus on any particular breed as much as it will focus on the genes needed to create consistency. I know growth is very important, but quality will be key the next time times get tough. Whether a fellow straight or cross breeds, they will have to prove they can provide a consistent, quality product.
 

docgraybull

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Frankie":24k8ivkj said:
I wouldn't disagree with much in the article. Heterosis is proven over and over.
Frankie":24k8ivkj said:
5. My Angus bulls' weaning and yearling weights are comparable or better than the crossbred calves running through my local sale barns..
Frankie, I agree with the rest of your post, but how does one make these statements jibe?
 

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