Granted this is in a sales pitch for a particular genetic package, but the points still seem valid to me!
dun
The Balancing Act of Profitability
Who's got time to spend an hour at the coffee shop every morning stretching truths and catching up on town gossip? As I travel the country searching for management practices and cattle that increase profits for the beef industry, apparently some people still make time for their daily dose of caffeine and embellishment. As I walk into the gas station to pay for the gas, which apparently is made of gold these days, I overhear the stories. Stories of weaning an 800 pound calf and of topping the local market, but not once have I heard anyone say, "Oh yeah, my cow ate $200 less than your cow this year."
As Americans we're programmed to believe that bigger is better and more is best. We're a culture of egotistical, butt-kickers that refuse to be outdone. We must win, no matter what the costs. But, what are we winning? If you're competing at the county fair for the biggest watermelon, it's all about output and bragging rights. If you desire to stay in the beef industry for the long haul and have something to pass on to the next generation you better consider this:
max p = Px(X)-[wL+rK+nM+aR]
Admittedly, I have no idea how to read this equation, but it is apparent that the application has been missed by much of the beef industry. It is the equation for Producer Optimum, the very point at which profitability is maximized. It seems the industry has lost sight of the fact that the profit equation is two sided, profitability is a function of production and price minus input costs.
Today's exceptionally high cattle prices mask many flaws in production practices and overspending. High maintenance cows and $5,000 commercial bulls are seemingly justified when choice carcasses are bringing more then $150/cwt and corn is cheap. While times are good, producers feel compelled to make the investment in genetics with the highest yearling weights, milk, marbling, ribeye area and my favorite, $ index values that money can buy. But, how will your herd, and more important, your pocketbook, fair when the tides turn (and they will), corn is high, and cattle prices are low?
Historically, producers have been given genetic selection tools to measure only the output side of the equation. And now we have been given the ability to wrap these output based breeding values into units that mean something, dollars ($). Marketing and purchasing seedstock based on dollar value indexes has become a focal point for many buyers and sellers. It seems you can't push the index values high enough because, after all, it's a measure of return; however, this logic ignores the input side of the equation, the variation in environments, marketing goals and the current genetic base of cowherds. To be fair, many associations now offer measures of input, index values predicting cow energy requirements are available, but rarely used or printed by breeders of today's high-input seedstock. There are EPDs for cow maintenance and stayability, but extremes in these categories just doesn't seem exciting enough to brag about at the coffee shop. Some even offer customizable profitability indexes, but they are receiving modest use in marketing or breed improvement.
Instead of promoting ridiculous contests that reward high input, hand-selected, ultrasounded cattle for grading a high percent choice, why doesn't the industry reward and propagate the most profitable cattle? Good, functional, maternal cattle should grade 80% Choice if properly managed. How much effort or precious selection pressure should be aimed at hitting 90% choice? It seems a point of diminishing returns will always be hit before hitting the jackpot (until the Choice/Select spread reaches well over $20).
When are breeders going to define and accept intermediate optimums? When is a breeder going to advertise, "This year, and for the last 10 years, we changed nothing, our cattle are just right to maintain our customers' profitability." You need only to look at the dairy industry to witness how intense selection for output affects cow longevity, fertility, structural soundness and profitability. This low-margin, high-volume system has driven many independent dairymen out of the business, leaving only room for corporate operations. It would be a shame to see the same happen faster than it already is in the beef industry.
High input/output cattle can be biologically stressful to themselves, their environment, and less frequently considered, their owners. Cattle requiring daily attention and feed can not only be a potential source of economic liability, but a demanding lifestyle in times of precious little personal and family time. Optimum inputs vary greatly based on environmental resources, marketing scenarios and managerial desires. Low input cattle may not be the answer in nutrient-rich environments, but balanced decision making, sustainability and profitability should be the foremost thoughts in all environments.
dun
The Balancing Act of Profitability
Who's got time to spend an hour at the coffee shop every morning stretching truths and catching up on town gossip? As I travel the country searching for management practices and cattle that increase profits for the beef industry, apparently some people still make time for their daily dose of caffeine and embellishment. As I walk into the gas station to pay for the gas, which apparently is made of gold these days, I overhear the stories. Stories of weaning an 800 pound calf and of topping the local market, but not once have I heard anyone say, "Oh yeah, my cow ate $200 less than your cow this year."
As Americans we're programmed to believe that bigger is better and more is best. We're a culture of egotistical, butt-kickers that refuse to be outdone. We must win, no matter what the costs. But, what are we winning? If you're competing at the county fair for the biggest watermelon, it's all about output and bragging rights. If you desire to stay in the beef industry for the long haul and have something to pass on to the next generation you better consider this:
max p = Px(X)-[wL+rK+nM+aR]
Admittedly, I have no idea how to read this equation, but it is apparent that the application has been missed by much of the beef industry. It is the equation for Producer Optimum, the very point at which profitability is maximized. It seems the industry has lost sight of the fact that the profit equation is two sided, profitability is a function of production and price minus input costs.
Today's exceptionally high cattle prices mask many flaws in production practices and overspending. High maintenance cows and $5,000 commercial bulls are seemingly justified when choice carcasses are bringing more then $150/cwt and corn is cheap. While times are good, producers feel compelled to make the investment in genetics with the highest yearling weights, milk, marbling, ribeye area and my favorite, $ index values that money can buy. But, how will your herd, and more important, your pocketbook, fair when the tides turn (and they will), corn is high, and cattle prices are low?
Historically, producers have been given genetic selection tools to measure only the output side of the equation. And now we have been given the ability to wrap these output based breeding values into units that mean something, dollars ($). Marketing and purchasing seedstock based on dollar value indexes has become a focal point for many buyers and sellers. It seems you can't push the index values high enough because, after all, it's a measure of return; however, this logic ignores the input side of the equation, the variation in environments, marketing goals and the current genetic base of cowherds. To be fair, many associations now offer measures of input, index values predicting cow energy requirements are available, but rarely used or printed by breeders of today's high-input seedstock. There are EPDs for cow maintenance and stayability, but extremes in these categories just doesn't seem exciting enough to brag about at the coffee shop. Some even offer customizable profitability indexes, but they are receiving modest use in marketing or breed improvement.
Instead of promoting ridiculous contests that reward high input, hand-selected, ultrasounded cattle for grading a high percent choice, why doesn't the industry reward and propagate the most profitable cattle? Good, functional, maternal cattle should grade 80% Choice if properly managed. How much effort or precious selection pressure should be aimed at hitting 90% choice? It seems a point of diminishing returns will always be hit before hitting the jackpot (until the Choice/Select spread reaches well over $20).
When are breeders going to define and accept intermediate optimums? When is a breeder going to advertise, "This year, and for the last 10 years, we changed nothing, our cattle are just right to maintain our customers' profitability." You need only to look at the dairy industry to witness how intense selection for output affects cow longevity, fertility, structural soundness and profitability. This low-margin, high-volume system has driven many independent dairymen out of the business, leaving only room for corporate operations. It would be a shame to see the same happen faster than it already is in the beef industry.
High input/output cattle can be biologically stressful to themselves, their environment, and less frequently considered, their owners. Cattle requiring daily attention and feed can not only be a potential source of economic liability, but a demanding lifestyle in times of precious little personal and family time. Optimum inputs vary greatly based on environmental resources, marketing scenarios and managerial desires. Low input cattle may not be the answer in nutrient-rich environments, but balanced decision making, sustainability and profitability should be the foremost thoughts in all environments.
