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January 2000
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Profit First
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.  (The link, Advantages of Cross Breeding, clearly illustrates this point.)
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.

Do you want addtional reading material about grazing and pasture management?  Click Noble Foundation