Transcript Impact of Health & Death Loss

Satisfying the 21st Century
Beef Consumer
Cattle Feeder’s Perspective
Tom Brink
Five Rivers Ranch
Cattle Feeding, LLC
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ContiBeef plus Smithfield (Monfort) Feedyards
50-50 owned by ContiGroup & Smithfield
Ten feedyards in Five States
811,000 head of feeding capacity
Market cattle to 4 of the 5 major packers
Majority sold on grids (formulas)
ContiBeef: Locations
Greeley, CO
Colorado Beef, CO
130,000+ Head/Year
Swift-Cactus/Greeley
Cimarron Feeders, OK
145,000+ Head/Year
Swift-Cactus
XIT Feeders, TX
165,000+ Head/Year
Swift-Cactus
Nolan Ryan
Legend:
= Feedlot
= Swift Plant
= National Plant
Grant County Feeders, KS
245,000+ Head/Year
National-Liberal
Naturewell
Dodge City National, KS
Liberal National, KS
Cactus, TX
Hartley Feeders, TX
135,000+ Head/Year
Swift-Cactus
Packerland Naturals
Coronado Feeders, TX
150,000+ Head/Year
Swift-Cactus
MF: Locations
Interstate
Malta, ID
110,000+ Head/Year
Kuner
Kersey, CO
185,000+ Head/Year
Hyrum, UT
Greeley, CO
Grand Island, NE
Yuma
Yuma, CO
270,000+ Head/Year
Gilcrest
La Salle, CO
185,000+ Head/Year
Cactus, TX
Legend:
= Feedlot
= Processing Plant
Five Rivers Ranch
Cattle Feeding, LLC
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Commodity principles are foundational
Must be efficient in all aspects of our business
Specification production and marketing
Sorting and segmenting our cattle inventory
Feeding for branded beef programs
C&P efficiency plus Value-added marketing
How do we satisfy consumers?
• Better cattle health
• Right breed composition
Health in the Feedyard
• “Old problem” but still identified as the #1
production problem feedyards face
• Impact on performance and carcass quality
is well documented
• We have the technology and know how to
get cattle better prepared to leave the farm
or ranch…implementation is lacking
Many cattle still need stronger immunity when they leave home.
Impact of Health & Death Loss*
Death Loss
ADG
DMC
Profit per head
0% - 0.5%
3.09
6.48
-$10.89
0.5% - 1.5%
3.00
6.65
-$20.41
1.5% and up
2.84
6.86
-$57.62
*800-lb. yearling-fed steers closed out in March 2006
Did the higher DL% steers satisfy anyone in
the system from producer to consumer?
Pre-conditioning in simple words…
“Vaccinate calves at 2 to 3 months of age, and again 2 to
3 weeks before weaning. At weaning control internal
and external parasites, castrate all remaining bull
calves. Make sure all calves are dehorned (preferably a
2 to 3 months of age). After weaning, calves should be
exposed to supplemental feed for 30-45 days. If
properly preconditioned prior to shipment, producers
have done a great deal to prepare their calves for the
future.”
---Dr. Max Irsik, University of Florida
Is cattle health improving?
• 55% of High Plains feedyard managers in 2002 said
health in southern-origin feeder cattle was “better” or
“much better” than a decade ago.
• VAC-45 type programs are on the rise, as are special
sales for such cattle
• Data is readily available that shows the value of
preconditioning (Pfizer-CSU)
• So some progress has been made but…
Cattle health is now a Social Problem
not a Technological Issue.
Breed Composition
---Large numbers of the industry’s cattle are designed
wrong genetically…wrong breed composition to succeed in
the feedlot and satisfy the consumer.
We skirt the issue and remain politically correct.
“More difference within breeds than between breeds.”
---And it costs the industry millions of dollars and reduces
our worldwide competitiveness.
---The feeding industry is also guilty of not consistently
communicating what they need to producers.
Here is what Five Rivers wants…
Our first choice: AN x Continental
• 50% to 75% Angus and 25% to 50% Continental
• Good feeding, Good grading, Good yielding animal that
is usually the right size
• Higher percentage British cattle lack often muscle, yield
and produce too many YG 4s.
• Higher percentage Continental cattle lack often grade,
and often get too big before they finish.
Balanced combination of Angus and
Continental breeding is tough to beat.
Heat tolerant genetics?
“Eared” genetics are necessary in the South
No more than 25% eared genetic influence in
Southern feeder cattle!!
Cow herd can still be up to 50% Bos Indicus influenced
Woodward, OK Auction (4/7)
Feeder Quality
#1s
#2s
Average Weight
Average Price
777 lbs.
771 lbs.
$99.93/cwt.
$93.90/cwt.
Minus $6 per cwt. ($47 per head) for too much ear.
You will be paid more for avoiding breed composition
problems in your cattle.
Breed Composition Pyramid: Ideal Feeder Animal
Up to 25%
Other Breeds
25% to 50%
Continental
50% to 75%
Angus
Chronically low quality grades in
Southern U.S. plants
Week ending 4/1/2006
Choice & Prime
Nebraska
Kansas
Texas
63.7%
44.9%
44.5%
Choice-Select spread was $10.74/cwt.
This problem is visible…
They’ll feed fine, but won’t grade
Balanced breed composition…
Progressing in the 21st Century
Quotes from Five Rivers’ Managers (to producers):
“Embrace individual animal I.D. and maintain verifiable age
and source records on you calf crop.”
“In today’s industry, with source and age verification being
on the consumer’s mind, I think this would be one of the
easiest and most rewarding steps any cow-calf producer
could take.”
“If we in the industry want to give consumers what they are
willing to pay for, then cow-calf producers should begin
to shift their mental paradigms to the age and source
verification process.”
Feeder calf value built in steps…
(1) Right breed combination--- sell at the market (not below)
(2) Verifiable immunity--- sell cattle above the market
(3) 1 + 2 + well selected genetics within breeds used--- access to
significant grid premiums
(4) All of above plus age and source verification give you access to
branded beef or “program” premiums that can add further $$ to the
producers bottom line
Example: premiums paid for verifiably
natural calves = $25 to $75 per head
Age, source and process
verification at the farm and ranch
level are the platform from which
cow-calf producers can access
branded beef premiums.
Another quote:
“Cow-calf producers should shift their
mindset toward more cooperative
integration within the overall
production chain.”
Where are we, really?
• Fix health issues and get the breed composition right.
• Realize that communication and educational challenges
are now bigger than technological barriers in making
progress at the producer level.
• Source, age and process verification can open the door
to branded beef premiums…that pay all the way through
the system…yes even back to the producer.
We have NEVER had a marketing system that
rewarded true value like we have today…leverage it
to your advantage!
Thanks.