With rising demand and shrinking
beef supply, consumers may face
higher prices at the meat case.
How will you provide the product consumers
desire at a price they are willing to pay?
“The greatest agricultural resource of
New York is its exceptional adaptation
for the growth of grass. Yet the hay crop
has received little attention and pastures
have rarely received any care… It would
certainly seem good policy to consider
means of increasing the efficiency of our
pastures”.
--Dr. G. F. Warren. 1910
Traditional Production
At any given time, about 15-20% of all
beef cattle in the US are housed in
feedlots. They account for about 10%
of all corn use in the US.
80-85% of the life cycle of
traditionally-raised beef cattle in
the US depends on grass and
forages as the sole nutritional
source.
If you do the calculations
based on the YAN prediction
equation and account for the
time, manure production, and
total meat production from
20% forage to 100% forage in
the diet, the methane
production increases by
500%
Per pound of beef produced.
Canadian, US, and Australian
studies have confirmed these
results.
The bigger picture is
more than methane.
Source: 2008 http://snipurl.com/methanecartoon, Last accessed May 7, 2010
Difference between profitable
and unprofitable cow/calf
operations
Lower feed cost, less debt and lower
operating expense
Productivity: higher sale weights, conception
rate and pounds weaned/cow exposed
Better management of genetics, herd health and
pastures
Measuring performance, benchmarking and
choosing the right replacement stock
Matching genetics to market
Correct use of technology
Cost reduction
Shift in costs occurred through:
1. Adding grazing days (extended grazing)
2. Shift in grazing systems
3. Adjustments in feeding systems
Nutrient Requirements of a Beef Cow
52% TDN
10% CP
22
52% TDN
10% CP
20
52% TDN
8% CP
16
52% TDN
8% CP
ion
14
g
in
lv
ca
re
P
Post Calving
Pregnant and lactating
e
-g
id
M
ge
s
tat
12
Mi
d-
10
n
tio
a
st
Month
D
EC
V
N
O
T
O
C
P
SE
AU
G
JU
L
JU
N
AY
M
AP
R
AR
C
H
M
FE
B
8
JA
N
TDN lb/day
18
Grass Fed Beef is an important part of the
Beef industry because:
1.It engages customers that may not eat any
other beef.
2.It meets the criteria for customers that desire
information about how their food is produced
3.It meets the needs of customers that do not
wish to have animals confined.
4.It is usually produced and marketed locally so
customers are face-to-face with farmers.
5.It is an important lifestyle for many farmers.
Increased interest in beef
finished on forage
•Reduced cost of gain
•Potential world grain shortage
•Energy conservation
•Consumer desire for leaner meat
•Philosophical predisposition to no grain feeding
•Health benefits
Can cattle be finished on all
forage?
Forage finished beef is more variable:
• flavor
• tenderness
•lean color
•retail shelf life
Can cattle be finished on all
forage?
Discriminated by packers:
• lower Dressing Percentage
• increased Cooler Shrink
• lower Quality Grade
Winter Performance Requirements
Assumptions:
•BW 85 lb
•Calving date May 1
•WW 578 lb (2.5 WDA)
•Harvest weight 1100 lb.
To finish on grass:
Cattle must gain 1.5 -2.0 lb/day during
winter feeding period.
If WDA through weaning is only 2.0 lb,
then winter gain must be 2.0/day
Performance of cattle fed hay crop silage
and dry hay during winter feeding period
Feed
ADG, lb
Source
Hay
0.3-2.0
Gallagher, et al., Baker &
Buchanan, Baker & Ketchen
HCS
1.3 – 2.1
Baker & Buchanan, Baker &
Ketchen
Growth Rate
Faster is better for palatability
Strive for 2.0 lb/day for at least the last
100 days
Improves calpain/calpastatin
Animals will be ready for market at younger
age
External Fat
A target of 0.3 - 0.4 inches is good
Allows slower chilling and prevents strong
cross bonds between muscle filaments.
Also demonstrates animal has adequate
energy for rapid growth and that muscle
tissue growth is stopping
Maturity
(animal age)
Strive for < 24 months
Less connective tissue cross linking
Older animals are less tender
Fewer problems with BSE regulations (cattle
are aged by dentition which is not always
precise)
Maturity
(animal age)
Strive for < 24 months
Less connective tissue cross linking
Older animals are less tender
Fewer problems with BSE regulations (cattle
are aged by dentition which is not always
precise)
Key Points
Multiple and varied benefits of grazing
Economic benefits vary
Forage can meet nutrient requirements of
cattle of all ages
Research needed to manage meat quality
Consistent market required
Frame Score
What is it?
Measurement based on observation and
height measurements when claves are
evaluated at 205 days of age
Uses?
To estimate expected size of animal when it
reaches maturity
Sire selection
Carcass Value vs. Meat Quality
Commodity market
1.
2.
Carcass value
Meat quality
Specialty market
1.
2.
Meat quality
Carcass value
Major characteristics important in
beef production include:
•
mature body size,
•
milk production,
•
age at puberty,
environmental
adaptability,
•
rate and efficiency
of gain,
•
•
muscle expression,
•
cutability, and
•
marbling.
Beef Quality Grades
Maturity
Click to add text
Marbling
A
Abundant
Mod. Abund. Prime
Sl. Abund.
Moderate
Modest Choice
Small
Slight Select
Traces Standard
Pract. Dev.
B
C
D
Commercial
Utility
E
USDA Beef Quality Grades
Most Desirable
M
A
R
B
L
I
N
G
USDA Prime
USDA Choice
USDA Select
USDA Standard
USDA Commercial
USDA Utility
USDA Cutter
USDA Canner
Least Desirable
Beef quality refers
to the expected
palatability of the
final cooked product
USDA Quality
Grades are used to
reflect differences in
expected eating
quality among
slaughter cattle and
their carcasses
How Do Quality Grades Work?
How Do Quality Grades Work?
Percent of Loin Steaks Receiving Desirable and
Percent of Loin Steaks Receiving Desirable and
Undesirable Overall Palatability Ratings
Undesirable Overall Palatability Ratings
Smith et al. (1987)
Smith et al. (1987)
5.6%
Prime
10.8%
Choice
26.4%
Select
59.1%
Standard
8
7
6
Extremely Desirable
5
4
3
2
1
Extremely Undesirable
Meat Quality- Sensory Characteristics
Tenderness factors
a.
b.
c.
d.
e.
f.
g.
Sarcomere shortening
Aging
Animal age
Genotype
Time on feed
Gender
Degree of doneness
Meat Quality- Sensory Characteristics
Tenderness factors
a.
b.
c.
d.
e.
f.
g.
Sarcomere shortening
Aging
Animal age
Genotype
Time on feed
Gender
Degree of doneness
Relationship between body condition score and body fat
Body Condition Score
Percent Total Body
Fat
Subcutaneous Fat Cover (inches)
1
0.7
0
2
5.0
0.004
3
9.3
0.005
4
13.7
0.11
5
18.0
0.19
6
22.3
0.29
7
26.7
0.41
8
31.0
0.54
9
35.3
0.68
Rick Hardin. Using Body Condition Scoring In Beef Cattle Management. The University of
Georgia College of Agricultural & Environmental Sciences Cooperative Extension Service
Circular 817/December, 1990. http://www.ces.uga.edu/pubcd/c762-w.html
Effect of Rates of gain vs. Fat in gain
Fat in gain, %
60
50
40
0.6 kg/d
1.0 kg/d
1.3 kg/d
30
20
10
0
200
300
400
Shrunk Body Weight, kg
500
Suggested window of acceptability
for strategic alliances
Minimum 100 days in a high energy diet
Carcass weight 650-800 lb.
Low Choice QG
Yield grade 3 or better
Manage for tenderness
– maximum age of 18 months
– fat depth .3-.5 in. for insulation
– electric stimulation of carcass
– min. aging in box of 14-21 days
Juiciness
Marbling
Marbling stimulates the
salivary glands and
influences the perceived
juiciness of beef
Insulatory effect during
cooking
Juiciness
Fat slows down the
migration of heat and
decreases the shock effect
of heat on protein
degradation and moisture
loss.
The amount of water and fat
lost during cooking is
reduced
Regressions of meat quality indices
on carcass measurements
Factor
Prediction equation
R2
Tenderness
4.95 – 0.002 x marbling
0.04
Flavor desirability
6.47+.02 x HCW - .0836 x REA
0.30
Flavor intensity
0.005 x marbling
0.44
Overall desirability
3.81 + .0063 x Mrb – .0267 fat
0.24
Owens and Gardner, 1999
“For overall maximum meat
quality, these equations indicate
that the preferred animal is one
with a high degree of marbling but
minimal fat cover.”
Owens and Gardner,
1999
Regressions of meat quality indices
on beef production factors
Factor
Prediction equation
R2
Tenderness 7.86 - .0027 x FW +.643 x ADG – 1.39
x Wt/DOA
0.49
Flavor
desirability
8.26 + .0063 dietE – 2.62 x Wt/DOA
0.55
Flavor
intensity
15.04 - .0029 x FW – .0031 x DOF
– 6.43 x Wt/DOA
0.95
Overall
desirability
8.92 – 3.115 x Wt/DOA
0.71
Owens and Gardner, 1999
“For optimum overall meat quality,
the ideal animal appears to be one
that is older (but still under 30
months) and that has gained
rapidly, but not excessively heavy
at harvest.”
Owens and Gardner, 1999
“No Better Bull” Profit Tips
1.
2.
3.
4.
5.
Smaller cows
Later calving
Hybrid vigor-wean
23% more
Use composite bulls
Develop heifers to
55% of mature
weight
6.
7.
8.
9.
10.
Avoid scours
Fenceline weaning
Pre-condition
Select for feed
efficiency
Capitalize asset
base
Know your Costs
Price for Profit
1) Start with the input costs =
Variable
Costs
2) Add in ownership costs =
3) Add in a return to you =
Price
Fixed Costs
Profitable
Value vs. Price
Value = Quality +
Service + Price
Your buyers want
quality
Your buyers want to
know how their food
was raised
Your buyers are wiling
to pay for education
Calculations for Determining Price
Cost and Profit Method
Gross Margin Method
Plan for Profit – Don’t Drop Prices
Going Rate for Market Area
from live animal through pre-slaughter handling to processing; helping you achieve eating quality excellence for your consumer.
This workshop will identify ways producers can excel in the production of traits which directly affect profitability: growth, carcass quality, and yield under varied environments and different production systems.
3% market grass-fed/organic
97% commodity beef
Does not take into account environmental impact of planting, harvesting, transporting crops.
Assumes all grass-fed beef is not efficiently raised and all grain fed beef is.
Producing finished cattle at younger age is critical for profitability whether grain or grass finished.
1. extending grazing season
2. purposeful combinations of native, perennial and annual grazing options (warm and cool season grasses)
3. Feeding systems: types of feeds, labor use, machinery required
Mid gestation (110 days) – nutrient requirements are the lowest
Pre-calving (50 days) – period with the 2nd highest nutrient demand b/c fetus is rapidly growing. Cow should be gaining weight.
Post calving- tough period (82 days) She must meet demand of lactation, repair her uterus for re-breeding.
Pregnant and lactating (123 days). Highest nutrient demand, but she should be pregnant and nursing a calf.
For BCS 6 TDN requirements increase 13% for every 10 degrees below 30 degree comfort zone
For BCS 4 or less, requirements increase 30% for every 10 degrees below 30 degree comfort zone
AU grazing days
Lb DM/Acre
AU/Acre
Potential world grain shortage due to increased usage in foreign countries
Consumer desire for favorable FA profile (health benefits)
cal·pain (k l p n) n. A proteolytic enzyme that is regulated by the concentration of calcium ions
calpastatin [¦kal·pə′stat·ən] (cell and molecular biology) A protein found in all cells that is both the specific inhibitor and substrate of calpains
These characteristics differ in relative economic importance, especially when considering different phases of the production system.
Reproduction traits, such as milk production and age at puberty, are the primary concern of a cow-calf producer.
Efficiency of gain, rate of gain, and carcass traits are most important to stocker and feeder operations.
As USDA Quality grade goes from Standard to mid Choice
number of dissatisfied consumers goes down
taste increases
Source: Source: #207; Bowling et al., 1977 JAS 45:209
Why as beef producers do we need to understand cuts?
You need to understand break down of carcass and value of part regardless of marketing channel.
Price is the dollar amount that you ask for sales of a product or a service. It is one of the four P’s of Marketing: Price, Product, Placement, and Promotion. Price is critically important to the profit on the farm, but the other P’s of marketing contribute substantially to the price that you can get. Profit is the 5th P that keeps you in business. There are various costs that go into deciding what price you will charge for your product.
1) Start with the input costs = Variable Costs (VC) i.e. fertilizer, seed, gas, labor
If you don’t cover these you will have to shut down in a short amount of time.
2) Add in ownership costs = Fixed Costs (FC) i.e. depreciation, interest, repairs, taxes, insurance
If you cover these you will meet your breakeven cost to the business, but have nothing left for yourself. Every item should contribute to ownership costs. If you don’t cover ownership costs, you will have to shut down in a longer amount of time.
3) Add in a return to you = Profitable Price - this is the price you need to survive in the long run.
Allocate Expenses by Enterprise
To track labor and equipment costs by product requires excellent records. You can keep track of tasks and expenses such as plowing time and fertilizer for the whole farm and allocate by square feet used by a particular product. Keep track of daily time spent for special efforts or expenses required by specific products such as transplanting separately. Add all of these together to determine costs per product. Be sure to keep track of harvestable yields or the amount of product that was actually sold, as this impacts the price per unit significantly.
Value vs. Price
Many direct market farmers are afraid to charge what they need to in order to have some profit for themselves. You are providing more value to the buyer as you are closer to the customer. Ask yourself who are your competitors? Do you want to be a ‘price setter’ or a ‘price taker’? Value = Quality + Service + Price
Your buyers want a quality product that you can provide because you can grow varieties for flavor instead of travel characteristics.
Your buyers want to know how their food was grown. They like the fact that they have a relationship with you. This takes time on your part, but they are willing to pay for it.
You can introduce them to new products and ways to cook specialty items. This is education that they are willing to pay for.
Fresh un-waxed products, less fuel used, and community support are also cited as reasons many
consumers are willing to pay more for local products.
Calculations for Determining Price
Cost and Profit Method
Add your variable cost + your fixed costs + profit needed for the particular product = Income Divide by number of units produced = price/unit
For example:
If it costs you $3,000 total variable costs and $2,000 total fixed costs and you want $2,000 of profit for a specific product then your total income from that product needs to be $7,000.
Divide this by the number of units produced, and you will have the price per unit. $7,000 / 950 units = $7.38/unit
Gross Margin Method
This method derives from the whole business sales, costs, and planned profit. This method is usually used by retail businesses that resell products. An example of gross margin method in a vegetable business might be:
Know your total expected vegetable sales = $10,000
Know your total fixed costs + desired profit = $3,000 - this is the gross margin needed.
Divide your gross margin by total sales: $3,000/$10,000 = 30%
Know your unit variable cost = $5.00
You divide the unit price by 1- 30% of the unit variable cost to determine the price
$5.00 / (1-30%) = $5.00 / .7 = $7.14 per unit
Plan for Profit – Don’t Drop Prices
What if you have corn at $3.50/dozen according to your calculations and your neighbor has $3.00/dozen? Can you still make a profit by lowering your price? Sometimes it is better to sell fewer at the higher price than sell more at the lower price. For example, if your margin on the $3.50 is $0.50 toward profit. If you sell 300 dozen that will give you $150 in profit. You would have to sell 600 dozen if you sold at $3.25 to get the same profit. For a 7% decrease in price you have to sell twice as much product.
Do not price your farm product below the market just because the farm income is inconsequential for you. For example, you may be able to afford to sell a dozen fresh brown eggs for $1.00, but other local farmers who rely on farm income for their families cannot - they might need the full price of $3.00 a
dozen to cover their expenses and do not have the off-farm income you do. They could lose sales unfairly due to your indiscretion. In the interest of cooperating fully with your local farm community, keep your prices in line with market rates for any farm product, even if you can afford not to.
Going Rate for Market Area
Many beginning farmers start out with a pricing strategy that reflects what everyone else is charging. While this is a good place to begin, it is not where you want to be forever. It is important to know your costs and price for profit.