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ILC examines lost opportunities

By Larry Dreiling

Lost opportunities in beef production was among the topics discussed at the recent International Livestock Congress, held in conjunction with the recent National Western Stock Show in Denver.

The keynote speaker was Gary Smith, Ph.D., emeritus distinguished professor of meat science at Colorado State University, who said that while in the last quarter century, the beef industry has made remarkable progress in improving the efficiency with which they produce one of the Earth’s most healthful, nutritious and palatable foods, there is still room for improvement.

For the most part, however, Smith decided to stick with what’s been improved.

Smith spent much of his address referencing a 1991 address by Chuck Lambert, Ph.D., then chief economist for the former National Cattlemen’s Association and later deputy under secretary of agriculture for marketing and regulatory programs, who at that time said many economic opportunities from excess costs in the current beef system could be corrected to reduce the overall cost of delivering beef to the end consumer.

Smith echoed Lambert’s belief that gains in efficiencies would make the U.S. cattle industry more competitive against other animal protein sources and against the cattle industries of other countries.

Smith also recognized Lambert’s identification of 11 source potential gains for the beef industry if new efficiencies were achieved. Smith went on to see if those gains had been achieved in the two decades since that address.

The areas of potential gains, Lambert saw, were in reduction of excess fat, improvements in reproductive performance, death loss, reduction in hot-iron branding, improved weaning weights, multiple processing, feed efficiency, removal of outlier cattle, improvements in management, reduction of retail shrink and improvements to inventory systems to reduce out-of-stock items at retail.

Lambert estimated $12 billion in new revenue could be added to the $44.85 billion (1989) cattle industry by increasing efficiencies. That added up to a per-head gain of $458 per fed steer or heifer.

It was in 1991 that the first National Beef Quality Audit took place, showing that economic losses due to excess fat, management losses, and outlier cattle accounted for $4.9 billion or about 40 percent of the lost opportunities.

Since that initial audit, however, the industry has benchmarked its progress in reducing the other 60 percent of economic losses.

Smith, then, told the crowd of 400 ILC attendees that he had contacted 11 industry experts to survey the other eight areas Lambert had originally surveyed for potential gain.

In the area of reproductive performance, the experts found that in 80 percent of beef and dairy females exposed to mating weaned a calf in 2013, the same value in 1991. The problem primarily remained open calves, but recent drought kept the value the same.

In terms of death loss, 80 percent of cows and heifers had a calf, but 4.2 percent of calves died at birth and 2.3 percent more died between birth and slaughter between 1980 and 1989.

That meant a loss of $1.88 billion per year, predicated on $1.73 billion in losses for keeping females that did not wean a calf and $130 million in feed and management costs for live calves that died prior to slaughter.

The experts of today said about the same thing, that 80 percent of cows and heifers had a calf, but 3.6 percent of calves died at birth and 2.6 percent more died between birth and slaughter.

“Basically what we’re saying here is we’ve made no progress in reducing death loss,” Smith said. “The reasons we didn’t are because of dystocia, scours, and pneumonia.”

Dystocia losses are mostly genetic, Smith said, while scours and pneumonia can be prevented.

“We have too much difficulty with these calves because we are pushing those cows too hard and we aren’t paying enough attention to the fact that the bull is too big for that cow,” Smith said.

“Some of it is also related to weather, specifically extreme drought. Some of our experts say it was more due to drought than genetics, especially in the last part of the last 20 years.”

The drought has created a heightened incidence of what Smith called “weak calf syndrome,” in which cows in the third trimester of pregnancy fail to get enough dietary protein.

“Calves are born that do not receive enough of the things from colostrum that allow them to have immunity from the germs that cause scours and pneumonia and they die close to birth,” Smith said.

Weaning weights, meanwhile, have improved since 1989, Smith and his expert panel say, from 500 to 550 pounds on average, creating a nearly $300 million gain in economic opportunity.

“Admittedly, with the drought, we’ve seen some decline,” Smith said, “but we have been able to see improvement mostly through improved genetics and also better management. The American Angus Association use things like net value to help its members. Incorporated into it is weaning weight where you just don’t buy it but feed it when it’s profitable to do so.”

Another gain in opportunity was through reduction of multiple processing of cattle via preconditioning programs and the support of feedyard veterinarians.

“It used to be cattle were processed on the farm, then onto the backgrounder, then back onto grass where if there are parasites they’re dewormed every 60 to 90 days. Then they go to the feedlot where there are always two or three trips through the chute,” Smith said.

“The industry has made improvements through programs like VAC-45 and many others. Plus the feedlot vets have worked hard to make sure animals don’t get unnecessary drugs. We’ve had a lot of help from pharma to make progress in redundant vaccinations.”

Losses in feed efficiency totaled $325 million according to the Lambert study. Improvements have been seen, as efficiencies have climbed from 7 pounds of feed to produce a pound of live weight gain in feedlot steers and heifers to 5.75 pounds of feed per pound of gain, mainly through better feedlot management, feeding of dry distillers grain and improved feed manufacturing.

“Some of it is also genetics, and we are finding ways to improve that efficiency through genetics,” Smith said.

The industry has reduced numbers of outlier cattle; those considered too light in weight and dark cutters grading lower than Select with Yield Grades at 4 or 5. It’s failed to reduce cattle that are too heavy in weight. Opportunity gains have increased about $15 per head due to that reduction.

Another improvement is in reduction of excess fat on the outside of cattle carcasses, which totaled $4.41 billion in lost opportunity. The NBQAs of 1991 and 2011 indicate average Yield Grades have improved from 3.2 to 2.9, trimmable fat has been reduced by six-tenths of a percent and cattle with fat thickness under three-tenths of an inch has been increased by 3.5 percent.

“We’ve made progress on the war on fat,” Smith said, indicating how the industry’s move to demanding a quarter-inch of trim on beef cuts has increased overall awareness on the demand for excess fat reduction.

The study shows the industry was unable to capitalize on reduction of hot-iron branding, primarily because the percentage of hot-iron branded cattle remains unchanged.

“We are branding far fewer cattle today compared with 1989,” Smith said. “We are also moving the brand to the optimum part of the hide. There is no premium, however, for using something other than hot-iron branding.”

The use of Best Management Practices in farms and feedyards may not have reduced the number of carcass condemnations or abscesses in the last 24 years, but the reduction in injection site lesions has been dramatic, Smith said, especially in the area of the major primal cuts. Also the NBQA indicates carcass bruising has been reduced from 39.2 percent of carcasses in 1989 to 23 percent in 2011.

“NBQA has really been the best in showing us what we needed to do and at helping us implement those best management practices,” Smith said. “We’ve seen more condemnations of livers, tongues and heads and other carcass parts, but overall we’ve been able to capitalize on this opportunity of reducing bruising, which showed a potential gain of $96 million in 1989.”

Two areas of industry note, where retailers have the most to gain, are in reducing retail shrink and out of stock items. Shrink, which Lambert estimated as an $850 million annual opportunity loss, is still a problem, primarily because there has been a lack of implementation of Vitamin E supplementation in the feedlot diet.

“We’ve never worked out the signals of when to time the supplements,” Smith said. “We should have worked it out.”

Meanwhile, about 16 percent of the time in 1989, certain beef cuts weren’t available to consumers when they wanted them. Now, that’s down to 5.1 percent.

“That’s been achieved through centralized cutting and packaging by the supermarkets,” Smith said. “Also, we’re so high in price, that the only way the markets are able to move our product is through feature pricing. About 65.4 percent of beef is sold as a feature product in stores.”

Smith concluded, “Chuck Lambert was spot on in his thinking back then in 1989. Perhaps it’s motivated people to these new efficiencies.”

Larry Dreiling can be reached by phone at 785-628-1117 or by email at ldreiling@aol.com.

Date: 2/3/2013



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