Hitting the Target

Cattleman, The, Sep 2004

Results of the 2004 Ranch to Rail Contest

Thanks to Joe Paschal and Dan Hale for their coordination and contributions to the 2004 Ranch to Rail Contest. Thanks to Davey Griffin and Mike De La Zerda for their photography contributions to this project.

In the July issue of The Cattleman magazine the reader was asked to evaluate 20 steers and identify the top five steers based on net return.

Net return was determined by subtracting the expenses (feed costs, animal health costs, initial feeder calf cost, and interest) from the income derived from selling the carcass to the beef processor on a carcass grid basis.

The challenge to every U.S. beef cattle producer is to hit the industry targets with the calves they produce. One of the most common questions asked at cattle producer meetings is, "What breed of cattle should I use to make the most money?"

Unfortunately, this question is too simple. The rancher's ability to achieve industry expectations depends on the specific genetics of the sire and cow herd and the management scheme applied to the cattle.

Three steps to hitting the beef quality target

1. Gain a better understanding of industry demands. Here are a few common industry targets:

* Health Status - Healthy calf

* Feedyard Average Daily Gain - more than three pounds per day

* USDA Quality Grade - Prime, Choice or Select

* USDA Yield Grade - USDA 1, 2, 3

* 12th Rib ribeye area - 11.0 to 15.9 square inches

* Carcass weight - 600 to 950 pounds

* Other defects - No dark cutters, bruises, hardbones, or cattle older than 30 months of age

2. It is critical for the rancher to collect data on how their calves are handled under the current management scheme to measure their ranch against industry standards. To gather health, feedyard performance and carcass grade data, the producer will likely have to maintain at least a partial ownership at the feedyard for a portion of their calf crop.

Often data on 20 head per breeding-management combination will give you some information with which to make decisions.

Collecting data year after year will strengthen your decision-making power. Programs like TAMU's Ranch to Rail and Oklahoma State's OK Feedout were developed to help ranchers collect this type of information. Some livestock market auctions, producer cooperatives, associations and feedyards are developing innovative ways to assist ranchers in obtaining this information and in interpreting their results.

3. Finally, with the industry targets - listed above - as your goal, use feedyard and carcass data from the progeny of the herd as your starting point to map a plan. Use sound selection and management practices to move toward this goal.

The contest cattle conditions

Feedyard

The cattle in the contest were fed either 174 or 198 days and handled similarly to that of a commercial feedyard pen of steers.

When the feedyard manager determined the cattle were at the appropriate harvest endpoint, the steers were shipped to the packer.

Table 1 reports the feedyard data from the 20 steers. Interestingly, the range in initial feedyard weight was 92 pounds. This spread grew to almost 400 pounds by the time they left the feedyard for harvest.

There was an $.08 range in initial price on a per pound basis and a 2.1-pound difference from the top average daily gain steer (Steer 3) and the low average daily gain steers (Steers 10 and 11).

These 20 steers came from 14 ranches. The information presented in each table shows significant differences between ranches and significant differences in cattle within a ranch.

Steer 10 got sick during the feeding period, which will impact the economic viability of this steer more than just the added medicine costs of $22.38.

Carcass

At the time of harvest the live cash price paid for the average finished steer was $87/cwt. For this grid, the base price was $142/cwt for a carcass that was USDA Choice, Yield Grade 3 and weighed between 600 and 950 pounds. The grid these cattle were sold on to the packer is Table 2.

The contest steers were sold when the spread between USDA Choice and USDA Select carcasses was $8.00/cwt. Therefore USDA Quality grade will have only a moderate impact on net return this year.

So far in 2004, the range in the Choice-Select spread has been as high as $20.00 and as low as $3.00/cwt.

Several cattle in this contest received a discount for producing USDA Select carcasses. Steer 4 received a USDA Yield Grade 4 discount and because of this it also did not receive the premium for meeting the Top Choice category (No YG 4 carcasses are allowed in this packer's Top Choice program).

Steer 3 had an offsetting premium (USDA Prime) and discount (producing a heavy carcass, greater than 950 lbs). Several carcasses received premiums for producing USDA Yield Grade 1 and 2 carcasses.

Forty-five percent of the steers produced USDA Choice or Prime carcasses (Table 3), which is typical of the Ranch to Rail program. Also, there was an extreme difference in USDA Yield Grade, with carcasses ranging in calculated yield grade from 0.2 (Steer 4) to 4.4 (Steer 10). There also were eight carcasses with a 12th rib ribeye area greater than 16.0 square inches.