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Time to Step Up Your Game

By John F. Grimes
 
Nearly every business is faced with evolving business models due to changing consumer preferences. History provides us plenty of examples of how traditionally accepted products or services can quickly be replaced by a newer or “better” version. Some call this progress while others prefer simpler, more traditional choices.
 
The beef industry is certainly no stranger to the concept of changing types and preferences. The size and shape of cattle have changed significantly over the years of modern history. The smaller framed British breed cattle prevalent in the 1950’s and 1960’s were forever changed by an influx of Continental breeds staring around the beginning of the 1970’s. This started a trend towards larger framed, growthy, leaner cattle that were very popular through the 1980’s and into the early 1990’s. The past 20-25 years have seen a trend towards Angus-type or black-hided hybrids in the latest efforts by cattlemen to create the “ideal” beef animal.
 
The direction of breeding programs during these past 20-25 years has been driven by an increased emphasis on improving the end-product merits of beef for the consumer. This change in priorities can partly be credited to the creation of the checkoff-funded National Beef Quality Audit. This comprehensive survey evaluates beef industry efforts to improve beef quality. It has been conducted every five years since 1991 and assesses progress the industry makes on a variety of production issues that ultimately affect consumer demand for beef.
 
In the first three Audits, marbling (intramuscular fat within the ribeye) consistently ranked as one of the top quality challenges for beef. The last two Audits indicated the top two quality challenges as food safety and eating satisfaction. Research has shown consistently that marbling has a big influence on overall eating satisfaction. Armed with this information, cow-calf producers set out to improve the quality of our product for the consumer.
 
The USDA defines beef quality of fed cattle by the grades of Prime (highest), Choice, Select and Standard (lowest). Marbling and carcass maturity determine the quality grade with higher levels of marbling producing a higher quality grade. Quality grade is a very important factor when pricing beef in the wholesale and retail marketplace and this message has been passed on throughout the supply chain. This fact has encouraged producers to emphasize genetics to improve carcass quality grades.
 
There has been a major shift in the distribution of quality grades across the population of harvested cattle over the past decade. As recently as 2006-2007, 40% of graded product fell into the Select grade. In just over a decade, beef grading Select fell to 17-18% in 2018. CattleFax projects that cattle grading Choice and Prime will reach a record high of 79% in 2018. Beef grading Prime this year is expected to reach 7.5-8.0%.
 
What are some of the factors that have driven this change towards higher quality grades? The majority of all fed cattle today sell on carcass merit grids and formula pricing systems. Under this scenario, there is a clear financial incentive to produce more Choice and Prime grading cattle. Select graded beef is consistently valued less than Choice and Prime. Seedstock producers have used available tools such as EPDs, genomic testing, ultrasound, and carcass data collection to identify cattle with superior carcass traits for the commercial cow-calf operator.
 
Feedlots are using advanced nutrition and health programs that improve the odds of cattle reaching higher quality grades. The aggressive herd expansion that has occurred over the past five years gave producers the opportunity to add higher quality genetics to their herds. The growing number of branded beef programs has created pull-through demand higher quality grade beef. The increased production of Choice and Prime beef will help solidify the U.S.’s position as the leading source of quality beef among exporting nations.
 
What does the trend towards higher quality grades mean for the commercial cow-calf producer? In past years, feeder calf producers were not always concerned with the performance of their calves in the feedlot and on the rail. Unless they retained ownership into the finishing phase, they felt that they simply did not have a financial stake in feedlot performance and carcass merit. However, the industry’s push towards higher grading cattle requires the cow-calf producer to produce feeder calves capable of achieving these goals. Feedlot operators will search for feeder calves with the genetic merit and health history capable of producing profitable feedlot gains and garnering carcass premiums. The will source their calves from producers with a history of success and either reward these calves with higher prices or discount the calves from producers without adequate documentation of quality.
 
It is time for commercial cow-calf producers to “step up their game” and raise the highest quality calf possible. The fact that we will have a larger supply of feeder calves in the near term will make it a buyer’s market and they certainly will be discriminating with their purchasing dollars. The cow-calf producer should use high quality genetics that excel in multiple traits including excellent marbling and implement recommended preconditioning programs. Feedlot operators, packers, and ultimately the consumer will expect nothing less.