Beef markets continue to see positive trends in high exports, productionWritten by Saige Albert
High beef prices show promise for cattle producers around the country, and forecasts that the industry is poised to expand continuing into 2014.
At the same time, research groups and meat industry groups look at protein output, prices and comparisons to other proteins in looking toward the future of the markets.
For 2014, total meat and poultry output has been defined as “erratic” by CME Group.
“This level of apparent randomness has made it even more difficult to gauge the status of total muscle protein supplies,” they comment.
“Amid all of the concern over low feedlot inventories and pig death losses has also been the issue of weather, which has impacted hog deliveries on some days and caused broiler slaughter and production to fluctuate wildly,” CME Group continues.
Total meat and poultry production has fallen short of year-ago levels, they explain.
“Last week’s year-on-year shortfall of 5.8 percent was pretty much free of weather problems and is the largest since a weather-impacted sharp decline in the week of Jan. 10,” CME says, speaking about the week of March 10.
Beef output for the weeks of March 3 and March 10 fell 7.5 percent and 6.4 percent lower than on year ago levels, respectively, and year to date totals are 4.7 percent lower than 2013.
CME Groups notes that relative beef prices are quite expensive compared to other proteins on the market, even after pork cutout values increased as a result of PEDv outbreaks.
“After jumping sharply following the discovery of bovine spongiform encephalopathy in Canada in 2003, the Choice beef-pork spread fluctuated seasonally between $70 and $100 per hundredweight through 2012,” says CME Group. “It jumped above $100 last year’s as cattle numbers tightened, set a new record in January and has remained near $120 since then.”
They continue, “While pork is at $120 per hundredweight is pricey, beef is still no bargain.”
Compared to chicken, CME Group also says that spreads of more than $120 per hundredweight have been seen, marking record highs.
“Even though the composite broiler price has risen by over $15 per hundredweight since mid-February, the surge in beef values has swamped it,” they note.
However, they further note that the pork-composite broiler spread remains in the “normal” range.
“We put ‘normal’ in quotations because it can easily be argued that there has been nothing normal about this range since 2007 with the spread roughly doubling from previous year,” CME Group comments.
The U.S. Meat Export Federation (USMEF) comments that red meat exports have started positive for this year.
“U.S. beef, pork and lamb exports all opened the new year on a positive note, although market conditions suggest 2014 could be a challenging year for U.S. red meat exports, according to statistics released by USDA,” says USMEF.
Beef exports rose 13 percent in volume and 16 percent in value for January, with double digit growth in Mexico, Japan and Hong Kong markets.
“While price is just one of the many factors that affect red meat trade, higher U.S. pork and beef prices will create challenges for American red meat exports in the months ahead, particularly in markets where customers are more price sensitive,” USMEF says.
“With U.S. beef production is expected to drop five percent this year, and already running below last year’s levels, it will be challenging to maintain export levels,” says USMEF President and CEO Philip Seng.
Three key markets – Mexico, Japan and Hong Kong – have strong performance in 2014, thus far.
Mexico’s exports were valued at $93.6 million, up 27 percent, and Japan’s exports were up 28 percent to $92.9 million. Exports to Hong Kong were valued at $80 million, up 118 percent.
Growth of 23 percent, 53 percent and 83 percent in value was seen in Mexico, Japan and Hong Kong, respectively.
Triple-digit growth in Colombia, coupled with solid growth in the rest of Central and South America, her offset the drop of 26 percent in volume and 21 percent in value to Canada.
Declines were also seen in the value to the Middle East and in volume to South Korea.
“In addition, the reemerging Indonesian market was the eighth largest single-country destination by volume as exports continued the strong pace set back in October following improved market access conditions,” USMEF continues.
USMEF reports that January exports of 97,824 metric tons marks an increase of 13 percent.
“Export value rose 16 percent year-over-year to $514.5 million,” they report. “Exports accounted for 13 percent of total beef production, including muscle cuts and variety meat, and 10 percent for muscle cuts alone – increases of two and one percent, respectively.”
Export value from a year ago was up $14.79 to $219.73 for beef.
U.S. beef leaders have actively kept involved in the international marketplace, recently attending the second-largest food industry show in the world, Gulfood in Dubai.
“What we saw in both regions is the competitiveness of countries wanting to be in the market,” said Mark Jagels, USMEF’s chairman.
Dan Halstrom, USMEF’s senior vice president for global marketing and communication, complimented the Market Expo team on their engagement and eagerness to learn about the two diverse markets.
“The real value of these market expos is in helping American producers – representatives of our funding sources – see and better understand both the challenges and opportunities that the United States faces in the international market,” said Halstrom. “The better informed our members are, the better we can represent their interests.”
Pasture leases require careful, written agreements to assure fairness, complianceWritten by Gayle Smith
Always put a pasture lease agreement in writing, advised Jay Jenkins.
The University of Nebraska Extension educator discussed developing pasture lease arrangements during a recent webinar.
“Lease agreements are binding for a producer and their heirs,” he said. “Get legal counsel when developing these types of agreements.”
Land owners with grazing pastures to lease should offer agreements that treat both parties fairly because the lease will have more staying power, Jenkins said.
“They are more likely to be renewed, more likely to be followed and more likely to be enforced if they are fair,” he commented.
“Fair is free from favor toward either or any side,” Jenkins continued. “Fair implies an elimination of personal feelings, interests or prejudices so as to achieve a proper balance of conflict of needs, rights or demands.”
Price is usually the first thing ranchers look at when deciding if a lease agreement is fair. Ranchers are used to relatively transparent markets in regards to price, but it can be a little more difficult to determine a fair price on grazing land since producers can’t look up current prices in a newspaper or hear them on the radio, he said.
To help determine a fair price, Jenkins said most states offer some type of farm and grazing land publication with current rental rates.
The University of Nebraska publishes the Nebraska Farm Real Estate Market Highlights each June. In this guide, the state is divided into eight districts, and a range of land lease prices is given.
The National Agricultural Statistics Service also publishes per acre rent data they gather from their farmer and rancher surveys. This information is broken out by county or district, but it only provides an average rate.
Jenkins said county Extension agents may also have a good idea of the going rate for range leases locally.
Typically, rangeland is leased per acre, which tends to cover the year-around use of a piece of land, or per pair per month, which is essentially the sale of a given amount of grass. This lease typically covers the grazing season and is usually about five months in length.
Per acre leases are most affected by pasture productivity, Jenkins said.
“The more grass a pasture produces, the more valuable it is on a per acre basis. In areas with higher average rainfall, grazing pastures will have higher rental rates,” he noted.
In per pair per month leases, price differences can be attributed to the amount of care provided by the landowner. Grass listed in the higher price range typically has full care provided by the landowner, and grass in the low-cost range is where the lessee does most or all of the work.
Jenkins said landowners need to keep in mind that cow size figures into per pair per month leases.
“Forage intake is directly related to cow body weight,” he explained. “If a cow weighs 20 percent more than average, she will eat 20 percent more, and it should cost 20 percent more.”
Determine a stocking rate
Landowners should determine a stocking rate before leasing out their grazing pasture.
“Stocking rate is a balance between the forage demanded by the animals and the amount of forage grown,” Jenkins said. “It is the most important part of proper grazing management.”
Landowners need to carefully manage their grazing land to ensure future productivity.
“Too much grazing pressure will lead to decreased long-term forage production of the land,” he said. “It is important to recognize economic incentives of both the land owner and cattle owner are different for per acre and per cow per month leases.”
When there are only a few animals in a pasture, animal gain is high because the animals are able to utilize the highest quality feed available for them to eat.
However, when the pasture starts approaching the maximum number of animals that should be grazed, there won’t be enough premium grass to go around. This creates more competition for desirable grasses, and the animals will start eating less desirable forages.
“As we add more animals, we will get more total gain, though each animal is gaining less,” Jenkins explained. “If we add too many animals, performance will eventually suffer, and total gain will be less even though there are more animals.”
Jenkins said conflict can arise in per acre leases because economic pressures push the cattle owner to stock the grass to the point where gain per acre will peak and return to the acre is maximized. However, the landowner would rather see a low stocking rate with less stress on grazing resources because he will earn the same amount of money.
Jenkins said the situation is reversed when a lease is based on per cow per month.
“It is important that the stocking rate be specified in the lease agreement to avoid disagreements,” Jenkins explained. “It also helps the landowner reach his rangeland health goals and gives the cattle owner a chance to reach his production goals.”
Stocking rate can be determined a number of different ways, including average number of animals during a lease period, but Jenkins recommending using animal unit months or animal unit days.
“Whatever way stocking rate is expressed, it should be clearly written in the lease agreement and discussed among the parties involved,” he said.
Other areas that should be addressed in the written lease are on and off dates, residual grass, who does what, who pays for what, subleasing and landowner access and hunting rights.
University of Nebraska Extension Educator Jay Jenkins noted that it is also important to address how grazing pressure will be reduced in case of drought or some other type of natural disaster, such as hail or fire.
Important questions to address include who decides and how will decisions be made, how much notice will be given before a reduction in stocking rate and how will payments be adjusted.
In these cases, Jenkins urges both parties to communicate with one another early and often to avoid conflict.
Trichomoniasis continues to cause problems for cattle across the WestWritten by Saige Albert
Trichomoniasis continues to threaten the U.S. cattle industry, particularly in the West, and veterinarians and producers are taking steps to decrease the presence of the disease.
“Trichomoniasis (trich) infection of cattle is a devastating disease for cattle producers,” write N. Striegel, R. Ellis and J. Deering. “When diagnosed in a herd, it causes economic loss and emotional pain.”
Striegel, Ellis and Deering wrote a 2009 bulletin on trich titled, “Trichomoniasis prevention: The cost per cow to prevent.”
“Across the West, the states who are looking for trich are finding it,” says Wyoming State Veterinarian Jim Logan. “Many of the states in the East who didn’t used to look for it have also found trich in their cattle herds.”
Trich is not a new disease or a new concern for cattle producers.
The protozoan organism Trichomonas foetus causes the venereal disease in cattle. It lives in the reproductive tract of the cow and in the sheath of a bull’s penis.
“The main problem that trich causes is infertility,” describes Logan. “It causes early-term abortion and short-term infertility.”
Additionally, bulls that are infected are lifelong carriers of the disease.
No treatment is available for infected animals.
“In addition to the reproductive impact, there is a huge financial impact due to replacement costs from infected animals and costs for lost calves,” Logan adds.
When trich is found in a herd, Logan notes that costs are incurred from quarantine of cattle and replacement of breeding animals, since the bulls should no longer be used.
“It is also financially impacting because of uneven calf crops,” he continues.
Liability is also a risk that comes with a trich-infected herd.
“Wyoming passed a statute during the 2013 Legislative Session allowing the Wyoming Livestock Board to identify diseases that are economically significant. The Board subsequently identified trich and B. ovis as such,” says Logan.
As a result, if a producer does not test or finds a positive bull and does not remove the animal, they are liable for subsequent losses from other producers who may have contact with the animal.
“Not testing, or testing and knowing a producer has positive animals, puts them in a liability situation where they can be sued for economic losses if infected animals are allowed to commingle with another producer’s stock,” Logan comments.
“Trich does cause a lot of problems,” Logan comments, “but there are things that producers can do to try to avoid it.”
Logan recommends that, where possible, producers should avoid grazing in common allotments and keep a closed herd. However, he recognizes that often, that isn’t possible with available grazing.
“For producers purchasing bulls, they should only buy those animals that have been tested or are verifiable virgin bulls from reputable breeders.” Logan says. “Do not add open or late cows or cattle from unknown health status to the herd.”
With good management, he notes that trich can be avoided.
“If people manage against it, they can usually keep trich out of their herd,” Logan adds, “but all it takes is one person in a common grazing situation who doesn’t test bulls or who introduces a bunch of open cows from potentially affected sources.”
The impacts of the disease, especially on common allotments, can be devastating for operations.
In compliance with the Wyoming Livestock Board’s rules, bulls are tested for trich statewide each year. A special focus area has also been identified for the disease in the southwest corner of the state, providing for more stringent test requirements.
In 2012-13, the Wyoming Livestock Board reported that 49 bulls tested positive for trich across five Wyoming counties. Those bulls came from 16 locations.
A total of 7,335 bulls were tested in 2012-13.
In Big Horn County, five bulls from one location were positive. In Hot Springs County, one bull was identified with trich, and in Washakie County, 24 bulls from five locations tested trich-positive.
In the southwest in the Special Focus Area, Sweetwater County saw 14 infected bulls from five locations, and Uinta County reported five positive bulls from four locations.
Logan further notes that state veterinarians are taking action to continue to work on trich.
“At the National Institute for Animal Agriculture Conference in Omaha, Neb. at the end of March, we are going to discuss the many issues surrounding trich,” he says. “Veterinarians and producers are trying to harmonize state import requirements and state test requirements.”
The efforts come at the request of cattle producers from across the West who struggle with the disease.
“There is work going on to try to get some things done and to harmonize requirements,” Logan comments.
Production ability is top consideration for retaining heifersWritten by Madeline Robinson
Riverton – “There is only one reason to keep a heifer and that is to improve the quality and profitability of the herd,” said Scott Lake, UW Extension beef specialist.
“Less than two percent of cows in U.S. are culled every year for their structural problems,” he added. “We need to make more decisions based on performance and do a better job in culling.”
Lake sees, first and foremost, reproduction ability as the most important factor when selecting heifers.
Other traits to consider include mothering ability, good milking ability for the environment and good structure of the udder.
“We need to keep selecting for maternal traits that are going to be the foundation of the cowherd,” said Lake. “When producers start chasing growth and carcass traits and selecting more for those is when we start to see fertility go down.”
Physical traits to look for on heifers are a body condition score of 5.5 to six, a large capacity to be able to carry a large calf to term and have room for large amounts of feed, structural integrity and easy weight gaining ability.
“It’s important to select a cow that fits a producer’s environment and fits their energy resources,” stated Lake. “There is a strong correlation between the condition of the cow and how well she is going to perform.”
The number one problem with fertility of open cows is a low body condition score. Nutrition is the number one reason open cows are in anestrous – a period where a cow is not cycling.
A feminine look is also important when selecting heifers. Feminine heifers have a tendency to reach puberty faster, remain in a herd longer and be the daughters of more masculine bulls.
The time a heifer reaches puberty is also highly correlated to post partum intervals.
“When producers are making selection decisions for their herd, they want a cow that will produce a value-added calf,” stated Lake. “They have to define what a value-added calf is to them.”
Lake gave the example of a value-added calf being one that is better than the average calf in a cowherd.
Lake continued on to say just because a cow was bred and had a dinky calf doesn’t mean she should stay in the cowherd.
Some reproductive goals for heifers are to reach puberty by 12 to 13 months of age and a lot of management practices prefer to have those heifers cycling before they are bred.
“We want to be able to breed her by the time she’s of 15 months of age and calve her as a two-year-old,” said Lake. “A lot of models have shown this to be the most profitable system.”
“A lot of what keeps two-year-olds in a herd has to do with how they are managed and developed,” added Lake.
The most common way heifers are managed is to get them at 65 percent of their mature body weight by the time she is bred, a management practice called target weight – meaning a 1200-pound mature cow will need to be 750 to 780 pounds before she is bred.
“Approximately 80 percent of U.S. cowherds calve during the spring,” described Lake, “which means producers are going to be feeding their heifers a concentrate diet to get them to their target weight.”
Heifers fed on an increased plane of nutrition right after being bred have a higher conception rate than heifers turned out to pasture right after breeding described Lake.
Lake devised a heifer conception rate study that consisted of three treatment groups of heifers. All of the heifers were fed on the same nutritional plane prior to breeding and the differences in the three groups of feed lasted for 21 days.
The three feed groups consisted of a gain ration to simulate a high concentrate diet seen in a feedlot, a maintenance ration that symbolized a grass pasture turnout and a ration simulating forage from a mountain turnout.
“We saw a 20 percent difference in conception rate between cattle kept on the gain ration and the other two rations,” explained Lake. “Overall, the heifers in the gain ration had a 70 to 90 percent conception rate.”
The heifers in the other two feed groups lost weight during the 21-day trial period and had poorer conception rates.
“When this study was reconstructed in a real world scenario, the results were exactly the same,” said Lake. “A 15 to 20 percent difference in conception rate occurred between the heifers in the feedlot and the heifers that were turned out to pasture.”
Lake further noted that the gain ration treatment also contributed to a higher quality of embryo from the heifers.
Lake spoke at the Fremont County Farm and Ranch Days in the middle of February. Madeline Robinson is the assistant editor of the Wyoming Livestock Roundup and can be reached at firstname.lastname@example.org.
“Heifers born in the first cycle of calving season are going to be more fertile and have a shorter post partum interval throughout their lifetime,” commented Scott Lake, UW Extension beef specialist. “Those are the heifers that we want to pick.”
Lake suggested when selecting and developing heifers to keep 10 to 15 percent more than planned because some of them will fall out of the herd.
“Inherently producers are selecting for fertility when they select for early calving cattle because that means their mother was bred at the beginning of the breeding season,” added Lake.
Reproduction is a low heritable trait, but when selected for continuously, the effects become evident. The difference won’t show up in the next generation of calves, but over a period of time, the difference will be notable.
Lake also advised from an economic and fertility standpoint, it is not feasible to keep open two-year-olds that are unable to be bred-back with the rest of the herd, even if they had a good calf the previous year.
“We want the ones that will breed back to continue on in the cowherd,” said Lake.
Traceable Meat™ provides a tool for ranchers to connect with consumersWritten by Saige Albert
As more consumers are seeking information on where their food comes from, a new program has emerged to help ranchers track individual animals from birth to harvest.
“This system is set up to provide the opportunity for meat producers to provide information on their product and their ranches to consumers through a mobile app,” say Josh Morrison.
The app, Traceable Meat™, was released at the beginning of the year and is now available for both consumers and producers to utilize.
Morrison explains that when producers register as a member, they have access to a dashboard on an internet platform.
“Ranchers sign into the website and can enter their information,” he says. “They can add animals, edit information and manipulate the appearance of their app.”
Information regarding an individual animal’s vaccinations, antibiotics and processing records can all be added on the ranch.
The system is applicable to any type of meat protein – including beef, pork, lamb, fish and poultry.
At the same time, ranchers can also include information about their operation, including location, contact information and specifics about their practices, in the app to better inform consumers and provide them a direct connection to the ranch.
“Traceable Meat™ is the edge ranchers can utilize to separate themselves from their competitors,” Morrison adds. “Many ranchers are already gathering this information. It is just a matter of getting set up in the Traceable Meat™ system and putting specific USDA compliant meat package labels on their products.”
After a rancher sells an animal – whether that be to a feedlot, harvest facility or to their neighbor – they can transfer the information with the animal.
“In the meat production industries, each animal can have multiple owners through its lifetime,” Morrison explains. “The Traceable Meat™ system is set up to allow different owners to access an animal. The animal’s account is passed from person to person with changes in ownership.”
The system also includes information input for all sectors of the meat production industry.
“The system can include information like the age of cattle at harvest, the length of time meat was aged, processor information and vendor information,” Morrison continues. “Basically, this app provides farm-to-fork information through the entirety of an animal’s life.”
The system individually identifies each animal that is registered within a herd.
“Every time an animal is entered, a QR tag specific to that animal is generated,” Morrison explains. “That tag travels with the animal through the system.”
The QR tag can be printed and be utilized on a variety of media – whether that be on product packaging or restaurant menus – allowing consumers access to information about the individual animals they are consuming.
“We are also working on a proposal with USDA, based on their Animal Disease Traceability rule,” he says. “We are working to become compliant with that rule.”
Morrison also adds that a shopping cart feature is also available through the app, allowing consumers to purchase beef directly from producers.
Traceable Meat™, adds Morrison, is a novel product that allows producers to become involved in a one-of-a-kind way to connect with their consumer.
Cutting edge technology
“The app went live at the end of January,” he says.
“We are leading the industry in this arena,” Morrison notes. “Traceable Meat™ is excited to be teaming up with a couple of well-established businesses in cattle management to provide additional services for clients.”
The company continues to move forward with their product to meet the needs of both ranchers and consumers.
“We hope to start setting some new standards in the meat industry,” Morrison says. “People should know where their meat is coming from, how it is treated and other information.”
He continues that the high prices seen in today’s market mean that now is a great time for ranchers to invest is new technology.
“It is a good time to invest in Traceable Meat™ for ranchers to ensure sustainable higher income from red meat consumers who want farm-to-fork information and are willing to pay for it,” Morrison says. “Let’s give consumers what they want, set some standards and make some money.”
“When consumers go to the supermarket and buy a package of hamburger, they are buying meat from a number of different animals in it, and they don’t know exactly what they are getting,” Morrison says. “Information is power, and the more information consumers have, the happier they are.”
Morrison further notes that universities and independent researchers have provided data showing consumer’s willingness to pay more for meat with origin information.
“If we can provide the information, it is a little more work, but it pays off,” he adds.