Smith looks to regain lost economic opportunities
Denver, Colo. – Impacts such as drought, record high beef prices, decreased cattle numbers and cheaper feed proteins have occurred in the beef industry the past several years.
The wide variety of influences felt in the industry was discussed at the International Livestock Congress (ILC) on Jan. 14.
One of the presentations at the ILC was by Gary Smith, who gave an overview of where the industry has been over the past 20 years and where improvements can still be made.
Smith is a Colorado State University Distinguished Professor Emeritus and an adjunct professor for Texas A&M University. His presentation to the ILC was an update of improvements Chuck Lambert of National Cattlemen’s Beef Association first identified 23 years ago.
Sources of gain
Lambert identified 11 sources of potential economic gain in the beef industry back in 1991. Additionally, he proposed those factors could total up to $12 billion. The 11 sources were along the whole spectrum of the beef industry – from calving to the retail market.
“He was a great believer in the fact that efficiency was the thing that would make us competitive against all the other sources of animal protein and against the forces of other countries,” said Smith.
The 11 sources were reproductive performance, death loss, hot-iron branding, weaning weight, multiple processing, feed efficiency, outlier cattle, excess fat, management practices, retail shrink and grocery stores being out-of-stock of certain cuts of meat.
“There are many economic opportunities from excess costs in the current beef system that could be corrected to reduce the overall costs of the labor in beef to the consumer,” assured Smith.
Lambert conducted a benchmark study in 1991, which included three of the 11 sources of his potential economic gains. This benchmark later became known as the National Beef Quality Audit.
Smith and experts in specific leading fields across the U.S. conducted research to try and capitalize on the lost opportunities and compare their results with what Lambert had 23 years ago.
“The industry has not been able to capitalize on the economic opportunity to improve reproductive performance of cows since the prior study in 1991,” said Smith. “Still today, only 80 percent of U.S. dairy and beef cows and heifers wean a calf.”
An explanation to the high amount of open cows is unpredictable weather, specifically in recent years extreme drought.
Also a number of producers are retaining ownership of their open cows instead of selling them for in today’s current market, where they are worth approximately $1,200.
Multiple processing has also been named as an area for economic improvement. This is the process where producers can run animals through a chute, including vaccinating and implanting anytime.
“We are unnecessarily processing far too many cattle, which can lead to weight loss, bruising and potentially broken legs,” said Smith. “It is a cost of $110 million a year to the beef industry.
Death loss is another area of potential economic gain.
Producers have witnessed death loss of their calves prior to weaning and at times right before slaughter.
“This is from the amount of feed used to maintain animals that never made or produced a product and results in a $1.86 billion loss per year,” said Smith.
There was no change in the amount of death loss that has been seen today from the death loss that occurred in 1991. The reason for the no change is due to dystocia, scours and pneumonia with calves.
“The thermal neutral zone for calves is 57 to 58 degrees Fahrenheit. Anytime cows are calving in weather lower than 50 degrees or greater than 75 degrees there is potential for death loss if the appropriate bedding or protection is not provided,” said Smith.
The best example of this is that when calves are born in extreme drought conditions they are more susceptible to weak calf syndrome.
“It is from instances of pregnant cows going through an extreme drought and not having the proper dietary amount of protein in their last trimester of pregnancy,” said Smith. “When the calves are born, they do not receive the proper amounts of nutrition from their mom’s colostrum, which allows them to have immunity to germs that causes sickness.”
Feed efficiency has always been an area of improvement for the beef industry, and it has improved by 1.25 pounds.
In 1991 it took seven pounds of feed for one pound of gain.
Today, about 5.75 pounds of feed equal one pound of gain.
“The improvement of feed efficiency is due largely to feedlot management, ration formulation, better feed manufacturing and the feeding of distiller’s dried grains,” stated Smith.
There has also been a two percent gain in feed efficiency due to genetic improvement.
The weaning weight of calves has increased by 50 pounds in the last 23 years, and this is due 70 percent to better genetics and 30 percent to better management practices.
Management practices continue to improve within the industry, which has reduced the amount of condemnations of carcasses and offals, bruises, injection-site lesions and abscesses that used to be common in the industry 23 years ago.
“The support of veterinarians and pharmaceutical companies has greatly impacted people’s management practices,” said Smith.
Lambert also designated hot-iron branding as an area for economic opportunity in the amount of $180 million. Lambert’s reasoning was that hot-iron branding costs the beef industry in reduced growth performance, stress to cattle and discounts in the value of hides.
“There is no change in economic improvement in this area because there is no market that will pay premium price for unbranded cattle. Simply, it is impossible to sort cattle from branded to unbranded at the speed that packing plants operate at,” explained Smith.
Outlier cattle have also impacted the economic opportunity to the beef industry by having carcasses that are too light or too heavy in weight, grade lower than U.S. Select, have dark colored meat and have a yield grade of four or higher.
“The industry has been able to decrease the occurrence of dark cutters by two percent and animals that grade lower than select by 2.5 percent,” said Smith.
Retail shrink is still a big area left for economic improvement.
There has been no change in the 23 years of supermarkets in being able to reduce the amount of meat moved or discarded.
“There has been no progress in this area because there has not been an implementation of feeding Vitamin E in feedyards. Vitamin E increases case life of meat by one to five days,” said Smith.
On average, four to five percent of people will go to a meat case and will not be able to find the cut of meat that they want. This is quite a reduction from 16 percent that was seen in 1991.
Two-thirds of all beef sold in supermarkets sold because it is featured by the store. The industry has made progress by utilizing centralized cutting and packaging techniques.
“In less than a quarter of a century, those in the beef industry have made remarkable progress in improving the efficiency with which they produce one of the earth’s healthiest, most nutritious and palatable foods,” said Smith, who notes that improvements must continue to be made to increase the viability of the industry.
There have been improvements in the industry with the amount of excess fat being seen on carcasses and cuts of meat.
Excess fat could be losing the beef industry an extra $4.41 billion in costs to cattle, according to calculations.
“The value of fat on the outside of a T-bone steak is eight dollars a pound, but if that fat is rendered it is worth 35 cents a pound,” said Colorado State University Professor Gary Smith.
The National Cattlemen’s Beef Association and universities across the U.S. led the effort in reducing the amount of fat on the outside of cuts of meat.
Now the standard amount of fat is one-eighth to one-sixteenth of an inch.