Producers confident in tools, Angus geneticsAngus breeders like Sydenstricker Genetics manager Ben Eggers, Mexico, Mo., say the Certified Angus Beef brand’s impact, and their ability to respond, grow in tandem with the record premiums paid.
By: Steve Suther, Agweek
Angus breeders like Sydenstricker Genetics manager Ben Eggers, Mexico, Mo., say the Certified Angus Beef brand’s impact, and their ability to respond, grow in tandem with the record premiums paid.
“In the earlier days of CAB we often heard, ‘Where’s the premium?’ I haven’t heard that in quite a while,” Eggers observes. “The value of superior carcass merit is well documented now, and many top commercial cattlemen have reaped the benefits. As that ‘pull through’ effect grows even stronger, I think we’ll see even more increase in beef demand as the average quality increases.”
At the calf level, the soaring premiums move past any perceived “black hide” advantages.
“The CAB premiums help explain the huge price spreads we’ve seen lately based on quality,” says Malta, Mont., seedstock producer Dave Hinman. “It’s been $20, $30 per hundredweight or more on the same weight cattle.”
The difference of nearly $200 per head shows great buyer confidence, he says. “The feeder couldn’t afford to pay that if he didn’t know a lot about the calves. They have to watch everything pretty close…”
Hinman’s bull customers do too, and their solution is to find balance.
“We put all the numbers in our catalog and they look at all of them,” he says. “They want it all, just like their next buyer, all the way to the people standing in line to be seated at a steakhouse. And people will pay to get what they want.”
Science, performance data and common sense used in concert can create those genetics. “But you can’t forget any one of those,” Hinman says.
Having grown up in the meat business, Dick Beck, manager of Three Trees Ranch, Sharpsburg, Ga., wonders why some cattlemen pay scant attention to beef quality potential. Sure, they’re concerned with fertility, fleshing ability and other maternal traits not easily measured, but that’s no reason to ignore the carcass side.
“The cowherd traits have a big economic impact, but they’re not very heritable. Carcass traits are highly heritable, so it is easy to make progress or lose ground,” he notes. “Keep working on the cowherd, but why would you walk away from making progress on a trait that’s easily improved?”
Ability to produce premium beef can make an Angus bull worth at least $10,000 more than average, Beck notes, doing the math: “If you get 100 calves in his life and 40 of them grade Prime, that can add $8,000; if 40 more make CAB, that could be another $3,000.”
He says “commodity-minded” producers debate the ups and downs of the Choice-Select spread. “That doesn’t mean anything to us — if we’re not making at least Choice cattle, we’re not in the Angus business.”
Like Hinman, Beck says the most-demanded bulls are the ones that do it all, including quality grade.
“We’re finally to the point where we can design a system that produces premium beef every time if you do everything else right,” Beck says. “That’s exciting.”
Don Schiefelbein, Kimball, Minn., agrees. His family buys calves from their bull customers and finishes 20,000 head per year to sell on a grid.
“Making the cattle do 85 percent or 90 percent, even 100 percent CAB was unheard of just five or six years ago,” he says. When they do, as a fair number of loads did last year, the breakeven equations go out the window.
“Say you have two steers and one makes CAB and one doesn’t,” Schiefelbein says. “It costs nothing more for the one that earned the premium — it’s all extra dividend, added value built in. That’s why breakevens mean nothing when you try to factor in 80 percent CAB.”
When all calves are selling for record-high prices is “the perfect time for genetic upgrades,” he says. “Get your genetics in order to add value to your calves. It’s a sweet time to invest for a whole new level of prices.”
Some producers bought bulls for $2,500 or less in 2013, but in January, a set of heifers from the Schiefelbein feedlot grossed $2,500 per head on the rail, nearly all Prime or CAB. They were from a herd that had stacked high-marbling Angus genetics for three generations, the standing recommendation for all bull customers and one that can take decades to achieve across a herd.
The market says, it’s a goal worth pursuing.
Editor’s note: Suther is the director of the industry information division of Certified Angus Beef.