Beef Cow/Calf Marketingosucowcamp.okstate.edu/cow-calf-boot-camp/2015-camp...4/6/2015 1 Beef...
Transcript of Beef Cow/Calf Marketingosucowcamp.okstate.edu/cow-calf-boot-camp/2015-camp...4/6/2015 1 Beef...
4/6/2015
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Beef Cow/Calf Marketing
Workshop #8
Scott Clawson – NE Area Ag Econ
Beef Cow/Calf Marketing
• Fact or Fiction:As CC producers, we are trying to market forage to the best use and value.
• The limiting asset in operations is not cattle, it’s land and thus forage
• Successful CC operations adapt to short and long run market and price issues
• CATTLE CYCLESIncreases and decreases in the production cycle partially due to price signals sent enticing action at the CC level
Beef Cow/Calf Marketing
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25 mil. ?
10 mil. ?
20 mil. ?
OK heifers to kept as replacements up 26%
as of Jan 1
• Will this cyclical nature continue?
• How can this be used a management tool?• Strategic cow herd management• Heifer retention at peak prices is more expensive• Retention at low price levels allows heifers to be mature
and productive at the peak of the price point in the cycle, hence we are selling at the peak, not retaining
Beef Cow/Calf Marketing
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• SEASONALITYRegular patterns of prices each year and cycles of prices and production over a period of years
• Based on strong production actions taken at the CC level of the system
• What are the two things that make the majority of revenues for CC producers?
• What two classes of cattle display the greatest variation in price through the year?
Beef Cow/Calf Marketing
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• Where do we go with this information?• Calf marketing
• Retained ownership (via programs like OQBN) can result in a seasonal upward price movement by moving out from typical October marketing
Beef Cow/Calf Marketing
• Management of excess forage with purchased calves or longer term retained ownership
• Cull cow marketing • Variability in prices is risk, also provides opportunity
Beef Cow/Calf Marketing
Separate venture?
Thank you!
Beef Cow/Calf Marketing
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3/30/2015
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Oklahoma Quality Beef Network
Workshop #8
Gant Mourer
Beef Value Enhancement Specialist
Oklahoma State University
Beef Industry
Oklahoma State University
• “We must find ways to maximize production yield and revenue per head. The focus on cost will remain, but the emphasis must shift to increasing value”‐Pete Anderson Midwest PMS LLC
Ickey Shuffle- Did You Know - GEICO.mp4
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Oklahoma State University
Marketing Cattle
Oklahoma State University
Producer Options
• Sell Cattle• Take a given price
• Market Cattle• Work to create a marketable and profitable product
• Market Value Added Cattle• Have a marketable and profitable product, 3rd party verified
• Information is Key to Increase Confidence for buyers and sellers!
Oklahoma State University
Quality #1 in Profitability
• Quality Cattle and Management Practices…Repeat
A bovine that meets or exceeds production expectations in a given system or environment.
Producers must establish marketing goals
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Marketing• Develop Heifers
• Natural• Holder Brothers Beef• Duff
• Retained Ownership
• Local Markets
• Akaushi Beef
• Stocker Cattle
• Purebred
• Commercial
• Alliance/Comingle
• Many More
Oklahoma State University
Value Added ProgramsConfidence to Cattle Buyers
• Programs• Age and Source Verification• Genetic Verification• Production System Verification• Health Management Verification
• 3rd Party Verified • USDA Certified Companies
• IMI Global, Verified Beef• Breed Association• Universities• Pharmaceutical Companies
Oklahoma State University
OQBN
• Network of Producers, Educators, Veterinarians and Industry Professionals
• Continually Growing
• Improve Quality of Cattle• All Segments Benefit
• Increase Communication
• Increase Access to Management Strategies
• Increase Access to Value Added Markets
• Animal Welfare
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Oklahoma State University
Oklahoma Quality Beef Network
Cow/Calf Stocker/Grower
Feedlot/Packer
Oklahoma State University
Age and Source Verification
• USDA Verified Program
• Cattle Records must be complete
• Calf Birth Dates and Ranch of Origin
• Verified by a 3rd party company• IMI Global
• Japan• 20 months of age or less
• Feb 2013 30 months of age or less
• 40‐50$ hd premium 5 years ago
Oklahoma State University
Genetic Verification
• Not necessarily a USDA Program
• 3rd party• Breed Associations
• Verified Beef
• CAB/Zoetis
• Identify cattle consist of high % of that particular breed
• Identify cattle that will “Grow and Grade”• $17/hd (Genemax Focus, Genetic Merit Scorecard)
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Production System
Natural• Livestock used for the
production of meat and meat products have been raised entirely withoutgrowth promotants, antibiotics (except for ionophores used as coccidiostats for parasite control), and have never been fed animal by products.
Organic
• Certified organic beef must come from a fully verifiable production system that collects information on the history of every animal in the program, including its breed history, veterinary care, and feed.
Oklahoma State University
Natural Beef
• Natural Beef Claims• No implants ‐ lifetime or last 100 days
• No antibiotics
• No animal byproducts
• Grass fed
• Family farm raised
• No pesticides or herbicides
• Tested for residues
• NHTC and Never, Ever 3 Programs
Oklahoma State University
Organic Beef• Organic Beef Claims
• Born and raised on certified organic pasture
• Never received antibiotics
• Never receive growth‐promoting hormones
• Are fed only certified organic grains and grasses
• Must have unrestricted outdoor access
• Must receive humane treatment
• No genetically modified cattle or embryos
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Oklahoma State University
Production System
• Both are USDA Verified• IMI Global, Verified Beef
• Branded Products• Laura’s Lean, Nolan Ryan, Creekstone. Whole Foods• Holder Bros Beef, Duff Cattle Company• Grass Fed• Beta Agonist Free
• Fairly Expensive • High Premiums Set at beginning of production cycle, could be $150+/hd
Oklahoma State University
PerformanceNatural Conventional
d 0 BW 562 562
Final Wheat Weight 822 869
Wheat ADG 2.27 2.68
Feedlot in BW 821 868
Feedlot final BW 1274 1385
Feedlot ADG 3.26 4.19
Feedlot DMI 24.28 25.95
Feedlot F/G 7.43 6.15
Net Returns 0.00 203.69
Maxwell et al. 2013,2014
Oklahoma State University
Production System
Must Market as Natural (verify) or use technology and consumer
driven!!
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Oklahoma State University
Oklahoma State University
Oklahoma State University
Technology
• Implants• 0.12 lbs/day suckling calf
• 8‐10% increase in efficiency
• Zeranol‐1969
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Oklahoma State University
Economics• 1980
• 18 lb gain
• $0.60 value of gain = $10.80 increase in revenue
• 2015• 18 lb gain
• $1.30 value of gain = $23.40
• $.85 value of gain = $15.30
• Cost?
“Current” Use of Implants Finishing and Stocker
9994
7778
38
0102030405060708090
100
Finishing Large Stocker Small Stocker
Pe
rcen
t o
f O
per
atio
ns
Cattle Fax, Johnson (2008)
“Current” Use of ImplantsCow/Calf
5.516.4
24.8 26.9
0102030405060708090
100
1-49 50-99 100-199 200+
Pe
rce
nt
of
Op
era
tio
ns
National Animal Health Monitoring System
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Use Declining in Larger Operations?
64.3
26.531
0102030405060708090
100
1995 2009 2012
Pe
rce
nt
of
Op
era
tio
ns
Superior Livestock Video Auction
Percentage Lots Implanting / Not Implanting
Superior Livestock, 1995-2014
0
10
20
30
40
50
60
70
80
'95 '97 '99 '01 '03 '05 '07 '09 '11 '13
ImplantNo Implant
Source: Modified from King, Seeger, et al. JAVMA,2006, 2011
94.9
5.1
Pounds
Other
NaturalandOrganic
93.7
6.3
Dollars
Other
NaturalandOrganic
Source: FreshLook Marketing Data 13 weeks ending 12/28/14.
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Oklahoma State University
Price Advantage for Not ImplantingSuperior Livestock, 1995-2014
-$0.60
-$0.50
-$0.40
-$0.30
-$0.20
-$0.10
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
1995 1998 2001 2004 2007 2010 2013
No Implant
Source: Modified from King, Seeger, et al. JAVMA,2006, 2011
Management Verification
Precondition/Health
• Vaccination protocol
• Castration
• Dehorned
• Nutrition
• Weaned
• 3rd party verification
• PI BVD Neg?
Handling/Wellbeing
• New
• BQA Guidelines
• 3rd party verification
• Tyson Farm Check
Oklahoma State University
Preconditioning Programs
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Oklahoma State University
OQBN Vac‐45 Requirements
• Vaccination Protocol (3 Options)
• Castrated and healed
• Dehorned and healed
• Weaned at LEAST 45 days
• Verification of requirements• 3rd party (OSU)
Oklahoma State University
OQBN Vac‐45 Recommendations
• Deworm and treat for external parasites
• Fresh Water and high quality forage
• Mineral Supplementation
• Coccidiostat
• Feed Concentrate/Bunk Training• At least 7 days
Oklahoma State University
OQBN Precon
• In Addition to Vac‐45 Program
• Multiple Sources
• Meet Health Requirements
• Cattle must be retained a minimum of 60 Days
• Verified
OSU Comm Serv.
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Oklahoma State University
OQBN Precon
• Increase options for producers• Include more producers
• Wheat pasture• Western Ok
• Not ready to re‐stock• Drought Conditions
Oklahoma State University
OQBN Program Benefits
• Reduced Cattle Stress and Shrink
• Improved Immune System
• Increased Sale Weight of Cattle
• Seasonal Price Increase
• Increased Market Demands
• Market at OQBN Verified Sale
Oklahoma State University
Where is the Premium Created?
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Oklahoma State University
Where is the premium created?
• Calf Health• #1 production problem in feed yard
• Tom Brink JBS Five Rivers
• Lack of preparedness when cattle leave ranch!*750 to 825‐lb. yearling‐fed steers sold Q3 of 2012
Oklahoma State University
Calf Health
Shawn Walter Professional Cattle Consultants, 2014
Shawn Walter Professional Cattle Consultants, 2014
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Oklahoma State University
Why are is there demand for preconditioned cattle?
Market Vac‐45
% Treated 41.9 9.5
% Death Loss 3.1 0.0
ADG (lbs) 2.75 2.93
Health Cost 13.54$ 8.95$Step et al. 2008
Oklahoma State University
OQBN Premiums
$8.12 $7.84 $6.54
$9.23 $8.65
$19.99
$‐
$5.00
$10.00
$15.00
$20.00
$25.00
2009 2010 2011 2012 2013 2014
Oklahoma State University
OQBN likelihood of positive return of investment.
Practice Net Return ($/Head) Likelihood of positive Return
45 Days Weaned $35.44 62.2%
Vaccination $20.32 61.4%
Dehorn/Polled $23.35 56.3%
Wean+Vaccination $28.86 60.4%
Wean+Vac+Dehorn $41.84 67.2%
Certified Vac‐45 $69.16 79.3%
DeVuyst and Williams, 2013
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Vaccination Trends
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
% Lots 44.7 34 32.9 25.4 20.2 18.4 14.3 10.5 6.7 5.8 3.9 2.8 3.7 2.8 1.5 2.22 1.38 1.22 0.88
0
5
10
15
20
25
30
35
40
45
50
Change in the proportion of non‐viral vaccinated beef calves selling in Superior Livestock video’s “Summer Sales”
Only O.88% of lots were not vaccinated in 2013!
Source: Modified from King, Seeger, et al. JAVMA,2006, 2011
80
90
100
110
120
130
140
300 350 400 450 500 550 600 650 700 750 800
Purchase Price, $/cwt
Arkansas Livestock Market, 2010
Bulls
Steers
AVG Discount $8.07/cwt
1.23
1.16
1.12
1.14
1.16
1.18
1.2
1.22
1.24
Breakeven
, $/lb
Effects of arrival sex on breakeven
Bulls
Steers
P < 0.01
6.03 %
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Feedlots that rated pre‐arrival management as extremely or very effective for reducing sickness and death
43.4
49.6
35.8
46.3
52.2
23.5
64.8 65.8
51.2
67.265.2
36.6
81.1
88.4
80.4 79
91.7
70.9
0
10
20
30
40
50
60
70
80
90
100
Introduction tofeed bunk
RespiratoryVaccine at least
RespiratoryVaccine a
Weaned 4weeks prior to
Calves Dehornedand castrated
Calves treatedfor parasites
COFE 1994
Feedlot '99
Feedlot '11
USDA APHIS, 2013
Oklahoma State University
Opportunity
USDA APHIS, 2013
Oklahoma State University
Opportunity
USDA 2013
USDA APHIS, 2013
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Oklahoma State University
Preconditioning ReturnsPreconditioning Gross Returns $242.57Vaccinations $10.00Labor $2.00
TransportationWormer
$4.00$3.25
Ear Tag $1.50Feed
Hay $26.78Weaning Ration $34.65
Interest 6% $17.83Death Loss 0.5% $8.34Total Expense $100.01
Preconditioning Net Returns $134.41
Oklahoma State University
• Health is extremely important to the industry• Marketing programs are to meet consumer
demand• Develop or locate genetics to a market that you
deem profitable• Maintain records• Profitable!!!!