Beef Cow/Calf Marketingosucowcamp.okstate.edu/cow-calf-boot-camp/2015-camp...4/6/2015 1 Beef Cow/Calf Marketing Workshop #8 Scott Clawson – NE Area Ag Econ Beef Cow/Calf Marketing

4/6/2015

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Beef Cow/Calf Marketing

Workshop #8

Scott Clawson – NE Area Ag Econ


• 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


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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


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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?


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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


• Management of excess forage with purchased calves or longer term retained ownership

• Cull cow marketing • Variability in prices is risk, also provides opportunity


Separate venture?

Thank you!


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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


• “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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Marketing Cattle


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!


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


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


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 Quality Beef Network

Cow/Calf Stocker/Grower

Feedlot/Packer


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


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.


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


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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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


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


Production System

Must Market as Natural (verify) or use technology and consumer

driven!!

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Technology

• Implants• 0.12 lbs/day suckling calf

• 8‐10% increase in efficiency

• Zeranol‐1969

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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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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


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


Preconditioning Programs

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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)


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


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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OQBN Precon

• Increase options for producers• Include more producers

• Wheat pasture• Western Ok

• Not ready to re‐stock• Drought Conditions


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


Where is the Premium Created?

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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


Calf Health

Shawn Walter Professional Cattle Consultants, 2014

Shawn Walter Professional Cattle Consultants, 2014

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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


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


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!


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


Opportunity

USDA APHIS, 2013


Opportunity

USDA 2013

USDA APHIS, 2013

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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


• 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!!!!

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Questions?

Gant Mourer(405) 744‐6060

[email protected]

Documents

Beef Cow/Calf Marketingosucowcamp.okstate.edu/cow-calf-boot-camp/2015-camp...4/6/2015 1 Beef Cow/Calf Marketing Workshop #8 Scott Clawson – NE Area Ag Econ Beef Cow/Calf Marketing