How to make a profitable cow herd - Lee Leachman

so it's it's a great pleasure for me to introduce our speaker this morning sponsored by beef and lamb genetics so first of all thanks to beef and lamb genetics for our sponsoring the Leachman to come and speak to us today I've known leaf for a number of years from when I was in in Canada and Lee has a an economics degree from from Harvard and their family was in the cattle business for a number of years in Montana Lee moved the business to Colorado in 2003 and he'll talk a bit about all the bowls they sell but basically they've got experience around the world and in Brazil and South America Paraguay a Europe Australia New Zealand and people here would be familiar with there is intense and absalons and stabiliser cattle and they basically originated with with Lee Leachman yesterday our on Monday talking with scientists and mice a similar theme came up a few times and that is one of the challenges we have a scientist is actually adoption so getting farmers to take results and apply them and I think after the talk today you'll realize if we had 50% of our farmers were Lee Leachman actually adoptions not the problem so he sees he sees an opportunity grabs it and runs with that so and without any further ado I'll turn it over to Lee well it's good to be here this morning thank you do beef and lamb genetics for bringing me down I actually have the opportunity to bring my family with they're gonna be an hour late and they're much happier I'm sure sleeping right now then hearing me speak so that's probably okay I will just give a little background on our company to kind of start with the topic speak about is how to build a more profitable coward this is very much the type of presentation that we would give to a fairly lay audience an audience of cow-calf producers in the United States it would be potential customers of ours and that's what the talk is designed to do I did put some genetic trends in I figure that most of you would want to see genetic trends so I put those slides in this morning they're actually not in the paper that's printed the only thing surprising is that most of you have higher degrees and yet you still want to sit in the back of the room so I'm I'm just kind of wondering about that trend that kind of thought you'd be at the front of the room but anyway a little bit of background by now you know that I'm a bull shipper from Colorado and you have to say that very carefully yeah it's a little deep but I you know why am I qualified to talk about profitable cowards and particularly this far from home I'm almost guaranteed to be an expert because I'm several thousand miles from home but I am a third-generation seedstock producer my father was in the business my grandfather was in the business and basically for three generations we've made our money selling genetics to beef cattle producers very different production schemes and selection criteria over those several several decades but nonetheless third-generation like our president the United States I am from Harvard University my dad sent me there he said this way you won't learn any animal science that I have to unteach you that was his commentary before he sent me but he did tell me not to become a Democrat and not to come back with an earring so I think if it were in this day and age as cautions would have been even more strident I'm sure as other things might have preoccupied him but I did go broke in 2003 I think that's always very pertinent that was very expensive it was far more expensive than going to Harvard and it was far more educational than going to Harvard and it does temper a lot of the things that we do and how we even approach our business and I think in many ways that you know you could almost characterize my career so far as the per years in the post years and I often reflect now on how much my decision-making has changed I can remember back in the earlier years where I would always be impatient with those who wanted to be conservative and now I'm very conservative and so that's that's just a change and the way we look at things and as I mentioned I have made my living off the cattle for the last twenty seven years what kind of Bulls do we raise we raise angus and red angus and stabilizers the stabilizer is a composite that started out copying a blend that was developed by Agricultural Research Service at USDA they called it a mark 2 it was developed at the Clay Center Nebraska Research Station and they basically built a gal V Simmental Hereford red Angus and those cattle were red and horned red and white and horned actually and as the market the United States moved towards black and polled we modified the Catalan selected in that direction we raised those genetics and select them to maximise cow-calf profitability those three maternal breeds then we select our Charlet on terminal traits so they're selected just for birth to harvest terminal traits we produce Bulls through a network of co-operators so we have now 35 herds in the United States that we specify the matings they make the matings they turn in the data we select the male's that we want we bring those males to a centralized location which is in Colorado in the center of the United States we evaluate those males we then send them out to a variety of marketing locations around the United States we put about 1,500 Bulls on test each year sore sampling about the top half of those male calves since 2004 we've marketed about 13,000 bulls so we are I think we're in the top three or four in the United States in terms of volume at this standpoint and we also do a little export work not a big part of our business but we send some genetics here to focus and raising tainha store eclis and then we also send genetics into Australia into the UK and some into South America so that's just kind of an overview just to give you an idea where I'm coming from almost everything I'm going to talk about is about selection of those beef cattle and how we position that in the marketplace and how we try to market that to our customers so the thing that we start out with our customers is what are what are the keys to herd profitability and I think it's interesting that as we talked to ranchers in the United States understanding that most of the ranchers that we're selling Bulls to would own their cows they would be typically in the 500 cow range probably on average some fairly big producers primarily located in the western United States the only seats left are the good ones in the front so they're in the western United States they would typically be family-run operations they would be running on large expanses of acreage typically using over ten hectares per cow to run their their cattle on their cow on a yearly basis and yet they're very confused about what drives their profitability generally they're they're typically selling those calves at weaning time some of them would retain them and graze them after weaning and sell them on out to a year of age hardly any of them less than ten percent of them say would actually carry those animals through the fattening stage in the feedlot and sell them to a packing plant so we asked them you know what drives their profitability typically they think about weaning weight as being their sale weight and that would be the primary driver or their sale price if you sit around the coffee shops in our part of the world everybody this time of year is talking about did you hear about that set of calves and brought such-and-such per pound and they are just astronomical figures just to give you an idea right now if you're selling a yearling aged animal that say weighs 375 kgs that animal in US dollars is worth over two thousand dollars a head now okay so the market is by historical standards in unprecedented territory on a market price you know sale revenue per head is a big driver sale revenue per cow is maybe a better driver cost per cow nobody wants to talk about annual cow cost in the United States right now by most estimates if you include the rental fee for the grass so an opportunity cost for the grass are pushing $700 per cow so these numbers are really high and a big chunk of that is is the grazing cost profit per cow very few people would have a handle on that and almost nobody would be thinking in terms of dollars per landmass dollars per acre dollars per hectare that that thought process is really unheard of in North America very very few of our customers would think about that so we're trying to get them to think about that we think that is the driver they own land mass they want to maximize the revenue that they can generate off that land mass or that the profitability stocking rates obviously critical herd Health's critical but I don't like talk about those things I like to talk about genetics so we're going to talk about how genetics affects dollars profit per acre to a cow-calf producer in north america so we started out with cow herd genetic drivers for profit output is is obviously one of the keys what does their calf way but reproduction and longevity are big drivers and from a genetic standpoint we basically have three sets of genetic prediction that will characterize that what does heifer pregnancy what percentage of those females breed in 15 months of age days to conception which characterises from the beginning of breeding season to when that female conceives is she breeding earlier or later we try to do that to separate out the gestation effect and then stay ability does she stay in the herd what percentage of those cows are still in the herd at six years of age and then of course cow cost and really that that pretty well captures what drives profit for that ranch here we could talk about price per pound when they sells the calf but basically when does that calf weigh how many of them are there and what was the cost to produce it and so we've done a pretty good job in beef cattle genetics at increasing the weight we've increased milk production and growth rate that increases the weight of that calf we've done a pretty lousy job on these low heritability traits they're hard to measure they're not very irritable we haven't made a lot of progress fortunately hybrid vigor impacts them highly and we've done almost nothing to characterize how our genetics affect cost and so I'm going to talk about that a little bit today one of the problems with this traditional selection using EBV s is that we increase output and we find the ones that grow faster and we find the ones that milk more and the results are we get calves they grow faster and heifers they get bigger and cows that weigh more and cows that milk more but that output is not profit at the end of the day higher growth animals reach larger weights at a given age but why do they do that we're in a room of geneticists so why do those animals what's going on there why do those animals reach larger weights at a given age what's the number one thing we've changed pardon me adult size has gone up right but why is adult size gone up what's what's the driver here what's happening on a daily basis there anymore I resemble that remark that should have got a bigger laugh are you guys here oh wait now come on you can laugh it's okay we're gonna talk a lot about feed intake and I resemble you know large feed intake do they eat the same and grow more no they eat more and grow more right and basic UPD zouri bee bees have ignored the cost of that higher growth we're typically in that camp in the United States we advertise these great big yearling weigh DP DS or 400 day--we DVDs and we say bigger is better and so if there's an animal that has an ad there's another animal has a hundred obviously the hundred is better than the eighty that's a better animal it's going to drive more profit but you didn't look at the cost side right and the cost side said there was more food consumed we increase the cow size what happens to fertility big question mark okay how big our beef cows in the United States today are the cows bigger than they were ten years ago are they big enough these are questions that we ask cow-calf producers we're trying to change the thought process we say when was the average sire of your mature Calvert born this is a little retrospect right say say what year was that most of them miss that quite significantly it was actually 2006 it's nine years ago if you figure that those Bulls were used as yearlings and we used in the herd for four years and the average mature cow and the herd is between four and nine years of age works out the average herd sire that made the cows that are in the herd today was more nine years ago so then it bears looking at what the genetic characterization of those animals was nine years ago when the average yearling a PD in the United States for Angus was around 70 and today we're up around a hundred so we've we've got these cows that are really big we've increased the growth rate and the young sires and we're gonna be really surprised when our cows in the future are even bigger than they are today we shouldn't be surprised right that's that's a that's a natural result of the way we're selecting and and and many of the cows and that are producing these high-growth Bulls the United States very easy to do encounter cows that weigh over 1,700 pounds or I guess so does that about 750 kgs is that about right so big cows will those cows reproduce will they be efficient this is an interesting chart I gave a talk back gosh almost a decade ago and Arkansas not the most progressive part of the cattle rearing production system in the United States and there was someone from the Extension Service on the program with me and I got up and I said you know as we select these cows bigger cows our production per acre is actually going to go down and so of course they went out and measured it so they went out into these commercial herds in Arkansas when they weighed the cows and they weighed the calves at weaning and that's the scouter scatterplot from that and the r-squared is not very high but the trend is very very clear and that is that as those cows increased in size the percent of their body weight this efficiency is percent of body weight the percent of the body weight they weaned goes down and so if we do the standard calculus and we take body weight to the 3/4 power as a prediction of metabolic weight and then we factor in what those cows are going to eat on an acreage it becomes very clear that as cow size goes up production per acre goes down okay and then you have the added kicker in the United States that as weight per head goes up price per pound goes down okay from a cow calf marketing standpoint weight per head at sale time the higher that is the lower that price per pound is going to be because the contrary to popular opinion everybody says well the fattening stage is the expensive part of the United States rearing system no it's the cheapest part the expensive parts the cow calf part so those calves sell today in the marketplace for two dollars and fifty to three dollars per pound as stores cattle or feeder cattle as we call them and then they're cheapened up during the fattening stage when we put on weight at around seventy five cents a pound and so the net net of this is as we've increased this cow size we've actually had a tremendous adverse effect on cow calf profitability even though production per head was going up production per acre which is what their asset base is was going down and it's interesting we can now go backwards using simulation models that actually came from Steve we go back and look at our genetic trend within our herd for overall predicted prop ability from birth through harvest and this is that trend and it goes back into the 1980s and comes up to the 1990s and that's basically flatlined right which in medical terms is dead and and we we were increasing growth rate in that her and very rapidly but what we were gaining on growth rate we were giving away on fertility and an efficiency and feed intake and production per acre and so we were basically flatlined for that period and I came back in the organization right here right before death so that was a tremendous impact I had I can in tribute that all to my education at Harvard but you know we weren't measuring the right things that's obvious or we weren't selecting for the right things let's put it that way so then we start and into the into the 2000s when I moved to Colorado we actually were very fortunate in that we moved into a partnership with a business that owned a feedlot and they had two hundred and fifty six ten head pens and so we sorted a thousand bowls into sired groups and ten head pens we we basically used an allocation model to allocate feed to with individuals within those pens and then we gathered that data and we ran EB V's on it and lo and behold we found huge differences on feed conversion and intake between those bowls no big surprise to anybody in the genetics business we said look if those big sire differences exist how do we select young sires to sample without knowing what they eat we can't do it so being being kind of money minded and cheap we tried to build our own feed box so we built these little bunks that had load cells under it and a big steel case around it because our feed truck drivers don't speak English and they're not very good at not hitting the bunks and as we we feed the animal then the scale reports the weight and the Eid reads off the animals here and the Eid readers in the bunk and you can buy these from a company in Canada now for much cheaper than what we built them for but suffice to say we put those in and we started measuring the cattle and when we did that we were shocked at the variation in feed intake and feed conversion that we found in these Bulls just shocked so now we've measured over 12,000 individual animals that's actually probably a dated slide that numbers probably closer to 14,000 now and we've also then progeny tested animals out of those men so we've gathered lots and lots of feed intake data here's here's a slide that I use that just shocks producers okay here are two bulls that are born in the same pasture within three days of age okay they had approximately the same weight at 365 days of age that one of those animals consumed forty-two pounds of dry matter a day and one of them consumes 17 pounds of dry matter today that's a big difference now when these two animals were on test and we would have visitors come and we had this data we would take them out into the pen we would move those two animals away from the others and stand them in a corner and we would say who thinks it's the bull on the right and who thinks it's the bull on the left and you could not tell phenotypically which bullet was nine thousand pounds of feed per year okay I mean it's a shocking number the one bull the bull on the Left actually was a better converter the lower intake bull converted four to one the bull on the right for the ten to one okay that traits 40% heritable we just do kind of back of the envelope math we can run a hundred and twelve of this bulls daughters on the same annual feed as seventy five of this Bulls daughters which herd makes more money that's kind of a slam dunk right so this trait is highly heritable it's hard to measure because you need one of these devices and you got to measure it but it's a hugely significant trait obviously if you're in swine genetics or poultry genetics you've been selecting for it for decades so we have to do that beef cattle disappoint another profit driver is fertility and longevity and hybrid vigor is the key to that it's still shocking to us how few people crossbreed on a global basis but it is the best way to improve that it adds 23 percent more pounds waiting for Chow exposed the problems in the United States it's hard to keep the uniformity Angus is the dominant breed and from a marketing standpoint you have to have cattle that look like Angus to sell well in the marketplace and preferably grade on a carcass basis like Angus the solution now is to use hybrids and composites they allowing us to keep the uniformity keep Angus type and be competitive on carcass merit so you see in the United States basically there are two seed stock markets there is yes and everything else that's now half angus and half one of the other breeds is a hybrid and that's basically what's happened in beef cattle genetics in the u.s. the market segmented into those two characteristic markets and EPDs work on those hybrids and so all that's in motion and we're making a lot of progress in the hybrids but it's interesting that obviously I guess is the largest breed constituting about 40 percent of all the registrations in the United States they're moving at a faster pace one of the things have been interesting is that as these other breeds have made hybrids and started to do genetic analysis on hybrid populations their own genetic analysis said basically they'd be better off raising high percentage Angus now that's really detrimental to your breed Association so you can imagine some of the discussions that Sue after that realization but now we also are measuring what happens in the feedlot feedlots a big driver in our industry we had the fortune of tying up with the feedlot that it gathered individual information on about a hundred and eighty-five thousand calves from about 2,500 different earns so a big database we went in and standardized that database for market price and for feed cost and for in weight and when we got done with that we did a factual analysis but basically we found there was a $600 value spread from top to bottom and that thirty five percent of that value spread per head was driven by feed conversion about another thirty percent was driven by what we call grid value which is just a what we use as a term to describe carcass merit per pound okay so carcass value per pound was a driver of 30 percent we'll talk about that carcass weights a big driver again if you buy the calf at an expensive price per pound and have to cheapen them up the more pounds you can put on in the fattening stage the more profitable that animal you purchase will be and then herd health accounted for the other seventeen percent so we started measuring feed conversion in the Bulls and then we said we got to prove that to our feedlot constituents and customers so we found a large herd in South Dakota that a I'd those cows we a I had a thousand cows each year we ended up with about five hundred a I sigh well five hundred steers which about halfway I sired we brought them to one feedlot on a given day we back rounded them for 70 days we sorted them into sire pens on a given day and then we these were the EPDs of the different sire groups the next section shows you the number of heads we had a lot of cleanup sires it came after the AI and there was two hundred headed in that we did DNA type these two sets of cleanup sires and then these were the AI sires here's the average daily gain forehead the dry matter intake per head you can notice that this sire ranking is ranked from least efficient by our feed conversion epd prediction to most efficient down at the bottom and then here are the actual results and efficiency and you see that that prediction we had on those Bulls before we collected this data very accurately predicted the ending feed conversion differences there was about a 1.6 difference and they ranked almost exactly like we predicted they were going to write and those are those are pretty significant differences at the market price that was about a hundred and sixty dollars per head so the commercial data lined up with the EB B's and from top to bottom we had a big difference in value we did that in 2009 that fundamentally changed our business okay it fundamentally changed our business because the people that buy the calves out of our Bulls said that is the trait we want that trait will drive our profitability you put that in two calves we will pay for that and so then we said we're going to actively select for that the other thing that's going on is marbling is still a big driver of consumer acceptability in the United States fat in the beef we kind of went to that whole trend where we said wow the beef stew fat we need to get it leaner and the reality is today the consumers are telling us no we want the highly marbled beef if we look at a study done at Colorado State University just a couple of years ago these are different grading categories interestingly the line between certified angus beef a very dominant brand in the United States they draw the line right here and this is just the percent acceptable by marbling score and the average carcass in the United States the average our mix is about 70% of our product is in these three categories and less than 30% is in these two categories the difference in value per head today between a prime and a low choice is $220 per head in the marketplace okay so there's this huge premium on value if you can get cattle up into the prime carcass range or even into the upper two-thirds choice there's almost $100 so we try to select for that this is that same progeny test earned and did the feed efficiency study in 2012 396 tears went 99 percent choice 88% certified angus and 25% prime the following year the Packer offered us a two hundred and $20 cash premium for those cattle on a live weight basis we sampled 105 of the 500 head that year and we had three prime yield grade ones and only one select they went through the roof with 54 percent prime and 90 percent CMB and so basically with genetics we're trying to push marbling or trying to push feed efficiency we're trying to push profitability the ranchers that we're selling to are not going to own all those calves all the way through the slaughter so we have to connect the dots in the value change and so that that's a complicated factor there are commercial cow-calf ranch or how do they get paid they typically sell their calves and weaning does any of that matter to them after weaning we had to design a way that they could get paid for selling those calves at weaning and so we got together with a company that does third-party certification they came in and said we're gonna agent source verify because we don't have unique ID in the United States there's no identification requirement of beef cattle so they identify the kids with an e ID and certify them an audit that then they document what they've done from a vaccination standpoint and then we come in and give them a scorecard on average daily gain rib eye area carcass weight yield grade feed conversion percent choice and then we actually predict what those calves are worth relative to national genetic average that allows the feedlot to then pay a premium for those cow-calf producers and we put this system in place and it's being very well received and it will change the way the the progressive ranchers are getting paid for their genetics so basically they can get paid for their post weaning productivity and value without taking the risk of owning those animals all the way through to harvest so we've been through a whole bunch of traits and usually at this point I try to kind of step back and wrap it up and say where are we really going because if I give this talk to a group of cow-calf producers like that was all really great but aren't we supposed to have hybrid vigor are we supposed to worry about cow size or feed efficiency or marbling we have all these traits and you know they can add to that reproductive carcass merit they always want to talk about structure and how the animals move that's a big issue but at the end of the day do we really carry about care about any of those traits the treat we want is profit so we have to translate those component traits into profitability and probably that's Steve and our relationship goes back to the early 2000s when we were looking for an index that would do that and they had a simulation model that Steve developed and that model predicted for the harvest profitability and and that's what we use for our selection at this point and the selection index this is old hat but I actually take time to go through this with producers explaining what selection indexes are and who uses them and why they use them and that they in fact work because our producers don't tend to get that and this is a slide that I use that really drives that home as we compare 1957 chicken genetics in 2001 chicken genetics these would be Ross line foundation chickens on the top and then current hybrids from 2001 and and obviously multi trade selection work now we haven't done that in beef cattle you know because not only do those chickens grow faster and they're significantly heavier muscled but they also use about a third less feed per pound of live weight gain so that's tremendous progress can we do that beef cattle so we use three profit indexes on each bull we produce we use one that's just from birth to weaning which is that includes fertility milk and growth and caffeine intake we do one post weeding which is profit from weaning to harvest which is feed conversion carcass value in carcass weight and that's also the index we use to predict the value of those feeder calves when they sell as stores cattle coming out of the ranch and then we have a dollar profit index which is our overall number which combines the other two and that is what we're selecting on we're selecting on the overall birth to harvest index and that's that's the whole objective of our system if you look at the average sire in our database compared to the top one percent sire this is how the different traits change birth weight goes down weaning weight kneeling weight go up milk stabilizes at about 22 pounds and our system days to conception becomes lower so they breed earlier mature cow weight comes down feed intake goes down significantly feed conversion improves marbling goes up ribeye goes up but interestingly back fat goes up we had a discussion yesterday talking about back fat in this genetic trend and so basically when we look at the index and whether the index is functioning we want to see all those traits moving in the right direction as we go toward the higher end of selection and those cattle are better now here I put these genetic trends in just to show you where we are in genetic Tran significant downward pressure on birth weight I don't know if it's happening here but in our country the average age of our customers or of ranchers in the United States at this point is about 64 years of age they are extremely sensitive to cavities if I want to lose a customer the surest way to do that is to sell them a bullet gives them calving difficulty and so we put a lot of downward pressure on birth weight even though our models tell us that's not necessary from a profitability standpoint it is necessary from a sales standpoint you're Owen just back up the green line is a genetic trend for Angus which is 40 percent of the industry the blue line is our genetic trend within our herd yearling weight we're following them on yearling weight because still pounds sell on carcass weight we're actually higher than Angus significantly that primarily driven by brief differences as we're using some of the European breeds that are composites on mature weight you see dramatically different trend lines alright we're going down we're not mature wait they're not and then this is probably the most interesting graph I think they're just anguses genetic trend on dry matter intake that's their sharpest upward trend of any trait they're selecting for of course they're not even really selecting for it right they're just starting to measure it and then here's our genetic trend on dry matter intake so to summarize if we can produce animals with less birth weight high growth upward trend on carcass value downward selection for mature size downward selection for feed intake we're going to end up with more output less input and that's going to drive more profit to our customers and can we really move that fast it's a big question as funny as we print these numbers in our catalog and obviously the economics have changed over the last decade so we have customers come to us and say how much of your change in your index figures being driven by the same in the market we said well no we take the market change out of that we make the assumptions adjustment but we scale it back to a constant market because we don't want that to go up and down based on market this would be the average predicted index on the cow herd that's currently in place they averaged about nine thousand and you can see what's going on from a trend standpoint interestingly we'll make those cows this year just finished mating season just about now two bulls that are fifteen nine that makes the average calf born in 2016 at twelve six we call the bottom 50% of them in 2017 the average animal we sell would be fourteen thousand on that index to give you an idea that would be about the same average as our herd sires were in our 2013 breeding season so the entire product offering in 2017 will have the same average genetic merit as hourly day I heard Cyrus did for years pardon me you are seriously training you we're moving really quickly because that's that's they're gonna buy the average then we have to move the average where do they look like this was a bowl that was the top bowl in 2013 he was number one on the profit index he was number one on all the indexes he converted four to one he wasn't the bowl that we did in the two book comparison you have an intake of 17 pounds per day he had a 17 square inch rib eye which is what about a hundred and fourteen I think on square centimeters and a lot of revived real high on IMS scanned quiet he was predicted to have a big birth weight yearling weight spread he does but he's he's not a calving he's sire he had a very elite pedigree on our index he had a very high profit projection we now a 450 progeny out of him and he has come in almost exactly where he was predicted to come in which is of course the exception not always the rule but he's one of the both we've ever used and we sold I think 52 of his progeny in her spring sale just several months ago when they averaged over $10,000 per head and so not only are we using the index and improving the cattle but our customers are paying us for that and we're seeing that as a dramatic change if we go back to that slide we talked about 1985 to 1995 no genetic change from 95 to 2005 we started selecting primarily on end product merit there were less antagonisms so we made improvement that improvement works out in hindsight to be about $2 per head per year we're now moving in between 10 and 15 dollars per head per year if we look at the history of beef cattle selection when we're at this stage what advantage is there to use selected genetics none use selected genetics or unselected genetics you're gonna make the same trend on profit when we were moving a $2 per head per year there's a slight incentive but in a decade's time we only move $20 at this rate of change that becomes more imperative that people adopt there's a rancher probably our best customer at adopting technology he runs about 2,000 cows where a compare is 2008 born steers to this 2012 steers every steering raised so this is on about 750 steers 8,000 was the index on the Bulls in 2008 just on just under 10 6 on 2012 so he didn't proved the index this is the date they went into the feedlot this is what they weighed going in and pounds this is what they gained so basically the cattle were a month younger they were about the same weight they gained more per day they finished at a significantly heavier weight here's the cool one and their dry matter intake per day went down same feed lots a ration and their feed conversion improved fairly substantially and the dressing percentage went up and the carcass weight went up and the ribeye area went up and the yield grade our prediction of red meat yield stayed the same and the percent an upper two-thirds of choice went up translating that into dollars keeping the feed the cost the same and the N base market the same those cattles in four years were one hundred and twenty two dollars per head better okay big numbers I think unprecedented numbers and beef cattle just a typical or prototypical steer at a nine hundred seventy nine hundred seventy six teen point two inch ribeye graded upper two-thirds choice converted four point five to one returned $1,800 to the ranch before he entered the feedlot huge number this is the tester that does the feed efficiency study that herd that first year's data I showed you a verage six to one that herd just in 2013 five years later average four point eight to one the best sire groups now coming out of that test herd are converting very close to four to one so we've dramatically improved that obviously cattle still have to work out in the field that they have the structural soundness and all the things that the producers one down on the ran and we think they still have that we're decreasing mature size we're increasing performance we're gaining on conversion and we're changing the harvest weight all the things in the positive direction so that's kind of an overview of what we're doing not I think surprising to you as geneticists that multi trade indexes work maybe surprising and how fast we can move beef cattle I think I don't I don't know that at any time that I've looked at any date over the last 20 years I've seen a population that's moving at that rate of change obviously those chickens were and they were making you know real-time change that was easy to observe but I think we can do that in beef cattle as long as we have our selection criteria correct so that's kind of the outlines you just told me to finish with about 10 minutes for questions and I think I'm close to probably bit of everything isn't there I mean like in any market place it's pretty fragmented you know we're we're the one of the top three largest but we still would only have about a two percent market share you know market is highly fragmented obviously there's a large segment of seat stock producers reading hybrids and a lot of them would be using indexes generated by breed associations those indexes tend to be what I call partial indexes they cover one of the phases but perhaps not all of the phases I think we're just at an inflection point in terms of adoption of index technology at the seed stock level it's going to take time for that to trickle down to the commercial level but it's driven by commercial success right if my sale averages go up more people copy me I mean that's just as you know that's just the driver right and right now my sale averages are very high we'll average almost $7,000 on 1500 bills this year and that would be about $3,000 higher than national average and so that's catching people's attention and then when our calves sell a lot of calves are marketed in the United States on videos so they're large broadcasts of videos like the video sale about every weekend at this time of the year and they'll sell fifty to a hundred thousand calves and those calves will typically be identified as their genetic source and now ours are scored with a scorecard and then they see what we're predicting on the premium and then the calves bring a premium those kind of signals will make the market change but you know I would say we're a decade or two from having large-scale adoption of these techniques which for me is a mixed blessing right it gives me more time to get ahead gives my customers more time to get ahead and so it's not a bad thing but it is education is a problem at the end of the day if you can materially change their economics they'll adopt as long as they don't have to change their management and of course this doesn't require managerial change this is erasing the same cattle so it makes it pretty simple if they had to retain ownership all the way through to harvest to get these advantages that would have been a big stumbling block because they weren't going to change that by getting them paid when they want to sell those catalyst stores cattle that's that's a game changer big-time game changer I think so it's coming it's coming but you know there's always the problem that success breeds complacency and in the industry right now there's a lot of profitability and so there's very little incentive for people to change right now now as the market turns down and people have rolled into high costs and then these high markets basically dry up as we increase supply which is going to happen over the next five to ten years then we're gonna see a lot of pressure and I think then we'll see a lot of change good question yeah it's a great question and we usually get a lot of questions about how we select for feed efficiency I don't think any of those measurements but let me ask you a question why don't we select for milk with reproduction held constant why wouldn't we do that because obviously we'd like built to go up but not if reproduction goes down right but we don't do that right because why would we do that to be it'd be a confusing way to dip it up but we want to select for feed efficiency with other trades held slit at the end of the day the math is really simple if output goes up and input goes down I make more money so the only trade I really want to measure is intake I've already been measuring growth for a long time I think we have pretty good measures of growth I think actually if we see really measured growth we'd have better predictions of growth than we have and we're starting to use some of those models but at the end of the day I just need to know what the intake is I need to know what the intake is I don't really want to select for RFI I don't really even want to select for feed to gain I want to get my genetic trend on intake appropriate and inappropriate is going to be somewhere between flat to slightly down I think you know and that'll depend on what happens to fertility in the long run I don't think we can take that genetic trend intake and keep going like that and not impact fertility at some point and when we impact fertility then we'll decide where we're gonna level that off and then the trend on output has to continue to be up in my opinion but ultimately we really don't care what those genetic trends are if the simulation models right if the simulation models right and we're selecting for the highest change rate of change and profitability we just let those trends find their own place ok notice we don't look at those genetic trends and say oh let's change that we look at the simulation model and say what does it drive and then that's what we follow ok and I think because of that selection on any you know when you get into feet again a residual average daily gain or feet conversion they all go out the window it's all about rate of change of profit a really good question the question basically hinges on whether the quality of the diet is going to change what we're selecting for because obviously we have we have ranchers that are running on very extensive country on low quality forage we have some ranchers that are running on abundant low quality forage we have some ranchers that are running on abundant high quality forage and then we put these calves in the feedlot and we give them a high energy diet so how do we optimize that across the different areas the first answer the question is there's not a lot of good data on that and if you understand that the constructs of setting up those studies you can't see really measure on one and then the other without creating factors you can't you can't take back out of the model so you really can't tell it's the first question from what we've seen we hypothesize at this point that what we're selecting for ultimately is efficiency at a cellular level we're selecting for efficiency of not throwing off too much heat when you synthesize into protein in fact okay that's what it looks like the same experiments in mice have shown and there are obviously many generations down the road if that's true that that efficiency will apply on that low quality forage and that high quality forage if that's true there is different constraints when we're on the low quality forage basically animals are limited by how much volume they can eat the beef cattle are and then on the high quality forage they're really limited by how much energy they can handle so what we see is if we measure a set of animals on a high quality forage diet on a high quality grain diet in the feedlot the range in intake compresses okay and in that environment gain and feed efficiency are very highly correlated ok if we measure on a very low quality roughage ration we get much bigger range as an intake and we get a much lower correlation between gain and conversion the take-home message for us as we measure both okay I showed you that that chart where we measured feed conversion on roughage in the Bulls and then we showed you the outcome on their steer progeny on concentrate and those were pretty highly correlated and so we think we're okay making that extrapolation we think that as we select downward on intake and upward on growth that when we put those cattle in a high energy diet they respond very well we just have to be careful that we don't take the intake down to where the cattle can't respond well on a very low energy diet so that's that's kind of our practical application we've thought about whether we split that into two traits and separate the selection and and maybe run them as correlated traits but the reality is at this point we don't know enough data to do that I think as we do we will separate it out we'll find some nuance in that but I don't think we're gonna find something that radically up heaves what we've been modeling at this point seems that the model is working pretty well but thank you very much you

Channel: Beef + Lamb New Zealand Genetics

Views: 28,022

Keywords: cow herd, angus, Cattle (Animal), Genetics (Field Of Study), animal production, Cow, lee leachman, calf, Cows, beef genetics, Beef Cattle (Domesticated Animal)

Id: 5g5KrsXYHaU

Length: 47min 54sec (2874 seconds)

Published: Tue Jul 28 2015