What Feeders Want
Information to make informed decisions sets the stage for profit at the feedyard.
June 1, 2024
Whether a producer walks through the door of a local auction market, closes a private deal with a handshake or sits at the computer listening to a chant as the ranch’s cattle stream online, sale day often comes with a mix of stress and excitement.
For an increasing number of farmers and ranchers, high prices are not a sign to rest on their laurels. Instead, they’re leaning on their cattle’s genetic merit and other qualities as marketing and benchmarking tools, and buyers are hungry for the information.
“Everything that we do at the feedyard, it all starts the day that he turns out a bull or he makes that decision on which straw of semen to use on that cow,” says Justin Gleghorn, director of cattle risk management and customer service with Cactus Feeders. “Everything we’re doing after that is basically just managing that decision.”
Like other players in the industry, cattle buyers — and more specifically, feeders — are eager to keep their balances in the black at every stage of the cattle cycle if they can help it.
“Every one of our employees owns some portion of these cattle, and it’s everybody’s job to get those cattle to generate some positive margin at the end of the day, because that’s what drives the value in our organization,” Gleghorn says.
Purchasing power
With their value-based pricing model, Gleghorn says he and others at Cactus Feeders must look at an array of characteristics to measure a group’s level of risk, even as cattle supplies have tightened.
“We’re very keyed in on matching up the growth potential, carcass merit, health — all of those things — so that when we run a projection, it matches the cattle,” he says. “It’s going to become ever more important that when we price these feeder cattle, they’ve got to meet our expectations, because they’re going to be very expensive, and we don’t want to have a surprise.”
“It’s going to become ever more important that when we price these feeder cattle, they’ve got to meet our expectations, because they’re going to be very expensive, and we don’t want to have a surprise.”
— Justin Gleghorn
Troy Marshall, director of commercial industry relations for the American Angus Association, who also manages the AngusLinkSM program’s Genetic Merit ScorecardSM program, says he hears echoes of Gleghorn’s message across a wide range of feeders. Whether they are buying AngusLink cattle at a premium or commodity-type cattle, they try to keep their yards running efficiently and want information to help them manage and market their cattle successfully.
“They want the information on those genetics not only to identify the superior genetics, but also to identify what those genetics are so they can manage them to the best of their ability and help these cattle perform in their yards,” Marshall says.
In a similar way, genetic merit information and marketing claims help commercial cattlemen better manage risk and can help them build equity, says Warren White, chief procurement officer of Prime Pursuits®.
Being a more narrowly focused cattle feeder, White talks about wanting to use side-by-side comparisons of genetic merit when he looks at cattle for sale. Prime Pursuits only buys cattle that meet its minimum program requirements, so they need to be choosy and pay for high-quality cattle that will fit their supply chain’s needs.
“I didn’t start using that [Genetic Merit Scorecard] as far as influencing what I want to give for calves until probably the last year,” White says. “As more Angus producers enroll in that, I think you’re going to see those premiums get wider.”
White says he knows the extra cash is helpful to commercial producers now. He also discusses the effect it could have later in the prospective cattle cycle.
“When these markets correct — and they will correct — and we get back to break-even levels, they can tell the difference,” White says. “It might make the difference in paying the note off and not.”
Marshall says the value of genetics is higher today than ever before, as feeders continue to seek efficiency in production.
“The feeders are aware of just how much more valuable genetics are to their bottom line, whether that be looking at feed efficiency, carcass weight or quality grade.”
— Troy Marshall
“The feeders are aware of just how much more valuable genetics are to their bottom line, whether that be looking at feed efficiency, carcass weight or quality grade,” he says.
Health and genetics
If genetic merit in areas like growth potential and carcass quality can make a premium, health issues can break it.
“The health status of a group of cattle is a primary consideration,” Gleghorn says about purchasing cattle. “That’s one of the things that can set you back as quickly as anything else in terms of wrecking a projection.”
It is a consistent challenge, he says, especially as the average frame size of feeder cattle grows.
“We spend a lot of time assessing health and health risk in these cattle, especially if they’re from sources that we know we might be getting into calves, even though they weigh 700 to 800 pounds,” Gleghorn says. “We’ll apply different strategies there based on the population of the cattle and their growth potential.”
Survey results summarized in the 2023 Industry Insights Powered by Angus Media & CattleFax show vaccination, current health, preconditioning and weaning are some of the health factors of importance across the industry. Percent black-hided, verified Angus genetics and verified genetic merit were genetic factors identified as purchase incentives following these health factors.
Survey respondents had a collective capacity of more than 3.3 million head of cattle.
Best management practices for cattle health have become more standardized over the years, says Marshall.
“I really feel like the management side of things has kind of evolved to where it’s almost expected if you’re going to participate in the higher tier of the market, and it’s not really a differentiator anymore,” Marshall says. “I think producers looking ahead, they are wanting to differentiate themselves through market access and being able to document the superior genetic management they put into the cattle.”
Higher standards
At the same time, the overall industry standard for cattle and their beef continues to be raised.
“If we had beef demand similar to what it was 10 or 15 years ago, we wouldn’t be near these price levels,” Marshall says. “When you look at the percentage of cattle that were qualifying for the Certified Angus Beef® (CAB®) brand and at the percentage of black-hided cattle that were in our industry 10 or 15 years ago, those all took a pretty significant jump as we started to expand in this last cattle cycle. I think we’re going to see the same thing in this coming one.”
The percent of black-hided cattle in the mix and the percent of those meeting CAB specs took a jump with the last herd rebuild. Will they again?
So, is more information always better?
White says yes. He says he recognizes that it is the business of Prime Pursuits to provide information to their partner retailer, Walmart, and its customers. White says other retailers take notice.
“I talk to people in the industry that know what we’re doing, know what Walmart’s doing, and Walmart’s the big one, so everybody’s going to be watching them,” he says. “Maybe it’s not for everybody, but they want to give their consumers a choice. I really believe in this.”
Even without a giant retailer working with them, Gleghorn says information provides an advantage to Cactus Feeders.
“You have a lot of variation out there in the population, so we just want to make sure that we project them correctly,” Gleghorn says. “That way we can match up what we can afford to pay for them and where those cattle meet our expectations, and we can continue to do business with each other year in and year out.
“From a buyer standpoint, yes, I would like to know if they’re average,” he says. “From a seller standpoint, I can understand why they would choose not to advertise if their cattle are average or below average. I’m not against buying cattle that are lower on the Genetic Merit Scorecard when we think about growth or carcass potential. As long as I know what I’m buying, those cattle have value, and the repeatability of those cattle in our system has value to us.”
It has value to the consumer, too, Gleghorn says. Consumers want a predictable product on their plate.
“What I’d like for those guys that are running cow-calf operations to remember is, yes, we sell cattle, but ultimately at the end of the day, we are in the beef business,” he says. “We have a demand structure right now where our consumer has shown over and over that they’re very willing to pay for a product that they can have confidence in and they can take it home, cook it, and it’s going to create a pleasurable eating experience for them. Not to be one-track minded, but let’s call it what it is. Quality grade, marbling, potential palatability, and that overall eating experience are driving the bus.”
Editor’s note: Sarah Kocher is a communications specialist for the American Angus Association.
Topics: Management , Feeder-Calf Marketing Guide , Feedyard , Selection , Industry Insights
Publication: Angus Beef Bulletin
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