by Katie Micik, DTN Markets Editor
WASHINGTON (DTN) — Quality beef genetics may be one thing that gets a big boost from the national cattle herd’s rapid shrinkage over the last year, a panel of experts said Monday at the North American Agricultural Journalists annual meeting.
Mike Kasten, a rancher in southeast Missouri, explained that he’s been able to almost double his profit per head by managing his herd’s genetics through artificial insemination and extensive record keeping.
“AI is not something that’s widely used, but from the standpoint of the future, we’re going to see AI and record keeping become a real integral part of where our industry is going,” he said. “We’re going to move toward quality in the future.”
The evolution of artificial insemination techniques gives ranchers more control over their herd’s genetic pool at a significantly cheaper cost than traditional breeding. It also helps them capture premiums by producing cattle that will eventually be graded as prime by USDA. For instance, of Kasten’s 2010 calf crop, all of his heifers and 97.4{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0} of his steers qualified as choice; 30{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0} of the heifers and 16.5{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0} of the steers met the grading requirements for prime. That led to a net profit of about $145 per head, compared to the $70 ranchers who traditionally sired their herds received.
High domestic beef prices face increased competition from chicken and poultry, but data presented by Larry Corah, a vice president for Certified Angus Beef, showed that consumers are buying more prime beef at retail meat counters and less select and choice beef. It’s a trend that, if it continues, could drive improvements in the genetics of the U.S. beef herd.
“If you’re going to sell a product at today’s prices, you better create a positive eating experience with the consuming public,” Corah said.
Globally, beef exports are expected to remain strong and the demand for quality cuts of beef will increase, especially if China gets into the market, Corah said. He noted that the United States produces about 84{fd15d42d1b024b97d6d50958be27cc8145b6addb99e015780abccf2984117bb0} of the world’s corn-fed beef.
“That’s our niche. Mike’s exactly right,” Corah said. “That’s (quality is) our future in the beef industry because we’re not a country that can graze 12 months of the year for the most part or utilize forage like Argentina, Brazil, Australia and so on.”
While Corah believes ranchers will focus on producing higher-quality beef, the recovery of the herd is likely to be a slow process. In January’s Cattle Inventory report, USDA said the beef herd totals 29.88 million head, the lowest level in more than 50 years.
“Our business model says we don’t think we’re going to see cattle numbers go up dramatically in the next four to five years, and if they go back up, they may not go back up dramatically,” he said. “If we get back to 31 million to 32 million cows, I’ll think we’ve done pretty well.”
Scott Brown, a livestock and dairy economist with the University of Missouri’s college of agriculture, said herd rebuilding is likely to be slow and it may take until January of 2014 for it to show up in the numbers.
Much of the rebuilding will depend on pasture recovery in Texas and Oklahoma, which received some solid rains this winter, but the overall condition will rely heavily on summer weather.
“There are some pretty good economic incentives to be thinking about growing the herd, but at the same time producers see a lot of risk,” Brown told DTN. “Where do we see corn prices this fall? Many are taking a wait-and-see attitude, so I think we will be slow to recover. Any building in beef cow numbers will be very modest.”
He knows of several Missouri cow/calf producers who are retaining heifers not to breed themselves, but to sell to ranchers on the Southern Plains once pasture perks up.
“You can take several hundred thousand heifers out of Missouri and still not grow the total herd very much. I think we’ve got a long ways to go, but I see the potential for higher quality as we go,” Brown said. “Folks have certainly been planning for what they think will be a very hot heifer market.”
Brown said the fixed-time artificial insemination protocols have made improving genetics, and thereby quality, vastly easier. And with bull prices running between $3,500 and $5,000, a rancher could artificially inseminate more heifers cheaper, Brown said.
The big unknown, Brown thinks, is whether consumer appetites will still demand more prime beef in upcoming years, especially with pork and chicken competing for market share.
“Suppose that we’re right. Consumers want that high-quality product and they’re willing to pay for it,” Brown said. “How much more can we pull up cow numbers? I think that’s a longer-term question.”
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Posted with DTN Permission by Haylie Shipp
