Profit By the Numbers

QB helps increase higher quality calves worth more at market time

USDA statistics on the production of Choice and Prime beef over the past several decades show that the industry is producing fewer head of Choice cattle than needed to fill the market demand — fewer than at almost any point in the last 50 years. According to recent studies, consumers are willing to pay as much as 50 percent more for beef USDA Prime
than Select grade steaks. That willingness to pay has not gone unnoticed by packers or feedlots, which are taking advantage of grid pricing to source more quality cattle while passing premiums to producers for those cattle.
The University of Missouri rolled out the Quality Beef by the Numbers program last week. The project helps producers raise more calves that grade USDA Prime by using highly proven sires.

Consumers are increasingly demanding higher quality beef and are willing to pay higher prices for it.

Research at the MU Thompson Research Center, Spickard, provides a base for better breeding of cow herds, said Dave Patterson, MU beef reproduction specialist. The QB effort takes calf marketing beyond that used by producers in the Show-Me-Select Replacement Heifer program (SMS).

At the rollout Patterson showed increased value of SMS heifers that rank Tier Two and bred to proven artificial insemination sires. Overall their premiums averaged $357 per heifer above natural service sires.

The QB program will track steers through feed yards to packing plants, allowing owners to receive premiums. With current high consumer demand for beef, cattle that grade prime add $450 to $500 per head over average market price, said Scott Brown, MU beef economist.

Beef processing plants now buy on market grids to attract high-quality cattle. “There are many more premiums than grading USDA Prime,” Brown added.

QB has a plan to help producers learn marketing of premium calves for which Missouri is already noted. Quality calves offer more profit potential.

QB is underwritten by MU College of Agriculture, Food and Natural Resources. Regional MU Extension livestock specialists are local contacts across the state.

Missouri Can Double its Angus Market

Larry Corah, of Certified Angus Beef, said CAB will sell over 800 million pounds of their product this year. “Missouri supplies 10 percent of our product,” Corah said. “That can be doubled.” CAB beef uses only upper Choice and Prime grades.

Quality Beef by the Numbers was unveiled last week to about 260 beef industry producers. Dave Patterson, professor of animal science at MU (at podium) and Scott Brown, research assistant professor (not pictured), led presentations that described how the project works and its financial benefits. Missouri Senator Roy Blunt joined Sonny Ramaswami, director of the USDA’s National Institute of Food and Agriculture; Tim Wolfe, president of the University of Missouri System; Brady Deaton, MU chancellor; Blake Hurst, president of the Missouri Farm Bureau, and Tom Payne, vice chancellor and dean of the College of Agriculture, Food and Natural Resources, in announcing the program. Photo by Kent Faddis.

The keys laid out by program sponsors include using proven superior sires and tracking ownership of calves through feed yards to processing plants. Calf owners will be paid after carcasses are graded, yield measured and value calculated.

Mike Kasten, herd owner from Millersville, Mo., was a founding member of the Show-Me-Select heifer program and early adopter of selling steer mates on premium grids. He showed his financial results.

Kasten’s premiums have grown each season he used proven sires in his herd. His records show carcass weights went up, meat marbling scores increased and rib-eye areas of steaks increased.

Steers from multi-generation use of highly proven sires resulted in 49 percent grading prime and 47 percent grading CAB. The calves from unproven matings had no prime grades. To put that in perspective, Brown said on average of all calves only three percent grade prime nationally.

Until he studied his data on carcasses cutouts and prices paid, Kasten said he had no idea which cows in his herd were most profitable.  “I couldn¹t identify my best cow,” he said. “I’d have to put dollar signs on her side to tell her from other cows in the herd.” Brown said, “We know the recipe for producing quality cattle. It includes genetics, but also overall herd management.”

QB will have guides for breeding, nutrition, health and management to help producers add value to their herds.

Smaller but Better Herds?

U.S. cow numbers are at the lowest level since the 1950s and shrinking.

“With very tight supplies, beef prices will move higher,” Brown said. He pointed to steers from Thompson Research Center that for the last four years averaged 30 percent prime carcasses from use of timed-artificial-insemination breeding protocols developed by Patterson at the farm.

At a time when cattle numbers are shrinking, we are in position to take advantage of premium quality market grids to boost returns, Brown said.

In the past, most producers did not have access to marketing grids – and premiums. With QB even small herds of quality cattle can compete.

Participants will receive carcass cutout sheets on each calf, a key to making herd-improvement decisions. In addition, a QB data bank will give individual rankings of all cows in a herd. And, it will give owners a ranking of where their herds rank in the program.

Patterson said every producer has access to data on the best sires in their breed. “Look in the sire catalogs from the AI cooperatives,” he said. The QB data bank will give records on cows and their calves.

QB links partners who specialize in quality cattle and marketing of high-quality beef. Cooperators include Irsik & Doll Feed Yard, Garden City, Kans., and Pratt Feeders LLC, Pratt, Kans. Three AI cooperatives are Accelerated Genetics, Genex, and Select Sires. The beef marketer is Certified Angus Beef.

QB members will pay an annual farm fee plus a per head fee for calves sent to the feed yards.