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OSU Extension BEEF Team

BEEF Cattle questions may be directed to the OSU Extension BEEF Team through Stephen Boyles or Stan Smith, Editor

You may subscribe to the weekly Ohio BEEF Cattle letter by sending an e-mail to smith.263@osu.edu

Previous issues of the BEEF Cattle letter

Issue # 634

April 29, 2009

Beef Cow Size, Efficiency and Profit - Scott P. Greiner, Ph.D., Extension Animal Scientist, VA Tech

The search for the optimum beef cow is ongoing. Finding her is only somewhat less challenging than defining her. Cow efficiency has been described, researched, and discussed in many different forums, and has taken on numerous definitions. Recent discussions have focused on cow size (mature weight), and the importance and relevance of this trait on profitability and sustainability of beef production systems. Cow size is a relevant component to measures of cow biological and economic efficiency, however it is important to note that a number of other components also impact these important measures.

Biological efficiency has historically been defined as pounds of calf weaned per cow exposed, pounds of calf weaned per cow exposed per unit of cow weight, as well as pounds of calf weaned per cow exposed per unit of energy consumed. Factors affecting biological efficiency include cow maintenance, gestation, and lactation requirements, and reproductive performance, along with calf maintenance and growth requirements, and calf weight. Through assignment of the input and output costs associated with these factors, one can arrive at economic efficiency. Biological and economic efficiency, while related, are not necessarily one and the same. It is possible to have high economic efficiency and relatively low biological efficiency. As an example, cows with low biological efficiency as a result of high inputs relative to calf weaning weight may have relatively high economic efficiency when feed costs are low. Similarly, cows producing high value progeny may compensate to some extent for low biological efficiency (lower calf weights or high feed inputs). This underlines the basis that the search for the optimum cow must optimize costs of production with potential calf income. Intuitively, the goal would be modest size cows with high reproductive rates and low input costs which produce high-value calves.

Cow Size, Milk, and Growth: Energy consumption during the cow-calf portion of the production cycle represents 72% of energy utilized from conception to harvest (Ferrell and Jenkins, 1982), and 70-75% of the total energy consumed by the cow herd is used for maintenance (Ferrell and Jenkins, 1985). Research has demonstrated that high-maintenance (energy requirement per unit of body weight) cows are characterized by high milk production potential, high organ weight, and high lean body mass (low fat mass). Conversely, low-maintenance cows have low milk production potential, low organ weights, and low lean body mass/high fat mass.

Cow intake, energy and protein requirements are influenced by mature cow size. As mature cow size increases from 1000 to 1400 pounds, intake, energy, and protein requirements increase 23%, 19%, and 13%, respectively for cows 90 days post-calving. Bigger cows simply require more feed inputs, in part due to larger body mass to maintain. Similarly, cows with higher milk production have additional costs associated with protein and energy requirements. The energy status of the cow impacts reproductive performance (Short and Adams, 1988), and energy status is a function of nutrient intake and availability relative to requirements. Hence, severe restrictions in nutrient intake relative to requirements impact body condition and rebreeding success.

The widespread use of genetic tools such as EPDs have resulted in tremendous gains in performance as measured in growth and milk production. Mature size has a strong positive genetic correlation with weaning weight and yearling weight (0.80 and 0.76; Bullock et al., 1993). Therefore, genetic trends for increased growth over time also reveal a corresponding increase in mature cow size. The combination of larger mature size (maintenance) and increased production (growth and milk production) influence total energetic needs of the cow herd.

The above discussions have related to differences in cow size and levels of production as they relate to differences in energy requirements. It is important to note that these measures are not measures of cow efficiency. In fact, cow size alone is a poor indicator of biological efficiency- although it is inherently correlated with costs of production (primarily nutritional inputs). These input parameters must be put in context with outputs such as number and weight of calf weaned (or slaughter weight) to derive biological efficiency, and further combined with costs and income parameters to arrive at economic efficiency. Research has demonstrated the interaction between environment (nutritional resources) and mature size, milk, reproduction, and growth at various levels of dry matter intake (Jenkins and Farrell, 1994). The most biologically efficient cow in a restricted feed environment is smaller in mature size and lower in milk production. These advantages change as feed becomes more available, and is contrasted by the large, high-milk cow being the most efficient when feedstuffs are abundant. Therefore, matching growth and milk production to the environment (feed resources) is a key component in defining efficient cows.

Differences in cow efficiency are profoundly affected by differences in reproduction, irrespective of other factors such as feed consumption and calf weight. Efficient cows are those that produce calves regularly, those that do not will not be efficient. Successful reproduction is the constant variable defining cow efficiency, while the relative importance of other variables may change with fluctuations in production environments and prevailing market conditions (Notter, 2002).

Tools for Enhancing Efficiency: As has been described, cow efficiency is a complex, multi-trait measure that is variable depending on differences in production environment and management system. Hence, the most efficient cow is likely not the same for every enterprise. However, tools exist which can be applied to enhance cow efficiency. Some of these tools have been at our disposal for more than thirty years, while others have become available very recently.

Reproductive success is paramount to cow efficiency, however genetic improvement through direct selection for reproduction has been limited due to the low heritability of reproductive traits and associated complexities involved in calculating EPDs. Capturing heterosis through the use of well-planned, structured crossbreeding programs provides the best genetic tool for enhancing reproduction. Maternal heterosis realized through the crossbred cow results in improvements in cow fertility, calf livability, calf weaning weight, and cow longevity. Collectively, these improvements result in a significant advantage in pounds of calf weaned per cow exposed, and superior lifetime production for crossbred females.

Research has demonstrated that economic efficiency is most improved in systems which exploit both individual and maternal heterosis, and the use of terminal sire crossbreeding systems is an effective way to ameliorate the potential antagonisms between increased lean growth and mature size with maternal performance (Tess and Davis, 2002). These systems which take advantage of sires selected for post-weaning performance and end product merit, mated to cows of moderate size and adapted to the production environment offer additional advantages worthy of consideration. Among these include potentially more simplified management schemes and concentration of resources for small herds (replacement females outsourced, fewer management groups, fewer specifications for sire selection, etc.).

Relatively new EPD tools are now available to allow for direct selection on traits impacting cow efficiency. Heifer Pregnancy EPDs predict the likelihood of a bull''s daughters to conceive to calve as two-year olds. This EPD could be used to exert genetic selection pressure on fertility. The Stayability EPD predicts the likelihood of a sire''s daughters remaining in the herd until six years of age (longevity). Since a large proportion of cows leave the herd as a result of reproductive failure, the Stayability EPD indirectly identifies favorable reproduction genetics. Several breed associations are in the developmental phases for similar genetic prediction tools which may be available in the near future. Selection tools directly related to cow size include Mature Daughter Weight EPDs (Angus) are also available, and can be used in multiple trait selection to influence cow size while allowing for selection pressure in other traits.

The beef industry also has recently introduced selection tools to enhance our capability to identify genetics which are favorable for reducing costs of production. Two examples include the Cow Energy Value EPD ($EN, American Angus Association) and Maintenance Energy EPD (Red Angus Association of America). Both of these EPDs are associated with genetic differences in cow energy requirements, and can be used to enhance efficiency.

Conclusions: Profitable and sustainable beef enterprises of the future are likely to successfully optimize the potential association between higher levels of production and increased costs. This may be accomplished through adherence to the low-cost producer philosophy while concurrently taking steps to add value to the calf crop. Cow size and efficiency are critical components in this endeavor. Changes in cow size and efficiency will be dependent on accurate record-keeping which will enable producers to make informed decisions for their enterprises. Determination of current efficiency measures is a necessary first step in positioning for the future.

Documenting Livestock Death Losses Under the LIP - Stan Smith, Fairfield County PA, OSU Extension

The 2008 Farm Bill created 5 new disaster programs, 1 of which is LIP (Livestock Indemnity Program). LIP provides compensation to eligible livestock producers who have incurred livestock death losses in excess of normal mortality, on or after January 1, 2008, and before October 1, 2011.

Losses because of adverse weather, as determined by the Secretary during the calendar year, including blizzards, disease, extreme cold, extreme heat, floods, hurricanes, and wildfires, are eligible for LIP. Since livestock producers who have incurred livestock death losses are making inquiries of Farm Service Agency (FSA) about what types of documentation are acceptable to document proof of livestock deaths, FSA released the following information on April 16, 2009 for clarification.

Livestock producers who have incurred 2008 and/or 2009 eligible livestock death

losses because of eligible adverse weather events may begin compiling their livestock death loss documentation. Details for FSA offices to receive and process LIP applications and the documented losses will be announced at a later time.

To be eligible to apply and receive assistance under LIP, each livestock producer must provide verifiable documentation of livestock deaths. Adequate documentation must be provided that proves the death of eligible livestock occurred as a direct result of an eligible adverse weather event in the calendar year for which benefits are being requested. The quantity and kind of livestock that died as a direct result of the eligible adverse weather event during the calendar

year for which benefits are being requested may be documented by, but is not limited to: bank or other loan documents, FEMA records, records assembled for tax purposes, National Guard records, private insurance documents, production records, property tax records, purchase records, rendering truck receipts, veterinarian records, or written contracts.

If adequate verifiable proof of death records documentation is not available, the livestock producer may provide reliable records, along with verifiable beginning and ending inventory, as proof of death. Reliable records of this nature may include, but are not limited to: brand inspection records, contemporaneous producer records existing at the time of the event, dairy herd improvement records, pictures, or vaccination records.

Certifications of livestock deaths by third parties may be accepted only if verifiable proof of death records or reliable proof of death records along with verifiable beginning and ending inventory records are not available and all of the following conditions are met:

a) the livestock owner or livestock contract grower, as applicable, certifies in writing:
- that there is no other verifiable or reliable documentation of death available
- the number of livestock, by category determined by FSA, were in inventory at the time the applicable adverse weather event occurred
- the physical location of livestock, by category, in inventory when the deaths occurred
- other details required for FSA to determine the certification acceptable
b) the third party is an independent source who is not affiliated with the farming operation, such as a hired hand, and is not a "family member"; that is defined as a person whom a member in the farming operation is related as lineal ancestor, lineal descendant, sibling, spouse, or otherwise by marriage, and provides a written certification that provides all of the following:
- name, telephone number, and address
- specific details about their knowledge of the livestock deaths
- their affiliation with the livestock owner or contract grower
- the accuracy of the deaths claimed by the livestock owner or contract grower, such as, but not limited to the number and kind/type of the participant's livestock that died because of the eligible adverse weather event
- other details required by FSA to determine the certification acceptable.

Documents that may provide verifiable evidence of livestock inventory include, but are not limited to, any or a combination of the following: canceled check documentation, balance sheets, inventory records used for tax purposes, loan records, private insurance documents, property tax records, sales and purchase receipts, veterinary records, brand inspection receipts and chattel inspections.

For more information regarding the documentation of death losses or application for LIP, contact your local FSA office.

Weekly Roberts Agricultural Commodity Market Report - Mike Roberts, Commodity Marketing Agent, Virginia Tech

Are we in an economic "Commodity Bubble" that's burst or is about to? According to the latest Brock report we are. Three bubbles are cited: the high-tech bubble of 2000; the housing bubble of '06/07; and now a commodity bubble of 2008. Brock's comments have merit with me. We''ve seen really wild Relative Strength Indices (RSI) and market volatility in these "exuberant" markets. And, we've been reminded that even though the RSI is a significant help to traders that on the other side of the issue if fundamental supply and demand situations change significantly and continue to change, the market will defy the RSI. We now come to fundamental questions for commodities like corn. Are we now in a cyclical pricing era where the new price norm for corn is $4.00/bu or higher because of a new demand fundamental such as ethanol or are we in a "commodity" bubble? I believe the former. One thing I agree with Mr. Brock on is his statement, "Your approach toward investing and price comparisons needs to be adjusted significantly. Producers are holding out for $4+ corn and buyers are anxious to buy, fearful of reliving the stress caused by last year''s bull market." Whatever happens, this uncertainty in our markets has created a fear in the market now more than ever. That's why commodities fell so much today on fears of a "swine flu pandemic!" Let's remember the bird flu scare of 1990's. This did not have a lengthy influence on grain prices. Initial World Health Organization (WHO) projections were that between 2 and 7 million people would die from H5N1 bird flu. To date, there have been 257 deaths. The market is emotional now amid inflated opinion. You won''t get swine flu from eating pork if it is cooked and handled in the recommended ways!

CORN futures on the Chicago Board of Trade (CBOT) closed down on Monday on "swine-flu" jitters. MAY'09 corn futures closed at $3.722/bu; off 4.75/bu but 2.75+/bu higher than last week. The JULY'09 contract closed at $3.806/bu; down 5.0/bu but 2.0/bu higher than last Monday. DEC'09 corn futures finished at $4.014/bu; off 5.25/bu but 2.75+/bu over last report. The market was concerned about a possible decline in meat and feed consumption in light of the recent world outbreak of swine flu. The talk of a global pandemic sent the market south. One floor source told me, "It might be enough to break the back of corn prices." However, I agree with Dr. Darrel Good from the University of Illinois in that the depth of demand concerns will largely be set by the extent of reported swine flu cases. Some good news though; the slow pace of getting the U.S. corn crop planted and a poor South American corn crop are providing mild support to prices. USDA late on Monday placed the U.S. corn crop at 22% planted vs. a five-year average of 28% planted this time of year. Reducing demand for corn are recent actions taken by China and Russia to ban Mexican and U.S. pork imports due to what they are calling "swine fever." As a result, exports were off as USDA placed corn-inspected-for-export at 33.0 mi bu vs. expectations for between 34.0-36.0 mi bu. Funds sold around 7,000 contracts as large non-commercial speculators went "net-short" for the week ending last Tuesday. Cash corn in the U.S. mid-section was mostly steady amid light producer sales. Ethanol futures were lower settling near the $1.55/gal level. Hold off on pricing any more of new crop corn sales. Old crop corn should be gone.

LIVE CATTLE futures on the Chicago Mercantile Exchange (CME) finished off on Monday. The APR'09LC contract, which is set to expire on April 30, closed at $86.150/cwt; off $0.700/cwt and $1.225.cwt lower than a week ago. The AUG'09LC contract was down $0.675/cwt at $82.300/cwt; $0.900/cwt under last Monday's close. DEC'09LC futures closed at $88.375/cwt; off $0.800/cwt and $0.775/cwt lower than last report. Selling was fueled by large non-commercials on swine-flu-fears. Commercial traders were net buyers. Light volume pressured prices. USDA on Monday put the Choice Boxed Beef cutout at $152.18/cwt, up $0.24/cwt. Stumbling hog prices, sell stops, and bear spreading hurt live cattle futures. At one point cattle front months rallied buoyed by thoughts that consumers would stock up on beef and shun pork in the near term. However, the rally could not be sustained because of the flu panic generated in the media. Cash cattle were off $0.96/cwt from last week with USDA reporting the 5-area price at $87.93. According to HedgersEdge.com average packer margins were $5.55/head better than this time last week. The average processor margin was placed at a positive $17.50/head based on the average buy of $88.16/cwt vs. the average breakeven of $89.56/cwt. Feed buyers should consider buying more feed needs again this week.

FEEDER CATTLE at the CME closed down on Monday. The APR'09FC contract closed at $99.450/cwt; off $0.300/cwt but $0.900/cwt over this time last week. The April futures contract will expire on April 30. AUG'09FC futures finished at $99.750/cwt; down $0.600/cwt and $0.950/cwt lower than last report. Lower live cattle and the market scare had traders running for cover out of August into May futures and many sell stops. The CME Feeder Cattle Index was placed at $100.11/cwt; up $0.05/cwt. It should still pay to hold feeders to heavier weights if you have the grass and good growing conditions.

Visit the OSU Beef Team calendar of meetings and upcoming events

BEEF Cattle is a weekly publication of Ohio State University Extension in Fairfield County and the OSU Beef Team. Contributors include members of the Beef Team and other beef cattle specialists and economists from across the U.S.

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