J. Anim. Sci. 2005. 83:2918-2925
© 2005 American Society of Animal Science
Factors affecting carcass value and profitability in early-weaned Simmental steers: I. Five-year average pricing
N. A. Pyatt*,
L. L. Berger*,1,
D. B. Faulkner*,
P. M. Walker
and
S. L. Rodriguez-Zas*
* Department of Animal Sciences, University of Illinois, Urbana 61801; and
and
Department of Agriculture, Illinois State University, Normal 61790
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Abstract
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In a 4-yr study, early-weaned Simmental steers (n = 192) of known genetics were individually fed to determine genetic, performance, and carcass factors explaining variation in carcass value and profitability. Steers were weaned at 88.0 ± 1.1 d of age and pen-fed a high-concentrate diet ($108.99/t) for 84.5 ± 0.4 d before allotment. Calves were implanted with Synovex C at weaning and successively with Synovex S (Fort Dodge Animal Health, Fort Dodge, IA) and Revalor S (Intervet, Inc., Millsboro, DE). Steers consumed a 90% concentrate diet ($98.93/t), consisting primarily of coarse cracked corn and corn silage, for 249.7 ± 0.7 d and slaughtered at 423.3 ± 1.4 d of age. Five-year price data were collected for feedstuffs, dressed beef, and grid premiums, and discounts. Average dressed beef price was $110.67/45.4 kg. Premiums ($/45.4 kg) were given for Prime ($5.62), Average Choice ($1.50), and yield grades (YG) 1 ($2.46), 2A ($1.31), and 2B ($1.11). Discounts ($/45.4 kg) were given for Standard (–$16.85), Select (–$8.90), and YG 3A (–$0.12), 3B (–$0.19), 4 (–$14.16), and 5 (–$19.56). Discounts were given for HCW extremes as well (409 to 431 kg, –$0.64; 432 to 454 kg –$11.39; > 454 kg, –$19.71). Input costs included annual cow costs ($327.77), veterinary/medical and labor ($35 per animal), feed markup ($22/t), yardage ($0.25/d per animal), and interest (10%). Dependent variables were carcass value and profit per steer. Independent variables were year, weaning weight EPD, yearling weight EPD, marbling EPD, DMI, ADG, G:F, HCW, calculated YG, and marbling score (MS). Carcass value was correlated (P < 0.05) with yearling weight and marbling EPD, DMI, ADG, feed efficiency, HCW, and MS. Carcass weight, MS, and YG accounted for nearly 80% of the variation in carcass value among steers, explaining 51, 10, and 8%, respectively. Profit was correlated (P < 0.05) with DMI, ADG, feed efficiency, HCW, and MS. Carcass weight, MS, YG, and DMI accounted for nearly 78% of the variation in profit among steers, explaining 21, 18, 12, and 3%, respectively. Carcass weight was the most critical factor contributing to carcass value, whereas BW and carcass quality were the primary factors affecting steer profitability. These models represent the relative importance of factors contributing to value and profitability in early-weaned Simmental steers based on historical pricing scenarios.
Key Words: Carcass Value • Feedlot Cattle • Market Factor • Profitability
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Introduction
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Nutrition and management have a dramatic influence on cattle performance and carcass merit. Optimum composition, BW, and economic endpoints for cattle are influenced by sex, genetics, implants, health, initial BW, diet, days on feed, performance, feedstuff and grid prices, end point criteria, pen conditions, weather, and seasonality (Pritchard, 1999
; Mark et al., 2000). The positive and negative correlations between performance and carcass traits result in economic trade-offs that change across input costs, grid premiums, and discounts. Understanding relative risk factors contributing to profit differences provides cattle producers with important information to help make more cost-effective decisions regarding management and marketing (Schroeder et al., 1993). Bishop et al. (2002) reported that a model including HCW, LM area (LMA), 12th rib fat thickness (BF), and marbling score (MS) accounted for 76% of the variation in carcass value differences. Previous research indicated that pricing values significantly outweigh production and management variables in explaining profit differences among pens of cattle (Schroeder et al., 1993; Lawrence et al., 1999; Pritchard, 1999). Mintert et al. (1993) and Mark et al. (2000) reported a model including feeder-calf price, fed-cattle price, and feed cost accounted for > 90% of the variation in pen profit differences. The current study was conducted to evaluate the interrelationships among genetic, performance, carcass, input, and market variables on beef carcass value and profit variability. Our experimental objectives were 1) to evaluate individual animal variation in performance, and carcass merit, value, and profitability under similar management conditions and 2) to determine the relative importance of EPD, performance, and carcass measurements in explaining variation in carcass value and profitability using 5-yr average pricing.
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Materials and Methods
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Experimental Animals
A 4-yr study was conducted utilizing 192 early-weaned steers of known genetics (0.75 Simmental or greater breeding) to determine EPD, performance, and carcass factors explaining variation in carcass value and profitability. Animals used in this trial were managed according to the guidelines recommended in Guide for the Care and Use of Agricultural Animals in Agricultural Research and Teaching(1988). Experimental protocols were submitted and approved by the Institutional Animal Care and Use Committee. Calves were a result of AI matings between registered Simmental sires (n = 20) and dams. Cows were managed at the Orr Beef Research Center (Baylis, IL). The American Simmental Association (ASA; Bozeman, MT) provided sire and dam EPD for weaning weight, (WW), yearling weight (YW), carcass weight (CW), percent retail cuts, and marbling (MARB). Individual steer EPD were calculated for each of these variables via Herd Handler (American Simmental Association, Bozeman, MT; updated January 9, 2004; Table 1). Average EPD for our data set were representative of breed average. Current breed averages are 25.7 kg for YW, –0.4 kg for CW, –0.01% for percent retail cut, and 0.05 units for MARB (ASA, 2004).
Management and Diets
Calves were weaned at 88.0 ± 1.1 d of age and vaccinated for infectious bovine rhinotracheitis, bovine viral diarrhea, parainfluenza-3, bovine syncytial respiratory virus, leptospirosis, vibriosis (Cattlemaster 4 + VL5; Pfizer, Exton, PA), Pasteurella multocida (One Shot; Pfizer), and 7-way Clostridium and Haemophilus somnus (Vision 7/Somnus; Bayer, Kansas City, MO). After weaning, steers were immediately adapted to a 90% concentrate diet (Table 2) and pen fed for 84.5 ± 0.4 d (85, 77, 86, and 76 d, in yr 1, 2, 3, and 4, respectively). Within each year, pen-fed intakes were converted to individual intakes based on growing-period gain and energy density of the diet (NRC, 1996). Maintenance intake was determined based on the average BW and NEm requirement of calves during the growing period. Maintenance intake was subtracted from total feed intake of the group; the remaining feed was assumed to be NEg intake. Group feed efficiency (total NEg intake/total gain) was multiplied by individual animal gain to determine individual NEg intake. Individual intakes (summation of NEm and NEg intakes) were used for economic calculations of steer profitability. Calves were transported to Illinois State University Research Farm in Normal for allotment on a feedlot-finishing trial. Steers were allotted randomly to one of 12 pens (four steers per pen) such that pen weights were similar. Animals were individually fed using a Calan (American Calan, Northwood, NH) electronic gate system. Steers were fed a common finishing diet (Table 3) balanced to provide 15.5% CP, 0.57% Ca, and 0.38% P (DM basis). Steers were implanted with Synovex C (100 mg of progesterone and 10 mg of estradiol benzoate; Fort Dodge Animal Health, Fort Dodge, IA) at weaning and successively with Synovex S (200 mg of progesterone and 20 mg of estradiol benzoate; Fort Dodge Animal Health) and Revalor S (120 mg of trenbolone acetate and 24 mg of estradiol; Intervet, Inc., Millsboro, DE; approximately 120 d before slaughter). Cattle were fed for 249.7 ± 0.7 d and slaughtered at 423.3 ± 1.4 d of age.
Performance Data Collection
Steer BW was taken every 28 d throughout the finishing period to evaluate feedlot performance. Dry matter intake and orts were recorded daily. Individual animal ADG and G:F were calculated based on carcass-adjusted final BW. Adjusted final BW was calculated by dividing HCW by the average (annual) dressing percentage. In yr 3, one steer was removed from trial as a result of illness. In yr 4, two steers died during the feeding period, and one steer was slaughtered early because of injury.
Carcass Data Collection
Steers were slaughtered at a commercial processing facility. Animals were stunned via captive bolt and exsanguinated. Individual carcass measurements were taken for HCW on the day of slaughter, whereas BF, LMA, KPH, and MS were collected by trained university personnel after a 24-h chill at –4° C. An image of the LM was made using chromatography paper, and grid measurements of the image were used to measure LMA. University of Illinois measurements were used to determine quality grade (QG) and calculate yield grade (YG). Because all steers were slaughtered at a comparable age (12 to 15 mo), QG was established based on subjective MS. Yield grade was calculated using the equation reported by Taylor (1994). Quality grade and YG as determined by USDA were compared with university observations.
Economic Analysis
Five-year price data were collected for feedstuffs, dressed beef, and grid premiums and discounts to standardize conditions across years. Ingredient prices for corn, soybean meal, alfalfa hay, molasses, and trace mineral salt were collected from annual commodity reports (1998 to 2002; NASS, 2003). Price for corn silage was calculated based on corn price using the following equation: ([{$/25.5 kg x 6.25} + $5.50/t of harvest and storage cost]/35% DM). Feed costs derived for diets fed during the growing and finishing periods were $108.99 and $98.93/t, respectively. Average dressed beef price was $110.67/45.4 kg (1998 to 2002; Cattle Fax, 2003). Average premiums and discounts (1999 to 2003; Table 4) provided by USDA (2003) were assessed to base price. Input costs included feed cost, annual cow costs ($327.77 per cow; Miller et al., 2001), veterinary/medical and labor ($35 per steer), feed markup ($22/t), yardage ($0.25/d per steer; Pastoor, 2003), and interest (10%). Annual cow costs were used to simulate a retained ownership scenario. Cows were uniform in size and condition. Year-to-year variation in cow costs would be expected, but conditions were standardized to the designated 5-yr time frame. Future studies will investigate the effect of variable feeder calf price on carcass value and profitability determinants. Carcass value was calculated for each animal using actual HCW and associated premiums and discounts for carcass merit. Profit per steer was defined as the difference between carcass value and total input costs.
Statistical Analyses
Data were analyzed using the stepwise option of REG in SAS (SAS Inst., Inc., Cary, NC) to determine regression intercept, slope, and model fit (R2) to explain variation within each pricing scenario. Individual steers were used as the experimental units for performance, carcass, and economic measurements. Independent variables used in the model included year, WW, YW, MARB, DMI, ADG, G:F, HCW, YG, and MS. Year accounted for year-to-year variation in animal measurements such as performance, days on feed, and carcass merit in response to slight differences in environmental and management factors. Linear and quadratic terms were evaluated for performance and carcass measurements. Dependent variables used in the model included carcass value and profit per steer. Simple correlations were calculated among genetic, performance, carcass, and laboratory measurements using the CORR procedure of SAS.
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Results and Discussion
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Performance and Carcass Characteristics
Mean, SD, minimum, and maximum values for steer performance and carcass measurements are summarized in Table 5. Cumulative DMI was low, approximately 2.0% of BW, relative to traditionally managed calves and yearlings, whereas efficiency was good with a G:F of 188.7 g of gain/kg of intake. Previous research reported similar cumulative DMI (6.90 kg/d) and superior feed conversion (212.8 g of gain/kg of intake) for early-weaned steers (Arseneau et al., 2001). At slaughter, 85.6% steers graded Low Choice or better, and 39.6% were Average Choice or better. Increased MS may be a result of early-weaning management, as traditionally managed steers and heifers of comparable breed-type and sires graded only 56% Low Choice or better (ASA Carcass Merit Program; M. Ropp, 2004, ASA, Bozeman, MT, personal communication). Previous literature has indicated an increased rate of marbling deposition in early-weaned cattle (Myers et al., 1999; Wertz et al., 2001). Carcass YG provided by USDA were as follows: YG 1 = 17.7%; YG 2 = 59.2%; YG 3 = 22.0%; and YG 4 = 1.1%. Steers were finished at heavy final BW, resulting in 26.5% heavyweight carcass discounts (> 432 kg). As a result, separate regression analyses were conducted on observations <7 432 kg (n = 139) to simulate marketing cattle to avoid weight discounts. Correlation coefficients among independent and dependent variables are shown in Table 6.
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Table 5. Mean, SD, minimum, and maximum values of finishing performance, carcass, and economic measurements of early-weaned Simmental steers
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Prediction of Carcass Value and Profitability using Five-Year Average Pricing
Carcass value was correlated (P < 0.01) with WW, YW, CW, MARB, ADG, HCW, and MS. Single-variable regression of EPD, performance, and carcass measurements on carcass value is shown in Table 7. Independently, HCW, MS, and QG accounted for a moderate (r2 
0.49) amount of variation in carcass value, whereas ADG explained a low amount (r2 = 0.30); all other variables were minor (r2 
0.13) contributors to differences in value. Results of multiple-variable stepwise regression analysis of EPD, performance, and carcass measurements on carcass value are shown in Table 8. Our model estimating value accounted (P < 0.001) for nearly 80% of the variation among carcasses; HCW, MS, and YG explained 51, 10, and 8%, respectively. Previous research reported that a model including HCW, LMA, BF, and MS accounted for 76% of the variation in carcass value differences (Bishop et al., 2002). In the current experiment, carcass value responded quadratically (P < 0.01) with increasing HCW (Figure 1) when cattle were observed as a group; however, individually, carcass value increased linearly until a substantial HCW discount was sustained (with a sharp drop at 432 kg) and continued to increase in value until a second substantial discount occurred (at 454 kg). Regression of EPD, performance, and carcass measurements on carcass value for observations (n = 139) with HCW < 432 kg is shown in Table 9. Carcass weight, year, MS, and YG accounted (P < 0.001) for nearly 95% of the variation in value among carcasses < 432 kg (representative of marketing to avoid a heavyweight discount), explaining 78, 12, 5, and 3%, respectively. Among these observations, increased BW leads to increased value without a risk of heavyweight discounts. Models using 5-yr average pricing to estimate carcass value may be used as a benchmark for comparing how factors change with shifting input costs and marketing factors for cattle within this genotype and management strategy.
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Table 7. Regression of carcass value with EPD, finishing performance, and carcass measurements of early-weaned Simmental steers
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Table 8. Regression of EPD, finishing performance, and carcass measurements on carcass value using 5-yr average pricing
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Table 9. Regression of EPD, finishing performance, and carcass measurements on value of carcasses <432 kg using 5-yr average pricing
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Profit was correlated (P < 0.01) with MARB, ADG, DMI, HCW, and MS. Single-variable regression of EPD, performance, and carcass measurements on profitability is shown in Table 10. Independently, MS, QG, and G:F accounted for a moderate (r2 0.40) amount of variation in profit, whereas DMI and HCW explained a low amount (r2 = 0.22 and 0.16, respectively); all other variables were minor (r2 0.09) contributors to differences in profitability.
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Table 10. Regression of profit with EPD, finishing performance, and carcass measurements of early-weaned Simmental steers
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Results of multiple-variable stepwise regression analysis of EPD, performance, and carcass measurements on profit are shown in Table 11. Our model estimating profitability accounted (P < 0.001) for nearly 78% of the variation among animals; HCW, MS, YG, and DMI explained 21, 18, 12, and 3%, respectively. Previous research indicated that pricing variables appreciably outweigh production and management variables in explaining profit differences among pens of cattle (Schroeder et al., 1993; Lawrence et al., 1999; Pritchard, 1999). Mintert et al. (1993) and Mark et al. (2000) reported that a model including feeder-calf price, fed-cattle price, and feed cost accounted for > 90% of the variation in pen profit differences. In the current experiment, pricing variables were held constant, and individual animal data were used to simulate marketing in a grid-pricing system. Although carcass measurements were not evaluated, Mintert et al. (1993) noted that performance factors accounted for only 5 to 10% of the variation among pens for profit. Albright et al. (1993) found that feed conversion accounted for only 3 to 5% of net return risk, whereas ADG and interest rate explained 2 to 4 % of profit variability when input and output prices were included in the model. Langemeier et al. (1992) and Albright et al. (1993) found that ADG had a greater effect on profitability for steers placed at heavier BW relative to lighter BW placements and asserted that an improvement in ADG decreased cost of gain and, therefore, increased profits. Mark et al. (2000) reported contradictory results, however, suggesting coefficients for ADG decreased slightly as placement BW increased because calf-feds are on feed for longer periods of time. Regardless, present models did not indicate that ADG significantly influenced profitability; however, the effect of ADG may be masked because of its high correlation with HCW, the primary factor affecting economic outcome. Further, Mark et al. (2000) noted the influence of ADG on profit was greater during summer months when gain is greatest. Cattle in our experiment were fed during the fall, winter, and spring months each year of the study. Pritchard (1999) reported that 10% changes in veterinary costs or death loss, even when added together, resulted in the least important profit determinant. He warned that health costs vary among cattle groups, and to improve health care by 10% above the average may cost more than it is worth. Within breed type, Gardner et al. (1996) found medical cost, dressing percentage, MS, DMI, ADG, days on feed, BF, and initial BW explained 82% of the variation in net returns among Continental-sired steers. Forristall et al. (2002) reported that MS, HCW, feed conversion, and LMA greatly affected net returns per animal, whereas BF and KPH had a smaller effect. In the current study, health and medical cost were minimal, and profit variation was primarily accounted for by carcass measurements when steers were marketed in a grid-pricing system. Regardless of marketing strategy, performance measurements were minor contributors to variation in profitability.
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Table 11. Regression of EPD, finishing performance, and carcass measurements on profitability using 5-yr average pricing
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Results of regression of EPD, performance, and carcass measurements on profit for observations (n = 139) with HCW <432 kg are shown in Table 12. Carcass weight, year, MS, YG, and DMI accounted for nearly 94% of the variation in profit among carcasses weighing <432 kg, explaining 51, 28, 8, 4, and 3%, respectively. Models using 5-yr average pricing to estimate profitability may be used as a benchmark for comparing how factors change with shifting input costs and marketing factors for cattle within this genotype and management strategy.
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Table 12. Regression of EPD, finishing performance, and carcass measurements on profitability of carcasses <432 kg using 5-yr average pricing
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Implications
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Models with non-price factors accounted for a majority of the variation among early-weaned Simmental steers; however, expected progeny differences were inconsequential in estimating carcass value and profitability. Year-to-year variation was significant in all models; multiple-year data are necessary for carcass value and profitability analyses. Carcass weight, marbling score, and yield grade were the most critical factors contributing to carcass value differences, accounting for nearly 80% of the variation. Carcass weight, marbling score, yield grade, and DMI were critical determinants of profitability, accounting for nearly 78% of the variation among steers. These models represent the relative importance of factors contributing to value and profitability in early-weaned Simmental steers based on historical pricing scenarios. Factors would be expected to change with different biological cattle types, management strategies, and future marketing conditions.
1 Correspondence: 164 Animal Sciences Laboratory, 1207 W. Gregory Dr. (phone: 217-333-2006; fax: 217-333-7861; e-mail: llberger{at}uiuc.edu).
Received for publication December 10, 2004.
Accepted for publication August 15, 2005.
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N. A. Pyatt, L. L. Berger, D. B. Faulkner, P. M. Walker, and S. L. Rodriguez-Zas
Factors affecting carcass value and profitability in early-weaned Simmental steers: II. Days on feed endpoints and sorting strategies
J Anim Sci,
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Abstract
Introduction
