The Value of Carcass Traits
What is the value of carcass traits when purchasing a bull? The answer is difficult to quantify because of all the factors involved, and it is different for every producer. An exact value might be impossible to calculate, but I can provide some questions that you need to ask yourself and think about before making a decision.
Perhaps one of the most important factors is how long the genetics of the bull being purchased will influence the genetics in the herd. For example, if an operation is keeping replacement heifers, the genetics purchased now will influence the herd for many years.
Another very important question is whether the calves are being marketed to capture the value of their carcass genetics. If you plan to sell calves at weaning, the financial value of improved carcass performance is much less than if they will be sold on the rail. The value may not be zero, but it is difficult to get a significant share of the improved carcass value unless the calves are owned through the feedlot phase and marketed on a quality grid. If your plan is to sell them prior to the finishing phase and you are not keeping back females, purchasing a bull that will increase the pounds of calf sold should be your first priority.
Do you know if and what changes are needed? This can only be answered if you already know how your calves perform on the rail. If this information is unknown for your cattle, it is difficult to purchase the traits that will best complement your herd. Take advantage of programs that allow producers to feed a small number of calves to establish a baseline before investing in new genetics that may not be needed.
What is improved carcass performance worth if calves are retained through the finishing phase? More specifically, what will they be worth for the next five to seven years, the time you will be marketing calves from your current bull purchase?
To help answer this question, we can look to the most recent National Beef Quality Audit and some trends in recent carcass data. The 2005 audit reported that inadequate marbling was responsible for a lost value of $26.81 per animal. This was calculated from the difference of what quality grades were actually produced versus what respondents thought they could market. The ideal distribution across quality grades was reported as: 7 percent Prime, 62 percent Choice and 31 percent Select. The value lost was due to not meeting the ideal quality grade distribution. If we assume the 2005 ideal distribution is the same today, we are making great progress. The trend since 2005 shows that the percentage of beef grading Choice has been increasing while that grading Select is on the decline (Graph 1). The numbers over the past two years, on average, have been close to the ideal distribution that was reported in 2005 for Choice and Select beef. The Choice/Select spread was fairly narrow in years just prior to 2010 (Graph 2).
Does this mean that we are producing the right amount of Choice beef for the current market? How will the end of the Great Recession affect demand going forward? How will a shrinking cow herd affect the market? What will U.S. export markets look like? There are a myriad of influences on the value of carcass attributes, but each producer will have to decide how to move forward with their operation. I encourage you to think about your marketing plan, make some reasonable assumptions and put a pencil to how much more your operation can pay for carcass traits when making your next bull purchase.