ID

Authors as Published

Dr. Scott P. Greiner Extension Animal Scientist, Beef, VA Tech

Livestock Update, August 2005

The following table presents a summary of the closeout information on Virginia Retained Ownership Program steers shipped in September and December 2004. Four loads of steers from 26 producers, with a total of 266 head were placed on feed at two cooperating feed yards in southwest Iowa. The steers were fed in three pens, and harvested over six dates between March 2 and June 7, 2004. Each pen was sorted prior to harvest to optimize the endpoint of each steer, and the cattle were marketed on a carcass-value grid with IBP-Tyson. For comparison purposes, steers have been assigned to value groups based on their net return to the cow. Net return to the cow through retained ownership was defined for each steer as total carcass value less all feeding costs (feed & yardage, trucking, health, carcass data collection & program fees). In effect, net return to the cow includes the value of the calf at the time of shipment to the feed yard plus (or minus) value added through retained ownership. Accordingly, the net return value for each calf provides a dollar figure on an individual calf basis which is returned to the cow-calf enterprise and available to offset annual cow costs, land payments, labor, etc. The following will characterize steers in the high and low net return categories as compared to average steers in this particular group.

Pronounced differences in growth performance are evident between the return groups. The high return steers gained 0.7 pounds per day faster than the low return steers. This superior ADG resulted in fewer days on feed, and heavier live weights at harvest. A portion of this performance advantage may be attributed to the superior health of the high-return group. Overall, one in twenty steers received one or more health treatments during the feeding period. Only one of the 89 high-return steers were treated, whereas approximately one out of every eight of the low return steers were pulled and treated at least once for health reasons.

The superior ADG of the high-return steers translated to heavier carcass weights at slaughter, which in combination with their advantages in carcass merit resulted in more total value on the rail. Carcass fat thickness and average yield grade was similar across all groups, which was anticipated as the steers were sorted and harvested at a target fat thickness endpoint (0.40-0.45 in.). Although difference existed in ribeye area between groups, these differences were primarily related to carcass weight. The most significant difference between groups for carcass merit was found in quality grade. The high return group graded 98% low Choice and higher, with 47% qualifying for Certified Angus Beef (CAB; average and high Choice quality grades). This is well above the industry average of 18% CAB certification rate. The low-return group attained a very respectable 72% low Choice and higher. Carcass yield grade advantages were noted for the low return group, with 48% YG 1's and 2's, compared to 41% for the high return steers. However, the low-return steers were penalized with a few YG 4's which were absent from the high return steers. Cumulatively, the proportion of "out" cattle on the grid system (Standards, YG 4&5's) was notable between the high and low-return groups. Compared to the often-quoted industry goal of 70-70-0 (70% Choice, 70% YG 1&2, 0% "outs"), the cattle overall attained desirable quality grades (86% low Choice and higher) and conformance (2% "outs"), but fell short for cutability (47% YG 1&2).

The base carcass grid price has been expressed as a low Choice, yield grade 3. Interestingly, the high return steers were sold on a weaker market compared to the steers in the low return group as evidenced by their lower base price. Despite this, premiums attained (and discounts avoided) for both quality and yield grade resulted in a final grid carcass price $2.50/cwt. higher than the low-return group. This higher carcass price coupled with heavier carcass weights resulted in a $205 advantage in net carcass value for the high return steers.

The overall strength of the cattle market since last fall is evident with this set of cattle, as retained ownership returned an additional $108 for the average steer over their assigned value as a feeder calf departing Virginia. Expressed on a net return to the cow basis, the most valuable steers returned $918 to the cow, whereas the low return steers returned $739. This $180 per head difference in return to the cow is greater than the retained ownership profitability difference between the groups of $109 ($163 retained ownership profitability for high group vs. $54 for low group). The additional net return value for the high group is a result of their higher value on a per head basis prior to shipment to the feedyard. The high return steers were valued at $755 per head vs. the low return steers at $685 departing Virginia. Therefore, the high return steers were more valuable as feeders, and added the most value through the feeding phase. A significant factor contributing to the advantage of the high value steers in the feedlot was their cheaper cost of gain, which is a direct result of their superior growth and health.

In summary, it should be recognized that this set of steers performed extremely well. With the lower return steers providing $739 back to the cow-calf enterprise, these cattle can be considered highly profitable. However, tremendous variation existed among the group in terms of value. This summary provides evidence that opportunity exists to add value for cattle with superior performance, carcass merit, and health even with a strong feeder market. Additionally, this summary further emphasizes that total dollars or net return per head are most relevant for the cow-calf producer as they reflect the cumulative affects of superior growth, carcass, and health.

Retained ownership provides an opportunity to reap the financial benefits of superior cattle for producers which have made a strong effort to add value to their cattle through improved genetics and management. The Virginia Retained Ownership Program is designed to provide feedback to progressive cow-calf producers who desire information on the industry suitability and profitability of their cattle post-weaning. Gaining feedback on the feedlot and carcass performance of cattle is the first step for a beef producer in deciding on the future direction for the herd. For more information n on the Virginia Retained Ownership Program, contact Scott Greiner at 540-231-9163 or sgreiner@vt.edu.

VIRGINIA RETAINED OWNERSHIP PROGRAM
Closeout Summary: Fall 2004 Shipments

 

Group Average

High Return 1/3

Low Return 1/3

 

266 head

89 head

89 head

Growth Performance

VA shipment weight, lb.

681

733

634

Slaughter weight, lb.

1241

1333

1152

Days on Feed

158

154

163

ADG, lb./day

3.57

3.90

3.20

Estimated feed:gain

6.48

6.52

6.46

Sick pulls, % treated

5.6%

1.1%

12.3%

Carcass

Carcass weight, lb.

764

829

701

Fat thickness, in.

0.44

0.47

0.41

Ribeye area, sq. in.

12.9

13.5

12.3

Yield Grade

2.9

3.0

2.8

USDA Quality Grade

86% CH-& better

98% CH-& better

72% CH-& better

1% Prime

2% Prime

0% Prime

30% CAB

47% CAB

16% CAB

13% Select

2% Select

26% Select

1% Standard

0% Standard

2% Standard

USDA Yield Grade

9% YG1

11% YG1

8% YG1

38% YG2

30% YG2

40% YG2

52% YG3

58% YG3

49% YG3

1% YG4&5

0% YG4&5

2% YG4&5

Base carcass price (CH, YG3), $/cwt.

$144.19

$143.17

$145.10

YG premium/discount, $/cwt.

$1.45

$1.46

$1.19

QG premium/discount, $/cwt.

$0.00

$1.96

-$2.05

Carcass price, $/cwt.

$145.59

$146.73

$144.23

Total carcass value

$1,112

$1,216

$1,011

Equivalent live price, $/cwt.

$89.54

$91.26

$87.75

Financial

Actual return to cow, $/head

$828

$918

$739

Feeder calf market value at shipment, $/cwt.

$106

$103

$109

Feeder calf market value at shipment, $/head

$720

$755

$685

Cost of gain, $/lb.

$0.428

$0.416

$0.446

Health costs, $/head

$14.55

$13.44

$16.82

Retained ownership profit/loss, $/head

$108

$163

$54

True feeder calf value at shipment, $/cwt.

$120

$124

$117

True feeder calf value at shipment, $/head

$828

$918

$739

Virginia Cooperative Extension materials are available for public use, re-print, or citation without further permission, provided the use includes credit to the author and to Virginia Cooperative Extension, Virginia Tech, and Virginia State University.

Issued in furtherance of Cooperative Extension work, Virginia Polytechnic Institute and State University, Virginia State University, and the U.S. Department of Agriculture cooperating. Rick D. Rudd, Interim Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg; Alma C. Hobbs, Administrator, 1890 Extension Program, Virginia State, Petersburg.

Publication Date

May 8, 2009

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