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An identity to your cattle profit

Clifford Mitchell Published on 17 August 2010
Cow and calf

Technology has definitely changed over the years, almost to the point where some wonder who’s watching who. Look on many prominent Internet websites and you can find a satellite picture of the home place. Cell phones now come equipped with locators to help parents know if children are where they’re supposed to be. Military personnel are given serial numbers to track movements or identify deceased.

All the technological improvements just shed light to how far the beef industry is behind. Most calves leave the ranch without knowing name and address. There’s no serial number or unique identification, unless commercial operators choose to follow the growing trend of age and source verification. These same commercial cow-calf men have adapted to different programs concerning health and genetics, but have failed to identify the potential of this concept.

“I think age and source verification is part of the evolution of where we’re headed in the beef industry. Several producers are missing the boat because they already do everything right, but for some reason won’t finish the job,” said Dan Dorn of Decatur County Feed Yard in Oberlin, Kansas.

Producers know the value of good genetics and a solid health program; however, an exact dollar figure for age and source verification is a little harder to pinpoint. Adding marketability and credibility to a calf crop may be the chief indicator of future worth.

“There is extra value in age- and source-verified cattle. Even for a producer who is selling smaller groups. Commercial operators have to identify value and know their costs. Age and source-verified gives instant credibility in the marketplace,” said Mark Harmon of Joplin Regional Stockyards in Carthage, Missouri.

The marketing system is cluttered with programs that promise producers certain levels of value if the proper management protocol is followed. The population of age- and source-verified cattle is rising because harvest premiums demand this animal.

“We handle seven or eight different programs when we market cattle through the value-added sales,” Harmon said. “We know producers are following the guidelines of the different programs because they have been issued program-compliant tags for their calf crop. Age and source verification gives us five or six more avenues to market cattle. Potential buyers are thinking about the premiums they’ll receive at harvest for those cattle. When producers can incorporate historical carcass data with this, it’s a lot easier to sell these calves.”

“Age and source is market-driven. Exports, to primarily Japan and Korea, have been driving the demand for this product,” Dorn said. “I think premiums for age- and source-verified cattle will be here for years to come. Hopefully, as more people identify this potential premium and we grow the supply of age- and source-verified cattle, demand will also increase.”

The information trail associated with age- and source-verified calves throws up a red flag and causes apprehension for some producers. Most cow-calf operators are good managers and do things right; however, the failure to pay attention to detail often leaves unclaimed profit for these highly skilled specialists.

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“Cattlemen who are intimidated by the process may never try to take advantage of age- and source-verified. Most people are doing it anyway and the costs are minimal compared to some management tools used to add value,” Dorn said. “All producers have to do to establish age and source verification is to give each calf a unique ID; it can be a brand, electronic identification or a simple dangle tag, and record the birth date of the first and last calf born on the place. Without unique ID, how can we follow genetics all the way through harvest? In our system, the only people who see this data are myself, the office manager and the USDA auditor who verifies the data.”

“More cattlemen are adding age and source to the calf crop as another management tool to avoid discounts at the marketplace. Whether you have a large or a small group, bring the best product to town that you possibly can,” Harmon said. “Good producers are going to do whatever possible to make their calves worth more. They have a lot of time and money invested in genetics and good management.”

Today, production costs have producers double-checking the books to make sure every effort has been made to return as many dollars per cow to the ranch as possible. Some producers still avoid the task of record keeping or giving calves a unique ID. Others feel the opportunity costs are too great not to take advantage of age and source verification.

“If you do all the work to wean them and give them two rounds of shots, take advantage of the premium opportunity age- and source-verified brings. Today, if I am selling calves, they’re going to have all the bells and whistles,” Harmon said. “If you are already doing everything else, what’s the real cost of a $3.50 tag? If you get two cents a pound more for your 700-pound steer, that’s $14 – with margins as tight as they are today, that’s a pretty good profit.”

“Most producers always say we’re not getting paid for our work. In our system, the best way to capture the age and source premium is to retain ownership,” Dorn said. “The system is not a total trickle-down effort at this time. To capture age and source premiums, through retained ownership, producers have to be willing to assume some, if not all, of the risk. Producers who do everything right can see the harvest premium for age- and source-verified cattle. Sometimes this premium is as high as $50 per head and lately, that premium could be the difference between profit and loss.”

Producers have many options to get involved with age- and source-verified programs. According to Dorn, these options can provide stability and market flexibility.

“Our program is where we deal direct with our customers to audit their age- and source-verified cattle. Those cattle are retained through the feeding process at Decatur County,” Dorn said. “You can get involved with many different programs and a lot of breed associations will sell commercial bull customers a tag identifying those calves with a known genetic background. These programs offer a lot of flexibility and can be marketed through the system or retained through harvest.”

“Through our PVP, once producers get verified through our process and apply the tags, that tag proves those calves are age- and source-verified,” Harmon says. “We keep the records and when we sell a large or a small group to a buyer, before I transfer any data, I make them read the tag numbers and send a spreadsheet from the feedyard, backgrounder or next owner. Transferring the information is a relatively easy process, once I know that calf is in their possession.”

Society is changing, putting more pressure on America’s farmers and ranchers to produce a specific type of product. Knowing where products come from is a big part of the buying philosophy.

“Most of us on the ranch or who own cattle, eat beef out of our deep freezer. Get away from the ranch and the ‘green machine’ is running,” Harmon said. “Weekly grocery shopping trips with my wife are very educational. Ranchers are going to have to start telling their story. Age and source verification could be a good start.”

“Export markets are the only ones taking advantage of this product right now. They want a safe, wholesome product that is under 21 months of age,” Dorn said. “As consumer demands for locally grown and raised products continue to increase, hopefully they will be willing to pay us to raise these products. As producers, we still have a problem telling consumers what product they are going to eat. The market will tell us what kind of products consumers want and we’ll have to produce it.”

Has the time come where the beef industry is at a crossroads? According to most, those words may be a little drastic for the current situation. The marketplace is changing; hopefully, one day a true pull-through economic process that pays for value up and down the chain will exist.

Today, producers must look at the challenges they face. See what advancement in technology is bringing to the world. The old-fashioned piece of paper that used to be in backpacks, pencil boxes and sometimes even sewn on the insides of clothes identifying name, address and phone number for school children may seem out of date, but it’s still relevant. Age and source verification may not promise “criminal” dividends, but just like that old standby, it could help bring your profit home safely.

“Most people are good managers and could easily age- and source-verify calves. Some may already be doing it, but don’t follow up with a unique ID or keep accurate records,” Dorn said. “Ninety-five percent of the cattle we feed are retained ownership or partnership cattle. These cattle are all age- and source-verified because it pays. Age and source verification is rapidly becoming just as important as health and genetics from a value standpoint.”

“No question, age and source verification helps our marketing efforts. Those harvest premiums, received by our buyers, are trickling down a little, although the system is not perfect. The market has to step out and establish what these calves are worth,” Harmon said. “Health, genetics and the time that you sell them has a lot to do with value. In the future, all the ‘bells and whistles’ along with the ability to validate management practices, will make a difference at the marketplace. Most importantly, commercial operators have to understand the value of a good product and what it’s worth.”  end_mark

Clifford Mitchell, Progressive Cattleman contributor

ABOVE TOP: Even before a calf is born, good genetics and a solid health program are key to adding value to the animal, but industry experts also say age and source verification gives cattlemen instant credibility. Photo by Joann Pipkin.

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