BEST OF BOTH WORLDS
Opportunity for a bottom line filled with pounds and premiums by Abbie Burnett for Certified Angus Beef Would you rather have AC or heat? Only meat or vegetables for dinner? Do you want the profit from your cattle to come from pounds or quality? These are decisions you don’t have to make. Brian Bertelsen, U.S. Premium Beef (USPB) vice president of field operations, addressed cattle questions with data at the Beef Improvement Federation’s recent online symposium. He began by defining premium as the difference between the amount paid on USPB’s value-based grid and the previous week’s USDA-reported average cash market. “Last year, we had a record-high quality grade premium,” he said, noting some groups earned record high total premiums above cash late in 2019 when the rewards for quality were especially high in the marketplace. “Prior to that, premiums were hanging around $50 per head.” Marbling and dressing percent were the two key profitability traits, the latter of importance because the grid pays on hot carcass weight (HCW) rather than live weight. Bertelsen showed the 22-year span of company grade and premium data, commenting on the mostly steady increase in HCW and average premiums paid. Drought caused zigzags in 2006 and again six years later. The introduction of such technology as ultrasound and genomic testing stimulated quality grade improvement early in this century and 10 years later, respectively. More pounds have been a familiar feature. “We’ve been increasing carcass weight and live weight ever since we learned how to build fence and selectively breed cattle,” Bertelsen said. “That’s obviously one of the first things we’re focused on because that’s our pay weight.” Increasing HCW is nothing to be ashamed of. “This is our competitive advantage,” he said. “We’re really not increasing cow numbers. We’re allowing our
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industry to feed more people with a lot of pounds of total product from less animals.” Adding weight can be a key to profit. “My job is to coach our producers and give them some suggestions, things to do and try,” Bertelsen said. “One of the things I’m talking to them about lately is, ‘Hey, the better your cattle are for genetics, for carcass traits, and let’s say for specifically marbling, really the longer you ought to feed those cattle… if I don’t feed him very long, I don’t allow him or her to maximize their genetic potential.’” Studying data and trends over the years, Bertelsen watched dynamic shifts develop. “Remember the drought year in 2006 led to lower grades and there was a high Choice-Select spread. That’s logical, right? But also remember how high the grades have been the last couple of years and the Choice-Select spread has also been pretty high. Well, that doesn’t make a whole lot of sense,” he said. Until you look at the steeply declining share of fed cattle grading Select across those 22 years. “The whole industry went from 37 percent down to 14 percent Select. Such a huge decrease in availability pushed some large meat customers out of Select and into Choice ...CONTINUED ON PAGE 34
