EXECUTIVE CORNER

Genetics Hide Color VS

by Darrell Wilkes, Ph.D., International Brangus Breeders Association (IBBA) executive vice president

It’s Been a Long Time in Coming . . . . My favorite speech 20 years ago centered on a prediction that the beef industry would stop valuing cattle based on “looks” alone and would move quickly to an objective scorecard that would include a score for genetic merit – not a guess, but a score based on data. In other words, buyers would start paying for what’s under the hide rather than appearance. I gave that speech at least 100 times and, if I didn’t convince anyone else, I darn sure convinced myself. At the time, I was consulting with feedlots that were feeding a lot of retained ownership cattle from ranchers. Packing plants were becoming more willing and more capable of returning carcass data back to cow-calf producers. We were at the early stages of selling cattle on a carcass grid basis rather than an average live price. We also started using EID tags and were able to efficiently gather individual weights on cattle as they entered the feedlot and when they were hanging in the packing plant. We suddenly had reams of individual animal performance data and carcass data. In short, we were overwhelmed with data that most of us had not seen before. The ranchers who were feeding their own cattle had a thousand questions about how to respond to their carcass and feeding results. My role as a consultant to the feedlots was to help their cow-calf customers understand and respond to the data. Honestly, it was a lot of fun. My own learning curve was vertical. The data were overwhelming me too. I was seeing differences in post-weaning net profit from one herd to the next of over $200/hd – among cattle that looked very similar when they arrived at the feedlot. You have to put that $200 figure in perspective. This was when fed cattle were selling for 80-90 cents. So, an average 1200-lb steer was worth around $1,000. Even then, the profit difference from one herd to another was $200/hd. Some of it was health-related, but a huge chunk of it was due to -- you guessed it – GENETICS. Today, a 1350-lb steer is worth about $2,000. I’d bet a steak dinner than the post-weaning profit spread on cattle that enter the feedlot at the same weight and generally “look” similar is at least $400/hd. And, the major driver of the profit spread is the same as it was 20 years ago – it’s still GENETICS. When I witnessed those HUGE differences in actual value of cattle, I was sure that it would trigger a revolution and that the industry would move quickly to an objective way of valuing feeder cattle. After all, there are billions of dollars trading hands in the feeder cattle trade and one cannot just keep doing what you’ve always done in the face of this compelling data. Man was I wrong!

So here we are, 20 years later, and what seemed so obvious back then is now becoming apparent to virtually everybody. We are on the cusp of transitioning to a true value-based feeder cattle market based on genetic scoring. So, it’s not so much that I was wrong about what would happen, I was just off by 20 years. The Red Angus Association of America (RAAA), in cooperation with three highly respected university economists, recently completed a study in which they surveyed some major players in the feeding and cattle marketing business. The results are compelling. For obvious reasons, RAAA is frustrated that hide color is a major value driver in the feeder cattle market and the favored color is not red. So, rather than complain about it, they did a survey. What did they discover? • 94-95% of respondents agreed that hide color plays a significant role in feeder cattle pricing and that black hide color generates a premium over non-black cattle of equal weight, quality, sex and health history. • Only 13% of respondents agreed that black-hided cattle are superior to non-black cattle of equal weight, sex and health history. Seventy-five percent disagreed that black hide automatically equated to superiority. • Almost three-quarters of respondents agreed that the emphasis on black hide has helped the industry advance in a positive direction over the past 25 years with reference to overall feeder cattle quality. • Only 11% of respondents believe that hide color must remain an important price-determining factor in the feeder cattle market moving forward. In contrast, 92% believe that in order to continue making progress in cattle quality, hide color needs to be replaced with more objective genetic criteria. • Ninety-three percent of respondents agree that specific genetic or genomic information on groups of feeder cattle more strongly correlates to actual feeding and carcass results than does hide color. At the risk of upsetting some people, I will paraphrase what I believe the survey showed. The “black revolution” has had a very positive effect on the quality of feeder cattle the past 25 years. It was a very practical first step in moving the ball down the field and improving a lot of very mediocre and mongrelized herds. Now, it’s time to move to the next level and leverage the science of genetics that has advanced dramatically over the past 25 years. It helps to digest this if one dismisses the idea that this is a fight between black and red. It isn’t. It goes way beyond that. It is a question of whether the beef industry will continue to wager billions of dollars based on outward appearances of feeder cattle versus a system that quantifies GENETICS, puts a score on the genetics, and pays accordingly. Since most Brangus are black, and therefore most Brangussired feeder cattle are black, why is the guy at the Brangus association even bringing this up? Because the same bias that exists against non-black cattle also exists against cattle with a touch of ear. And the pathway to eliminating the bias is the same in both cases – replace outward appearance and the bias that comes with it with an objective, genetics-based method of valuing feeder cattle. There is an effort underway to establish an industry-wide task force to address this issue. An industry task force is not like a legislature. They cannot pass a bill and make it happen. What it can and will do is raise the awareness and it will recommend some steps forward. I believe this will be frontpage news in the trade media for months if not years to come. Every beef cattle extension agent will give speeches about it. People will begin to see a clearer picture of how to add real value to their feeder cattle – which means buying good bulls with good numbers regardless of breed. This is part of the journey to eliminate the eared discount for Brangus feeder cattle. GO BRANGUS.