BxD OPPORTUNITES AND CHALLENGES

BEEF x DAIRY: OPPORTUNITIES AND CHALLENGES

Larry Corah, Ph.D., Supply Chain Consultant

Historically, the dairy and beef industries change very slowly. Yes, each year we add a few pounds of milk produced per dairy cow and a few pounds of extra weaning weight per beef cow - but change is slow.

The exception certainly has been the rapid adoption of use of beef semen in dairy cows. In five short years we have moved from marketing Holstein steers to, by the end of 2022, having beef x dairy (BxD) cross calves replacing 70% of the Holstein steers in the fed cattle harvest mix. That is an amazing change.

Why did that occur so quickly?

The main reason given is the dramatic increase in use of sexed semen by dairy producers. Yes, that left a lot of uterine space for beef semen, but another big reason was the fact that three of the four major packers quit harvesting Holstein steers, putting great pressure on the Holstein steer market value.

If you ask dairy producers how that transition is going, most will say “great.” The day-old Holstein steer selling for $40-60 has been replaced by a BxD cross calf selling for $200-250, making it a new profit center for most dairy operations. At a feeder weight of about 500 to 600 lbs., the BxD cross calf is about $12-15/cwt below a beef calf of the same weight, but the Holstein steer is $40/cwt below, according to data from Superior Livestock and Kansas State. Economics drive change and it is easy to see why use of beef genetics has been adopted so widely and rapidly by dairy operations.

Are there challenges?

The quick answer is yes. While most packers have continued their disinterest in the Holstein steer, they are also mostly lukewarm to the BxD cross, often creating marketing problems. This is due to two areas of concern - liver abscesses and reduced red meat yields.

The concerns have reached the point that many packers today discount the BxD fed animal $20-50/head. It is now to the point that some packers will only buy the fed BxD animal if it comes from what is called program cattle, where they know superior genetics were used and can be verified.

Is there something a dairy producer could do on the front end to address these issues?

The liver abscess problem is tough because there is no easy solution, and there is still research underway to pinpoint the mechanisms of infection. What can be offset is the red meat yield issue.

The first way to address red meat yield would be through the breed of beef semen used. Today, because of the impact of Angus branded programs, about 60% of the beef semen used is Angus genetics. Using heavier muscled breeds like Charolais or Limousin or even Simmental could offer some improvement. The drawback is, because BxD fed cattle need to be sold on a grid, these cattle will generally not grade as well, and many will not qualify for the Angus brands.

I would suggest an even better way to address the issue would be to utilize beef semen that will create excellent carcass quality when hung on the rail. Remember there are four key USDA Quality Grade levels - Prime, Premium Choice (CAB), Choice and Select. The higher quality grades are worth considerably more money, and not by a small amount.

For example, today a Prime grading carcass is worth $17/ cwt more than a Choice grading carcass. For a 900 lb. carcass that is $150-160 premium applied to that carcass. With dairy producers selecting their beef genetics for Marbling, which is a highly heritable trait, up to 20-25% of the BxD cross carcasses can achieve Prime. For those that don’t quite grade Prime, qualifying for Premium Choice and Certified Angus Beef® can also bring an extra $15-17/cwt over a Low Choice grading carcass. By selecting for Marbling, 40-50% of the BxD carcasses can qualify for the Certified Angus brand. These premiums will add value to the day-old calf and can be accomplished easily by simply using well marbled beef genetics. My take is that these quality grade premiums can offset any discounts, from a liver abscess or yield grade perspective, that may be applied to the average BxD carcass.

Yet one more opportunity not well utilized today, but likely one that will grow, is putting beef embryos in dairy cows rather than beef semen. For more information about SimVitro® HerdFlex®, visit www.selectsires.com and select HerdFlex from the Genetics drop down menu.

Yes, there are challenges but the added economic value the BxD cross calf has created will make this a management practice that is here to stay. If you’re interested in hearing more about BxD marketing opportunities, listen to episode three of The Select Sires Podcast.