Are You Capturing the Most Value?
Producers have many opportunities to participate in programs that add value to their cattle. What keeps many of them from participating is what it costs to add that value.
“Whenever it becomes time to sell those calves, you need to look at what facilities you have, what inputs it’s going to take to be able to capture those dollars, and then make that decision,” Gant Mourer, beef value enhancement specialist at Oklahoma State University, told Ozarks Farm & Neighbor. But even at the recent record high prices, Mourer said the programs pay off. “If you have a big insurance policy, you have a higher premium,” he said. “It’s kind of the same thing in the cattle market right now. That value of gain through a pre-conditioning, value-added program has been well above a dollar (per cwt), and some of the most valuable gains that we’ve ever had in the history of the beef industry.”
The programs go by names like VAC 45, VAC 45+ or VAC PreCon; a third party verifies you’ve followed the necessary vaccination and handling steps, and issues a certificate. That documentation will likely allow you to collect a premium at an auction tailored for animals that meet those parameters, but what if you bring your cattle elsewhere? Mourer said, “You have to have a quality product, and you have to manage your product and your business properly and then repeat, year after year after year. So if you do that and use even your local livestock market, you build a reputation over time, not even being involved in a program.”
One program that’s not providing much of a premium any more, though, is the age and source verification for Japan. In February 2013, Japan raised the minimum age for cattle that don’t have to be tested for BSE from the previous 21 months to 30; beef sales to Japan have doubled as a result, but Mourer conceded, “Those premiums have switched more to the health management, and even the non-hormone treated type cattle.” Still, he said age and source verification is an indication of how well the producer managed the calves, and he believes someday it will be a requirement. “It may not be five years from now; it may not be 20 years from now, (but) we’re going to have some sort of country of origin labeling system in place, and we will have to have that age and source verification – as I see it, anyway.”
But it can be a struggle to maintain producer enrollment in these programs, as Eldon Cole has seen first hand. The University of Missouri Extension livestock specialist is also Southwest Region coordinator for the Missouri Show-Me Select Replacement Heifer Program. Cole told OFN the program was initiated by Extension State Veterinarian Dr. David Patterson, who brought the concept with him from his previous post in Kentucky, and now stands alone as an independent non-profit corporation. Requirements include preg checking, vaccinations and certain physical guidelines.
And it pays, according to Cole. “Going back to when it got its start in 1996,” he said, “we’ve almost always showed that compared to a conventionally marketed bred heifer, the Show-Me heifers excel in price averages.” But producers are not knocking down the doors to get into the program. “We have a nice, continuous number of people that stay with the program; we have a number of folks who come in, maybe stay with it a year or two, and then they bow out. So, it’s not quite attractive to everyone,” he said
Why? Cole said some producers think it’s not enough compensation for their time and effort; while the top end of the heifers sell extremely well, others might not bring an attractive enough premium. But the biggest issue may be the requirements; for instance, a veterinarian has to visit the farm three times between weaning and marketing. “A lot of folks feel that is a roadblock to profitability,” Cole said. There is also paperwork involved that sometimes hasn’t been filled out to the program’s requirements. In addition, Cole pointed out, “Most of the people in the program are pretty new to selling breeding stock. They are feeder cattle producers; they’re used to raising that calf up to weaning age and maybe a little bit beyond that, and selling it on the market as a feeder animal with no questions asked.” The heifers are also guaranteed for one month after the sale, another new concept for a cow/calf operator. But, he added, “That kind of goes with the value-added concept. You’re going to add some value, but it won’t come free; you’re going to have to expend some of your resources, time, talents and feed.”