Impact of Health

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Satisfying the 21st Century Beef Consumer
Cattle Feeders Perspective Tom
Brink
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Five Rivers Ranch Cattle Feeding, LLC

• ContiBeef plus Smithfield (Monfort) Feedyards
• 50-50 owned by ContiGroup Smithfield
• Ten feedyards in Five States
• 811,000 head of feeding capacity
• Market cattle to 4 of the 5 major packers
• Majority sold on grids (formulas)

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ContiBeef Locations
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MF Locations
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Five Rivers Ranch Cattle Feeding, LLC

• Commodity principles are foundational
• Must be efficient in all aspects of our business
• Specification production and marketing
• Sorting and segmenting our cattle inventory
• Feeding for branded beef programs
• CP efficiency plus Value-added marketing

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How do we satisfy consumers?

• Better cattle health
• Right breed composition

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Health in the Feedyard

• Old problem but still identified as the 1
  production problem feedyards face
• Impact on performance and carcass quality is well
  documented
• We have the technology and know how to get cattle
  better prepared to leave the farm or
  ranchimplementation is lacking

Many cattle still need stronger immunity when
they leave home.
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Impact of Health Death Loss
Death Loss ADG DMC
Profit per head 0 - 0.5 3.09 6.48
-10.89 0.5 - 1.5 3.00 6.65
-20.41 1.5 and up 2.84 6.86
-57.62
800-lb. yearling-fed steers closed out in March
2006
Did the higher DL steers satisfy anyone in the
system from producer to consumer?
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Pre-conditioning in simple words

• Vaccinate calves at 2 to 3 months of age, and
  again 2 to 3 weeks before weaning. At weaning
  control internal and external parasites, castrate
  all remaining bull calves. Make sure all calves
  are dehorned (preferably a 2 to 3 months of age).
  After weaning, calves should be exposed to
  supplemental feed for 30-45 days. If properly
  preconditioned prior to shipment, producers have
  done a great deal to prepare their calves for the
  future.
• ---Dr. Max Irsik, University of Florida

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Is cattle health improving?

• 55 of High Plains feedyard managers in 2002 said
  health in southern-origin feeder cattle was
  better or much better than a decade ago.
• VAC-45 type programs are on the rise, as are
  special sales for such cattle
• Data is readily available that shows the value of
  preconditioning (Pfizer-CSU)
• So some progress has been made but

Cattle health is now a Social Problem not a
Technological Issue.
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Breed Composition
---Large numbers of the industrys cattle are
designed wrong geneticallywrong breed
composition to succeed in the feedlot and satisfy
the consumer. We skirt the issue and remain
politically correct. More difference within
breeds than between breeds. ---And it costs the
industry millions of dollars and reduces our
worldwide competitiveness. ---The feeding
industry is also guilty of not consistently
communicating what they need to producers.
Here is what Five Rivers wants
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Our first choice AN x Continental

• 50 to 75 Angus and 25 to 50 Continental
• Good feeding, Good grading, Good yielding animal
  that is usually the right size
• Higher percentage British cattle lack often
  muscle, yield and produce too many YG 4s.
• Higher percentage Continental cattle lack often
  grade, and often get too big before they finish.

Balanced combination of Angus and Continental
breeding is tough to beat.
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Heat tolerant genetics?

• Eared genetics are necessary in the South
• No more than 25 eared genetic influence in
  Southern feeder cattle!!
• Cow herd can still be up to 50 Bos Indicus
  influenced

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Woodward, OK Auction (4/7)
Feeder Quality Average Weight
Average Price 1s 777 lbs.
99.93/cwt. 2s 771 lbs.
93.90/cwt. Minus 6 per cwt. (47 per head)
for too much ear. You will be paid more for
avoiding breed composition problems in your
cattle.
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Chronically low quality grades in Southern U.S.
plants

• Week ending 4/1/2006
• Choice Prime
• Nebraska 63.7
• Kansas 44.9
• Texas 44.5
• Choice-Select spread was 10.74/cwt.

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This problem is visible
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Theyll feed fine, but wont grade
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Balanced breed composition
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Progressing in the 21st Century

• Quotes from Five Rivers Managers (to producers)
• Embrace individual animal I.D. and maintain
  verifiable age and source records on you calf
  crop.
• In todays industry, with source and age
  verification being on the consumers mind, I
  think this would be one of the easiest and most
  rewarding steps any cow-calf producer could
  take.
• If we in the industry want to give consumers
  what they are willing to pay for, then cow-calf
  producers should begin to shift their mental
  paradigms to the age and source verification
  process.

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Feeder calf value built in steps

• (1) Right breed combination--- sell at the market
  (not below)
• (2) Verifiable immunity--- sell cattle above the
  market
• (3) 1 2 well selected genetics within breeds
  used--- access to significant grid premiums
• (4) All of above plus age and source verification
  give you access to branded beef or program
  premiums that can add further to the producers
  bottom line

Example premiums paid for verifiably natural
calves 25 to 75 per head
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Age, source and process verification at the farm
and ranch level are the platform from which
cow-calf producers can access branded beef
premiums.
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• Another quote
• Cow-calf producers should shift their mindset
  toward more cooperative integration within the
  overall production chain.

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Where are we, really?

• Fix health issues and get the breed composition
  right.
• Realize that communication and educational
  challenges are now bigger than technological
  barriers in making progress at the producer
  level.
• Source, age and process verification can open the
  door to branded beef premiumsthat pay all the
  way through the systemyes even back to the
  producer.

We have NEVER had a marketing system that
rewarded true value like we have todayleverage
it to your advantage!
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Thanks.