At MFA's Beef Innovators meetings, industry experts explained why cattle are more valuable to buyers when the animals have been managed and treated properly. Useful information is an increasingly critical part of merchandising.

The U.S. beef industry may be the purest form of a capitalistic economy. Supply and demand drive prices from the retail meat counter to the farm or ranch where calves are born.

"In 2002, U.S. consumers will spend more than $60 billion for 26 billion pounds of beef," said Randy Blach wof Cattle-Fax, speaking at the 2002 MFA Beef Innovators Seminars. "That makes beef big business--and it's growing."

That $60 billion must support everyone in the beef production chain: seedstock breeders, cow/calf producers, backgrounders, feeders, packers and distributors. The portion of $60 billion producers receive depends not only on the kind and quality of his product, but on how well he merchandises that product. Useful information--up and down the chain--is a critical part of merchandising.

"In the beef industry, we are data rich but information poor," said Marcine Moldenhauer of Excel Corporation. "We all do a better job of collecting data than we do at analyzing it and passing it on to people who need it."

Mike John, manager of the MFA Health Track Beef Alliance, agreed: "Branded products more and more are driving the business," he said. "Consumers and retailers are demanding quality and safety assurances, backed up by credible information. The industry is paying for quality and consistency, with sound source and process verification. Producers need to figure out how to participate to share in that value.

"One of our biggest challenges is to provide a 52-weeks-per-year supply of qualified cattle, in acceptable volume," John added. "The main reason we usually see big dips in feeder cattle prices in October/November is that's when big slugs of cattle come onto the market: supply and demand, again. By stretching that big supply over a longer period, we can avoid some of these seasonal discounts."

Randy Blach seconds John's observation about market seasonality. "And it affects not only feeder cattle but cull cows as well," Blach said. "Historically, our heaviest cow slaughter comes in the latter part of the year, after spring calves are weaned and open cows are culled. Cows bought in November and maintained or improved in condition will usually make money early in the next year."

While some features of the beef business, such as seasonal price dips and peaks, endure over time, the industry is changing. Fast.

"The growing interest in case-ready meat will drive these changes even faster," Mike John predicted. "Retailers are demanding official source verification of every animal, back to the farm or ranch of origin. That means permanent identification, beginning at the ranch of origin. Animal I.D. also would be critical to the management of any disease outbreak."

All MFA Health Track cattle are fitted with individually identified and entered into a central database. The red Health Track tag is the only animal market service tag in the country that is qualified to carry the Beef Quality Assurance seal. To date, the database has records on some 70,000 head. Health Track leaders can quickly provide complete information on any calf or group of calves to feeders, packers or retailers.

"Health Track is the only alliance I know of that can quickly provide complete source and processing information to buyers," said John. "We are getting more feedlot and carcass information on individual cattle all the time, too. Any producer [Health Track member] who has a computer can also access this information for his own record keeping and analysis.

"We have also developed a web-based 'Market Decision Planner' that helps producers evaluate several marketing options: selling at weaning, selling at 45 days after weaning, etc.," John explained. "This tool simplifies the selling-decision process.

"Our first goal with MFA Health Track is to keep our customers in business," he added. "We're doing that by adding value to Health Track calves. Or, more correctly, we're doing that by eliminating many of the market discounts. For example, we provide opportunities for producers to sell their calves in critical-mass quantities, rather than small drafts of one or a few head. A potload of calves is worth more per head to the buyer than 3 or 4 head of similar-kind calves: The buyer needs to bid fewer times to fill his order. That may be a main factor influencing price."

"The top one-third of the producers earns $90 to $100 more per calf than the average," noted Blach.

"That trend has held pretty steady over the years. Buyers bid more to get what they want."

And buyers vote with their checkbooks on cattle that have been managed and treated to MFA Health Track Beef Alliance standards. First, calves must be identified to the ranch of origin and weaned at least 45 days before sale. They must be treated to "Vac-45" health standards: 2 rounds of vaccinations, 2 to 4 weeks apart. "We prefer that the first vaccinations be given before calves are weaned to reduce the level of stress," said Mike John. "However, calves can be vaccinated with the first round of shots at weaning. In either case, calves need to receive a booster vaccination to build good immunity."

The primary and booster vaccinations need to include 7-way blackleg; haemophilus somnus; IBR, BVD, PI3 and BRSV complex (with modified live virus booster); and pasteurella.

Calves are to be treated for internal and external parasites and male calves castrated. "We prefer calves be castrated with a knife, or they can be verified steers," said John. "If a male calf sells that is not a steer, we will pay the buyer and charge the producer 10 cents per pound of the sale weight"

Heifers must be guaranteed open on sale day. And cattle must be polled or dehorned. They can be implanted, but the product used and dates implanted must be recorded.

"All health treatments must be certified by a licensed veterinarian or by MFA," said John. "And cattle must be BQA (Beef Quality Assurance) certified, which qualifies them for the Nebraska Corn Fed Beef program.

"Also, we require that MFA Cattle Charge be fed for at least the first 14 to 21 days after weaning," he added. "And cattle must be on an MFA-approved nutrition program for the remainder of the 45-day post-weaning period. Adequate nutrition is critical to developing good disease immunity; we want to make sure cattle are nourished well enough to develop an adequate response when they are immunized."

John and his crew have followed up on the health of 46,000 Health Track cattle. Both morbidity (sickness) and mortality (death) rates were well below industry averages. Only 0.79 percent of the Health Track cattle required treatment, and death loss averaged 0.l7 percent. By comparison, up to 20 percent or more run-of-the-sale cattle require at least one treatment, and death losses can range from 4 to 5 percent or higher.

Midcontinent producers who manage spring-calving herds now are planning to wean calves. What kind of market will those steers and heifers face in the next few weeks?

"Cattle feeders may make some money for a change in the last quarter of 2002," believes Randy Blach. "We see no big changes in cow inventory nor total cattle numbers. In fact, numbers alone would make one think that finished cattle should be priced higher than they are. But carcass weights have been record high, which puts a tremendous supply of beef on the market.

"If carcass weights this year had been at 2001 levels, live cattle would be priced at least $3 per hundred higher," he added. "But we still have strong demand for our product and on-feed numbers are dropping. Choice steers may average $70 per hundredweight for the last quarter of 2002 and move on up as high as $74 or $75 by next spring."

Dampening feeder profits somewhat will be the smaller corn crop and a smaller-than-expected corn carryover. A 50-cents-per-bushel increase in corn prices translates into 50-cents-per-hundredweight less on feeder cattle prices. On the plus side for cattlemen, imports of live cattle--mostly from Mexico--will be down sharply. Total imports may be off by 300,000 head or more, compared with 2001.

However, the beef market shakes out short term, cattle are more valuable to buyers when the animals have been managed and treated properly. And being able to document and verify that management and those treatments gives the buyer assurance that he isn't buying a "pig in a poke" (with pardon begged of pork producers).