Pre-conditioned cattle will earn premiums in today's retail-oriented market. MFA's Health Track Beef Alliance is a path to capture more value in the marketplace.

In agriculture, making a profit is a gamble. Producers bet on weather, the cost of inputs and markets at sales time. Lacking commodity subsidy and insurance programs, cattle producers take on even more risk, a bigger gamble. However, a paradigm shift in the cattle industry is changing the entire business environment and creating markets more responsive to alert producers. It's a shift with potential to more equitably spread profit throughout the supply chain.

The basic components of the industry's shift in sales paradigm are a reflection of the modern market and consumer demand. There has been a drastic increase in grid marketing. There has been increased demand for source- and process-verified product (branded products) at the retail and foodservice level. Meanwhile, to reflect the industry's changes, feeder buyers are re-evaluating their procurement preferences.

Grid marketing has changed the value point for today's animals. Before grid marketing, producers received a per-pound price for live weight sold regardless of quality and how it would affect upstream value. Today, fed cattle are no longer worth an equal value pound for pound. Livestock is now priced according to quality (Prime, Choice, Select), yield grade and hot carcass weight. To people who can produce animals with high-value carcasses, this has been good news. To those who are not paying attention to these signals, the changes have also offered the opportunity to move down the value chain.

Obviously, retailers and foodservice companies are beginning to express their preferences for a consistent supply of high-quality meat, and the industry is feeling the effect. Because of the retailers' reaction to consumer demand and food safety issues, source verification by itself has some intrinsic value. In addition, process verification has drastically changed the type of orders in buyers' pockets.

No longer are thin, shrunk-out cattle topping the markets. Feeding companies now know that the reduction in sick animals and cattle with a quicker adaptability to feedlot conditions and rations are real-world, profitable benefits. Thus, they are increasingly buying properly pre-conditioned, fleshier calves. Sale results are now proving this in almost every market.

The MFA Health Track program has created a database that has documented the reduction of health risk and the value of efficient production of pre-conditioned calves. The program has also been able to document the drastic increase in demand for Health Track calves usually exemplified by the significant premiums paid and the net profit producers receive over what non-weaned calves would have been worth. With over 96,000 records on Health Track calves we know the following about reducing risk:

1. Health Track accentuates the benefits of whole-herd immunity. Properly vaccinating cows offers more flexibility in product choice for the calves and reduces pathogen shedding to calves.

2. Giving the first round of vaccinations pre-weaning (2 to 4 weeks) and using a modified-live, 4-way viral reduces treatment rates during the pre-conditioning period to 0.39 percent.

3. Producers should give the pasteurella shot with the first round of vaccinations.

4. Feeding a high quality feed during post-weaning stress and for the entire pre-conditioning period can reduce antibiotic treatments by 50 percent or more over commodity mixes or non-supplemented pasture.

The value derived from detailed lifetime health, management and nutrition recently was observed on a set of 80 steers from the MFA Research Farm at Marshall, Mo. These calves were creep fed on Cattle Charge and enrolled in the MFA Health Track Beef Alliance. The calves averaged 700 pounds on Dec. 1 and were sent to the University of Missouri for research trials under the direction of Dr. Monty Kerley.

This group had 60 calves from the same AI sire on synchronized breeding. The remaining 20 calves were from clean-up bulls. The group of 80 calves received no antibiotic treatments during their lifetime. They gained 3.8 pounds per head per day while on feed, with a 4.5 to 5.6 feed conversion, depending on the trial group. Overall, the animals graded 100 percent Choice or better, 45 percent graded Prime. The AI-sired calves graded 62 percent Prime. Only 9 percent of the cattle had lung lesions (remember, they had a lifetime history of no antibiotic treatments). Industry-wide, studies show a 43 percent incidence of lung lesions on non-treated cattle. Up to 62 percent lung lesions have been reported on cattle that have received antibiotic treatment. Because of the research trial, these calves were not implanted or fed antibiotics in their finishing ration to prevent liver abscesses.

Combining health, management, nutrition and genetics allowed these calves to hit a home run. Their net value was dollars ahead of "average cattle." These are the opportunities that producers can avail themselves to, and information like this shows why beef industry sales paradigms are changing.

Numbers tell the story

Because we have tracked over 15,000 Health Track calf sales against an additional 30,000 in their contemporary marketing groups, we know the following about adding value:

1. Health Track calves average $10 per cwt. over non-program calves and carry at least one body-condition score more flesh.

2. In December 2003, Health Track producers put a net $60 to $90 more per head in their pockets than they would have if they sold the calves right off the cow.

3. In June 2004, the net profit increase over at-weaning selling was $90 to $155 per head.

4. The higher calf prices are, the higher the incremental value of the gain put on during pre-conditioning. Target weight gain should be 2 pounds per head per day.

5. Creep feeding accelerates gain value by efficiently increasing the amount of total gain achieved at a cost significantly below the value of the extra weight.

6. Non-weaned calves shrink at least twice as much as Health Track calves when they are sold. The higher the calf value, the more you lose selling a bawling calf.

7. With calf prices on their way up, and feed costs on their way down, there has never been a better opportunity to profit from pre-conditioning and growing calves at home.

8. No one can wean calves more efficiently than producers in this part of the country.

9. Health Track calves will automatically qualify for any national ID requirements. (We've got you covered!)

Mike John is manager of MFA's Health Track Beef Alliance. Dr. Kent Haden is MFA vice president, Livestock Operations.