Impacts of Crossbreedingon Profitability in Vertically Coordinated Beef Industry Marketing SystemsFinal Report

David A. Daley and Sean P. EarleyCalifornia State University, ChicoCollege of Agriculture

Cooperators:American Hereford Association Craig Huffhines Kansas City, Mo.

Lacey Livestock John and Mark LaceyPaso Robles and Independence, Calif.

Harris Feeding Co.David Wood Coalinga, Calif.

Harris Ranch Beef Co. David Wood Selma, Calif.

Project outline•400Angus-basedcowswererandomlymatedto10Herefordand10Angusbullsundertypical

Westernrangeextensiveconditionsinyearoneofathree-yearproject.Inyearstwoandthreetheprojectwasexpandedtoinclude600cowsand15bullsofeachbreed.Asmuchaspossible,bullsthatwereaboveaverageforthemajorexpectedprogenydifferences(EPDs)ofeachbreedwerepurchased,basedoncriteriaprovidedbyLaceyLivestock(ranchowners).

•Theprojectwasconductedasa“fieldtrial”underreal-worldconditions,notasatraditionalcontrolledresearchproject.

•DNAsampleswerecollectedonallcalvesandonlythosecattlethatcouldbetracedtoasinglesirewereusedintheanalysis.

•Thehypothesisofthestudywasthatwewouldanticipateaslighteconomicadvantagetoperformanceinthefeedlotphase,whilereducingqualitygradetosomedegree.Theexpectationwasthatthetruevalueofcrossbreedingwouldbeparticularlymanifestedwithmaternalheterosis(thecrossbredcow).

Executive Summary

General conclusions•297Angus-siredsteersand284Hereford-siredsteerswereincludedinthefinalanalysis.

•PreweaningperformancehadaslightbutconsistentadvantageforHereford-siredcalves(approximately10lb.and$12perhead).

•BackgroundingperformancehadaslightbutconsistentadvantageforHereford-siredcalves(approximately10lb.and$12perhead).

•Averagedailygain(ADG)inthefeedlotfavoredtheHereford-siredcalvesintwoofthethreeyears,andtherewasaveryslightoveralladvantagetotheHereford-siredcalves.

•Feedconversion(asfedanddrymatter)hadaconsistentandmarkedadvantageforHereford-siredcalvesincomparisontothepredominantlystraightbredAngus.

•CostofgainhadaconsistentandmarkedadvantageforHereford-siredcalvesincomparisontothepredominantlystraightbredAngus.

•MorbiditywasclosetoequivalentforbothbreedgroupswithlowermorbidityfortheHereford-siredcalvesintwoofthethreeyears.

•QualitygradeconsistentlyfavoredtheAngusgroupforallthreeyears.

•Therewereessentiallynodifferencesincarcassweightoryieldofbothsiregroups.

•Therewereessentiallynodifferencesinpercentageyieldgrades4or5betweenthesiregroups.Hereford-siredcalveshadmoreyieldgrade4/5inyearoneandAngus-siredcalveshadmoreyieldgrade4/5inyearstwoandthree.

•EconomicperformancefavoredHereford-siredcalvesinthefeedlotintwoofthethreeyears,withanaveragereturnofapproximately$30perhead.

•CarcassperformancefavoredtheAngus-siredcalvesinallthreeyears,withanaveragereturnof$15.60perhead.

•OverallnetreturnfortheHereford-siredcalveswasapproximately$30perheadinaverticallycoordinatedbeefmarketingsystem,thisdoesnotincludethematernaladvantagesofthebaldiefemale.

•PregnancyratesforHereford-siredfemales(blackbaldies)averaged7%higherthanthoseoftheAngus-siredheifers.

Verticallycoordinatedbeefmarketingsystems(alliancesandpartnerships)havebecomebreedspecific,generallyAngus,inanefforttoimprovequalitygradeandtendernessandfocusontheconsumer.However,bysodoing,thevalueofcrossbreeding(heterosis)hasbeendiminished,particularlyatthecow-calflevel.TheprimaryobjectiveofthisprojectwastomeasuretheeffectofcontrolledcrossbreedinginrangeenvironmentsonpredominantlyAngus-basedfemales.Bydeterminingthevalueofheterosistobeefcattlealliances,cattlebreedingsystemsintheU.S.havethepotentialtobesignificantlymodifiedtoutilizesystematic,controlledcrossbreedingprograms.Inyearone,10Herefordbulls,selectedforspecificgeneticparameters(EPDs)werematchedwith10Angusbullsofcomparablegenetics.Bullswererandomlymatedto400matureAngus-basedcows.Inyeartwoandthree,15bullsofeachbreedwererandomlymatedto600cows.Allcattle(cowsandcalves)wereidentifiedwithelectroniceartags,andDNAsamplesweretakenonallsiresandcalvestodetermineparentage.

Allcattlehadequalaccesstocomparablefeedresourcesandmanagementinextensive,relativelyharshenvironments.Differencesinweaningperformance,feedlotperformance,carcassvalueandoverallprofitabilityweremeasured.TheonlycattleincludedintheanalysiswerethoseindividualsthatwerematchedtoonesirebyparentageverificationutilizingDNA.

Subsequenttomeasurementofindividualheterosis,theF1femalewasevaluatedfortheinitialcontributionofmaternalheterosisbymeasuringpregnancyratesontheF1females(Hereford×Angus)incontrasttotheprimarilystraightbred(Angus)group.

Dataindicatesaneconomicadvantageinthefeedlotphaseforthecrossbred(Hereford-sired)calves.Primarydifferencesweregainandfeedefficiency,resultinginalowercostofgain—approximately$5percwt.TheAngus-siredgrouphadanadvantageinqualitygrade,partiallyoffsettingthevalueinthefeedlot.However,thenetadvantagefavoredtheHereford-siredcattlebynearly$30perheadfortheentireproductioncycle.

Abstract

Historically,cattleimprovementinthe1950sand1960swasbasedontheintroductionofpurebred(registered)cattletoupgradeandimprovenativestock.Remarkablestridesweremadeinimprovingtheuniformityandqualityoftheproduct.Bythemid-1960smostherdswereemphasizingtheuseofpurebredHereford,AngusandShorthorncattle.

Inthe1960s,atremendousbodyofresearchwasdevelopedevaluatingtheuseofsystematiccrossbreedingtoimprovetheprofitabilityofbeefproduction.Thetheorywastocapitalizeonheterosis(hybridvigor)toimprovelowlyheritabletraitsandtobreedcomplementarity(advantagesanddisadvantagesofeachbreed).Systematiccrossbreedinghasthepotentialtosignificantlyenhancetraitsthataredifficulttomeasure(calflivability,mortality,conceptionrate,longevity,etc.)(Gregory,etal.1991).Datasuggesttremendousimprovementincalvesweanedpercowexposedwhencrossbreedingisproperlyimplemented.(Ritchie.1994,1996).

Basedonthisresearch,commercialproducersbegantoutilizecrossbreedingextensivelytoimproveoverallprofitability.TheincreasedlongevityandlifetimeproductivityoftheF1cowbecameobviousandthe“blackbaldie”becamefamousasthe“idealcow.”However,crossbreedingwasnotalwayssystematicandplannedbutwasfrequentlytheresultofsimplyintroducinganewbreedasanexperiment.Theresultwasoftenaninconsistentcowherd,consistingofmultiplebreedswithdiversebiologicaltypes.

Beginninginthe1990s,therewasastrongfocusonconsumerdemand,whichcausedproducerstoemphasizecarcassmerit,particularlyanimprovementinqualitygrade(marbling).Concomitantly,therewasagrowingtrendtowardverticallycoordinatedmarketingsystems(alliances)betweenproducers,feedlotsandpackingplants.Theintentwastoproduceamoreuniform,acceptableproductfortheconsumer.Thesetwotrendsresultedinadramaticshifttowardonebreed(Angus)andareductionincrossbreedingthroughouttheU.S.Thistrendhasbeenoccurringforwellover15yearsanddoesnotappeartobemoderating.Carcasstraitshaveimproved,buttheresultisthedevelopmentofapredominantlyAnguscowherdundercommercialrangeconditionsthathaslimitedhybridvigor.

Underthenewmarketdirection,withverticallycoordinatedsystemsbecomingtypical,itiscriticaltoevaluatedifferencesinprofitabilitywhencontrolledcrossbreedingisimplementedinanAngus-basedoperation.Potentially,therearesignificantopportunitiesforthecattleindustrytocapturevaluefromcrossbreeding,whilenotsacrificingtheconsumerfocusofthebeefindustry.

TheprimaryobjectiveofthisstudywastoconductacontrolledcrossbreedingsystemcomparingAngusandHerefordbullsundercommercialconditionsemphasizingeconomicdifferencesattheranch,feedlotandpackingplant.Majortraitsthathavethepotentialtoimpacttheoverallprofitabilitytoaverticallycoordinatedalliancearebeingrecorded.Resultsshouldbeapplicabletoanylarge-scalecow-calfoperationandofparticularinteresttothoseparticipatinginverticallycoordinatedpartnershipsand/oralliances.

Inordertofairlyassesstheimpactofcrossbreeding,dataontheproductivityoftheF1femalewillbeimportantandwillrequirelong-termcommitmenttomeasuringlifetimeproductivity.

Introduction

FourhundredmatureAngus-basedcowsweresortedandidentifiedwithelectroniceartagsintheLaceyLivestockprogram,basedinIndependence,Calif.InyearonepredominantlyAnguscowswererandomlymatedto10Herefordor10Angusbullsselectedbasedonrigorousgeneticparameters(EPDs)foroverallmerit.Inyearstwoandthree,theprojectwasexpandedtoinclude15bullsofeachbreedand600Angus-basedcows.Theprojectwasconductedforathree-yearperiod,thetypicallifespanofabullunderWesternrangeconditions.

LaceyLivestockhasutilizedAngusbullsexclusivelyforthepast10yearsonanAngus-,Hereford-andGelbvieh-basedcowherd.RetainedreplacementheifersarepredominantlyAngus,yetstillincludeotherbreeds.Heterosiswouldnotbemaximizedwithinthissystem.However,thebreedcompositionofthecowherdissimilartomanycommercialprogramsintheWestandtheresultsshouldhaveapplicationtomostoperationsthathavebeenusingAngussiresforseveralyears.

Duringselectedphasesoftheproductioncycle(pre-conditioning,weaning,feedlot,carcass),completerecordsweremaintainedonallcalvesborntotheproject.However,thesedatawerecollectedunderextensiverangeconditions(real-world),socattlewerenotmanagedlikethoseinatraditionalresearchproject,butweremanagedsimilartothoseinfieldtrialdata.Forexample,birthdates,weights,etc.werenotrecorded.Allcalveswereweighedontheranchat

pre-conditioning.DNAsampleswereobtainedforparentageverification,andeachcalfwasidentifiedwithanelectronicidentificationdevice(EID)placedintheear.

Atfeedlotarrival,cattleweresortedintosirebreedgroups.Hereford-siredsteersandAngus-siredsteerswerefedinseparate,adjacentpenslocatedatHarrisFeedingCo.undertraditionalcommercialfeedlotconditions.Onlysteersthatcouldbeindividuallyidentifiedtoonesire(notmultiplesiresorunknowns)wereincludedintheanalysis.Individualmorbidityandmortalitywererecorded,alongwithgroupfeedefficiencyandgaindata.Ultrasoundofribfatandaninterimweightwereusedtoassistinthedeterminationoflogicalharvestendpointforyearone.Interimweightswereusedinyeartwoandthree,sinceresearchersfoundlittleadditionalvalueintheultrasound.

Atthepointofharvest,allcarcasstraitsweredeterminedbyaUSDA(U.S.DepartmentofAgriculture)grader(carcassweight,backfat,ribeyeareas,KPH,marblingscore).Dressingpercentwascalculatedusingapooledcarcassweightdividedbygross-truckweight.

Datawereanalyzedusingstandardstatisticalproceduresforcomparingwithinandacrossbreedvariations.Alleconomicvalues(inputandoutput)weremonitored,andeconomicmodelsassessingthevalueofheterosiswereevaluated.

Forthepurposesofthisreport,economicdifferenceswereassessedbyactualcostsandreturntothefeedlotandpackingplant.

Methods

Thevalueofdirectandmaternalheterosishasbeenirrefutablyestablishedinpreviousresearch,mostnotablytheelegantworkattheU.S.MeatAnimalResearchCenter(USMARC)byKoch,CundiffandGregory.However,therealeconomicvaluereturnedtotheproducerunderextensiveWesternconditionsandcurrentmarketstructurehasnotbeendetermined.Directheterosisisdefinedastheincreaseinperformanceofthecrossbredcalfrelativetotheaverageofthestraightbredparentalbreeds.Maternalheterosisistheincreaseinperformanceofthecrossbredcowrelativetotheaverageofstraightbredfemalesoftheparentalbreeds.Asummaryofliteraturehasestablishedthefollowingvaluesforheterosis:

Direct heterosis – examples Survivaltoweaning–1.9% Weaningweight–3.9% Postweaninggain–2.6% Yearlingweight–3.8% Feedconversion–2.2%

Maternal heterosis – examples Calvingrate–3.7% Weaningweight3.8% Longevity–38% Numberofcalves–17.0% Cumulativeweaningweight–25.3%

Decadesofresearchhaveestablishedthattheprimaryadvantagetocrossbreedingisinthelowlyheritabletraitsinareasthataregenerallyclassifiedasreproductionorfitnesstraits.Therearesmall,net-positiveeffectsinmanyareas(pregnancyrate,calflivability,health,generalperformance,etc.)thatresultinaverysignificantreturnbutareverydifficulttomeasure.

Thevaluefromcrossbreedingisprimarilyevidencedbyincreasednumberofcalves(lifetime),cowlongevityandcumulativeweaningweight(lifetime).Similarly,onewouldnotanticipatedramaticdifferencesinfeedlotandcarcassperformanceincrossbredcattlebecausethesetraitstendtobehighlyheritable.However,theincreasewouldbeanticipatedtobepositiveforseveralmeasuresoffeedlotperformance.

Themostsignificantadvantagetocrossbreedingwillbeintheutilizationofthecrossbredfemale.Developingandmaintainingacrossbreedingsystemwhichcapturesmaternalheterosisiscriticaltolong-termprofitabilityinthecommercialcow-calfbusiness.

Results and Discussion

Thebasecowherdfromwhichthesubsetof600cowswasselectedhadbeenutilizingAngusbullsforapproximately10yearspriortotheinitiationofthisproject.However,thecowswerenotstraightbredAngus.Therewerestillpreviousbreedinfluencespresentinmanyofthecows(primarilyGelbviehand/orHereford),butthereisnoquestionthattheherdwaspredominantlyAngus.Therefore,mostpeoplewouldanticipateslightlylowervaluesforheterosisthantheliteraturevaluessincethefemaleswerenot100%Angus.However,theauthorswouldarguethatthisfieldtrialmoreaccuratelyreflectshowcrossbreedingisappliedunderreal-worldcommercialconditions.

Thisprojectwasnotdesignedtodeterminelifetimeproductivity(assessingmaternalheterosis).Sinceitwasconductedasafieldtrialunderextensiverangeconditionsforthreeyears,therewasanopportunitytoassesseconomicreturnforbothfeedlotandcarcasstraits(directheterosis).TheauthorshypothesizedaslightadvantageinfeedlotperformancefortheHereford-siredcalves.Pregnancydataforyearlingheiferswereobtainedfortwoyears;thatinformationprovidespreliminaryinsightintolifetimereproductiveperformance(maternalheterosis).

Approximately30dayspriortoweaning,calveswereindividuallyweighedandpre-conditioned.Hereford-siredcalves(n=290)averaged15lb.morethanAngus-siredcalves(n=304),weighing513and498lb.respectively(Table1).Thesedatareflectapproximately3.0%directheterosisforweaningweight,whichmirrorstheexpectationintheliterature(3.9%),especiallyconsideringthedamswerenotstraightbred.Basedonthestandardpriceforthedurationofthestudyof$1.20perlb.,theeconomicadvantagetotheHereford-siredcalveswas$18.

Cattlewereweanedanddeliveredtoagrowerlotforashortbackgroundingphasepriortoarrivalatthefeedlot.Theprojectcalveswerepartofamuchlargercontemporarygroupfromalargescaleoperation.Allverylightcalvesthatwerenotreadytobesenttothefeedlotwereremovedfromthegroupandreturnedtoaforagedietpriortodeliverytothefeedlot.

Steerswerefedanaverageof155daysonastandardfeedlotfinishingration.Therewerenodifferencesinaveragedailygaincalculated,leaving“deads-in”inastandardfeedlotfinancialperformancesummary(3.45Angus-sired,3.48

Results and Discussion continued

Table 1. Ranch performance summary (preweaning weight)

Angus-sired Hereford-sired Traits (n = 304) (n = 290)

Weight 498 513

In Value ($1.20) $597.60 $615.60

Value Difference $18.00

Hereford-sired).FeedconversionfavoredtheHereford-siredcalvessignificantly(7.44Angus,7.05Hereford),anapproximate5%effectduetodirectheterosis,somewhathigherthananticipatedbasedonpreviousestimates.Therewereslightbutnon-significantdifferencesinmorbidity(10.77%Angus-sired,9.51%Hereford-sired)andhospitalcosts($14.52Angus-sired,$12.68Hereford-sired).

Ultimately,themajordifferenceinthefeedlotsummarywasthedifferenceincostofgain.Whenalltraitswerecombined,theHereford-siredcalveshadalowercostofgainof$4.37percwt.andalowerbreakevenof$2.22percwt.TheprimarycontributortotheadvantagetotheHereford-sired,crossbredcalveswasfeedconversion.Feedlotperformancedatawererelativelyconsistentforallthreeyears(Table2).

Atharvesttherewereminordifferencesincarcassweight,dressingpercentandyieldgrade(includingallfactorsrelatedtoyieldgrade).However,therewasasignificantadvantageinmarblingscore(qualitygrade).(Table3).

TheAngus-siredsteershada19.5%advantageinpercentgradingChoiceorhigher(66.4%versus46.9%,respectively),resultingina$15.60percarcassadvantagetotheAngus-siredgroupduetocarcassquality.ThepricespreaddifferentialvariedbetweenChoiceandSelectatthetimeofharvestofeachgroup.Forpurposesoftheeconomicanalysis,weusedtheaveragedifferenceof$10percwt.

Table 3. Carcass performance summary

Traits Angus-sired Hereford-sired

Carcass Summary

Live weight 1,236 1,232

Hot weight 782 782

Yield percent 63% 63%

Quality Grade Summary

Prime .82% 0

Choice 65.66% 46.9%

Choice or better 66.4% 46.9%

Select 33% 53%

Yield Grade Summary

Total Yield Grade 1 & 2 43% 49%

Yield Grade 3 51% 45%

Total Yield Grade 4 & 5 6% 6%

Value Difference $15.60

Results and Discussion continued Table 2. Feedlot and financial performance summary

Traits Angus-sired Hereford-sired

Head 297 284

Dead 4 4

Finished 288 275

Weight in 673 674

Weight out 1,232 1,232

Feedyard performance summary Day on feed 155 155

ADG 3.45 3.48

Conversion-as fed 7.41 7.05

Conversion-dry matter 5.52 5.25

Cost of gain $79.77 $75.98

Death loss percent 1.35% 1.41%

MorbidityPercent morbidity 10.77% 9.51%

Hospital cost/head treated $14.52 $12.68

Hospital cost/head placed $1.91 $1.30

Cost SummaryDelivered cost/cwt. $119.68 $119.68

Total cost of gain/cwt. $87.05 $82.68

Breakeven/cwt. $105.18 $102.96

Value Difference $27.50

Insummary,thetwodifferentsirebreedgroupswereremarkablysimilarinmosttraits.Differencesatweaning(preweaningweights)showedaconsistentadvantagetotheHereford-siredcalves.Therewererelativelyslightdifferencesinfeedlotperformance,butthedatatendedtofavortheHereford-siredcattle.Again,thisfitswithourexpectationofcrossbreeding—smalldifferencesinmanytraitswithalargenetpositive.

ThemostnotableanddramaticdifferencewasthelowerfeedconversionfortheHereford-siredcalvesoverallthreeyears.Thisfact,coupledwiththeotherfeedlottraits,resultedinasignificantlylowertotalcostofgainandbreakevensfortheHereford-siredcattle.Intermsofcarcassperformance,dataweresimilarformosttraits,withtheexceptionofmarblingscore/qualitygrade,whichsignificantlyfavoredtheAnguscattle.

Becauseofthelengthoftheproject,researcherswereonlyabletocollectlimiteddataonreproductiveperformance,anareawhereyoucananticipatethemostdramaticresponsetocrossbreeding.Remember,forthemajorityofcow-calfproducerstheeffectofmaternalheterosisiscriticaltooverallprofitability.PregnancyratesonyearlingheifersthathadbeenidentifiedbacktoHerefordorAngussireswerecollectedinyeartwoandthreeofthestudy.Inbothinstances,therewasa7%advantageinpregnancytotheHereford-siredcattle(93%vs.86%)inarelativelyshortbreedingseasonwhereheiferswerebredwithartificialinsemination.

Results and Discussion continued

Thesedataaresimilartothoseofanotherlargecrossbreedingstudy—CircleARanchHeterosisProjectconductedinMissouri—whereresultswereidentical.Thelong-termimplicationsofhigherpregnancyinyearlingheifersaredramatic.Thisinformationallowsfordeepercullingofeithermaturecowsorreplacementheifersand/ortheopportunitytogrowthecowherdbecauseofahighercalvingrate.Inaddition,thereisthedocumentedeffectofincreasedcalflivability,increasedrebreedingratesand,mostnotably,adramaticincreaseinlongevity.

WhentheCircleAdatawereanalyzedbyVernPierce,UniversityofMissouri,foreconomicemphasis,theresultsshowedanadvantageof$514netpercowovera10-yearperiodor$51differencepercowperyear.Analysisshowsthatovera10yearperiodaproducerwhoutilizesHerefordbullsonAngus-basedcowscomparedtoaproducerwhousesAngusbullsontheAngus-basedcowswillhaveimprovedcashflow,increasedherdsizeandmorecalvestosell.(Pierce.2009)

Thedatafromboth,extensivefieldtrialsmirrorpreviousresearch.TheHarrisprojectincludesareal-worldeconomicanalysisthatfavorscrossbreedingforthecommercialcowcalfproducerinourcurrentmarketstructure(Table4).Theeconomicdatasuggestcrossbreedinghasthepotentialtosignificantlyboostreturninaverticallycoordinatedmarketingsystem.

ReferencesGregory, K.E, L.V. Cundiff and R.M. Koch. 1991. Breed Effects and Heterosis in Advance Generations of Composite Populations for Preweaning Traits of Beef Cattle. J. Anim. Sci. 69:947-960

Pierce, Vern. 2009. Comparison of the Economic Value of Hereford Sired Herds vs. Angus Sired Herds on Long Run Economics. A Simulation based on performance data.

Ritchie, H.D. 1994. A Review of Beef Cattle Composites. Department of Animal Science Michigan State University, East Lansing, MI 48824.

Ritchie, H.D. 1996. An Economic Perspective of Beef Cow Efficiency. CSU, Chico Beef Day 5th Annual Meeting, Feb. 17, 1996, Chico, Calif.

USDA – National Agriculture Statistics Service 2002 Census of Agriculture Ranking of 2002 Market Value of Agricultural Products Sold.

Results and Discussion continued

Table 4. Economic summary

Traits Angus-sired Hereford-sired

Ranch $18.00

Feedlot $27.50

Carcass $15.60

Net Value Difference $29.90

Impacts of Crossbreeding on Profitability in Vertically

Coordinated Beef Industry Marketing Systems.

Final Report — September 2010.

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