systems for producing leaner beef
TRANSCRIPT
Agricultural Systems 15 (1984) 171-188
Systems for Producing Leaner Beef
T. G. Forster, D. N. Mowat, S. D. M. Jones, J. W. Wilton & D. P. Stonehouse
University of Guelph, Ontario Agricultural College, Department of Animal and Poultry Science, Guelph,
Ontario, Canada N1G 2WI
S U M M A R Y
A stochastic model was designed to simulate theproductive and economic characteristics over the past five years of two conventional and four lean bee[" O'stems (three o[ which utilized bulls) of growing-finishing beef cattle in southern Ontario. Each system was based on 100 ha of land, with (A ) annually feeding one lot of 300 cattle with remaining maize utilized in a cash crop enterprise or (B) expanding thefeedlot capacity dependent upon Jeed resources. Within option (A), lean beef systems marketed an average of 965kg corn in addition to each tonne of beef produced. Assuming a liveweight price differential of 10 cents (Canadian)/kg between lean (B1) and fatter ((A 1)/(A2)) cattle, some lean beef systems became profitable at a shelled maize price of $174/tonne. Compared to the average of the conventional systems within option (B), lean bull beef systems produced 29 % more total beef and cost an average of 6.8 % less/kg gain. Lean bull beef could have sold at an average of only 4.1 cents/kg less (liveweight basis) than (A1)/(A2) beef to maintain profitability. Production of lean beef reduced production costs, but not enough to offset reduced returns received under current grading and pricing schemes. Utilization of processing technologies (i.e. electrical stimulation) may reduce price differentials between (BI) and (A1)/(A2) carcasses with increased profitability of lean versus conventional beef production systems.
171 Agricultural Systems 0308-521X/84/$03"00 ,© Elsevier Applied Science Publishers Ltd England, 1984. Printed in Great Britain
172 T.G. Forster et al.
INTRODUCTION
If beef is to maintain its competitive position relative to other meat sources in North America, efficiency of the beef industry must be improved (Dikeman, 1982; Gregory, 1982). Given the total beef production system, from cow-calf through to finishing, approximately 14-20~o of the required nutrients are often accounted for by the consumption of concentrate feeds (Byerly, 1975). However, over 80 ~ of the concentrate feeds are consumed by cattle during the finishing phase (Schake, 1981) as cattle require higher energy feedstuffs to lay down sufficient fat cover in order to reach the highest quality grade, at acceptable live weights.
Lean beef production would inherently reduce concentrate feed requirements, leading to a more cost-efficient production system. Simultaneously, the base of cereal grains available for consumption by more efficient animals (e.g. poultry and hogs) would be increased.
The objective of this study was to design, simulate and analyze the productive and economic characteristics of various lean beef production systems as compared to traditional methods of beef production. Lean beef systems involved combining known production practices such as the utilization of late fattening, more rapidly gaining cattle, intact males, lower energy rations and reductions in slaughter weight.
MODEL DEVELOPMENT
Two conventional and four lean beef production systems were designed as shown in Table 1. Systems 1 and 2 represent a typical approach to feeding beef cattle in southwestern Ontario marketing at an (A1)/(A2) carcass grade (Anon., 1978). Cattle managed under system 3 were fed a lower energy diet than cattle in system 1, thus reducing the fat content of the carcass. The additional lean beef production systems, in which a maize silage diet was fed to Hereford and Charolais bulls, resulted in estimated grades for leaner carcasses of (B 1) and (C 1), respectively. Production on variables was based on the diets as shown in Table 2.
All systems were constrained to a land base of 100 ha and one lot of cattle (of at least 300 head) per year. Two alternative strategies were designed in order to fully utilize any remaining land. Option (A) fed 300 head per year and marketed additional maize as cash. In option (B), the
Systems for producing leaner beef
TABLE 1 Characteristics of Various Production Systems
173
Item Beef production system
Conventional Lean beef
1 2 3 4 5 6
Breed Sex Diet
Hereford Charolais Hereford Hereford Charolais Charolais Steer Steer Steer Bull Bull Bull Maize Maize Maize Maize Maize Maize
silage, silage, silage sxlage silage sdage shelled shelled maize maize
Slaughter weight (kg) 476 567 476 476 567 476
Carcass grade (A 1)/(A2) (A1)/(A2) (A1) (B1) (B1) (CI)
TABLE 2 Ingredients and Composition of Diets
Item Diet
Maize silage plus Maize stlage shelled maize
Shelled corn (IFN 4-02-932) (~o) 270 - -
Corn silage (IFN 3-08-1530) (~o) 65.0 90.7
Soybean meal (IFN 5-04-6040) (~o) 60 7.3
Net energy for maintenance (Mcal/kg) a 1.75 1.56
Net energy for gain (Mcal/kg) a 1.12 0.99
o / a Crude protein (/o) 11.1 11-1
a Based on National Research Council 1976 data.
174 T.G. Forster et al.
feedlot was expanded to a capacity as constrained by the average amount of additional feed available.
A stochastic model was programmed in FORTRAN, with maize silage yield, birth weight, preweaning average daily gain, initial weight in the feedlot and slaughter weight used as random variates. Initial and slaughter weights were used to calculate mean body weights (and subsequently, mean empty body weights), which were then used to predict daily dry matter (DM) intake. Maize yield was directly related to maize silage yield so that percentage deviations from their respective mean yields were equal.
Production characteristics
All cattle were assumed to have an average initial weight of 204 kg in order to maintain constancy among system comparisons. This required that Charolais cattle were weaned approximately eight weeks earlier. Cow-calf producers were provided with a monetary incentive for these early- weaned Charolais calves. Mean slaughter weights were set at 476 and 567 kg for cattle produced under systems 1, 3, 4, 6 and systems 2 and 5, respectively.
Variation in the rate of gain can consistently be accounted for by variation in daily DM intake (Bogart & England, 1971). Hence, daily DM intake was estimated first, and then used in the prediction of liveweight gain. Daily DM intake was estimated using an equation developed by Fox & Black (1977a) which is:
D D M I = 0.100(EBW °'vS)
where D D M I = daily DM intake (kg) and E B W = empty body weight (kg).
Empty body weight was assumed to be equal to 89-1% of the liveweight (National Research Council, unpublished), which is in close agreement with Byers (1980). In order to allow for variation in DM intake for cattle of similar empty body weights, the estimated daily DM intake was used as a mean about which a standard deviation (>0.3) was placed, with subsequent randomization selecting the actual value used in further calculations. In addition, daily DM intakes were increased by 3 ~o for those production systems utilizing intact males (Klosterman et al., 1954; Bailey et al., 1966).
The equation of Lofgreen & Garrett (1968) was used to predict the net
Systems for producing leaner beef 175
energy required for maintenance, that being:
NEm = 0.077( I'V °'Ts)
where N E m = net energy for maintenance (Mcal/day), and W = body weight (kg). It was assumed that bulls and steers had similar maintenance requirements at the same liveweight (Bidart et al., 1970).
Hence, given the energy concentration of the diet, daily DM intake and the net energy required for maintenance, net energy available for gain was determined by subtraction. This value was then used in one of the following equations (National Research Council, unpublished) depend- ing on frame size and sex. Hereford and Charolais cattle were assumed to be of medium and large frame sizes, respectively. These equations are:
L W G = 13.976(NE °'9116)(W-°'6837)
for medium frame steers,
L W G = 15.602(NE °'9116)(W-°'6837)
for large frame steers and medium frame bulls, and
L W G = 17"423(NE°g'9116)(W -°'6837)
for large frame bulls, where L WG = liveweight gain (kg/day), NEg = net energy available for gain (Mcal/day), and W = liveweight (kg). This study assumed that bulls as well as steers were implanted with Ralgro. The above equations account for implantation: however, it was assumed that the response to implants was similar for bulls and steers. This assumption requires further evaluation.
A feed additive (e.g. monensin sodium) was utilized in all systems, resulting in a 10~o reduction in DM intake, regardless of sex (Fox & Black, 1977a; Boucque et al., 1982). However, the total feed saved from utilizing monensin sodium was assumed to be offset by storage and feeding losses (Stoneberg & Anderson, 1979).
Total lean beef produced was based on final carcass lean contents of 60, 62 and 65 ~ for grades (A1), (B1) and (C1), respectively, and initial carcass lean was assumed to be 65 ~o for all cattle (Jones, personal communication). In addition, respective dressing percentages of 58, 57 and 56 were assumed for (A1), (B1) and (C1) carcasses.
176 T.G. Forster et al.
Economic characteristics
All prices (Canadian) used in this simulation were five-year averages based on the years 1977-1981 inclusive. Cattle were priced at $1.72/kg and $1-53/kg for feeder calves and slaughter cattle, respectively (Agriculture Canada, 1977-1981). Furthermore, equality of carcass value was assumed, irrespective of the system by which the cattle were produced. Cow-calf operators received an arbitrary premium of $0.17/kg, or approximately l0 ~o of the purchase price for Charolais calves at 204 kg.
The opportunity cost for maize was $111.41/tonne (84.5 ~o DM) (Ontario Ministry of Agriculture and Food, 1977-1982). The costs of production for maize and maize silage were $659.25 and $594.93/ha, respectively (Crop Budget Committee, 1977-1981)" however, when maize was sold as a cash crop, storage costs of $31.75/ha were not included. Soybean meal, vitamin-mineral supplement, a feed additive premix and implants were valued at $327-15/tonne, $0.39/kg, $9.00/kg and $1.50 each, respectively.
Death loss was assumed to be 2 ~o and was calculated by taking 2 ~ of the average of initial cost of feeder purchase and estimated market value at slaughter. Interest paid on feeder purchase was estimated at 13.9 ~o/annum. Other variable costs included veterinary and medical expenses at $3'74/head/feeding period, bedding costs at $0.11/head/day, and marketing and trucking expenses charged at $0-0582/kg beef produced (Abraham & Small, 1978; Abraham & Lindsay, 1979; Abraham, 1980, 1981, 1982).
Fixed costs totalled $16 098 for the 300 head capacity feedlot, except for system 5 which required an extra $1750 to account for additional corn silage storage facilities. Feedlot expansion was estimated at $180/head, not including feed storage (Ontario Ministry of Agriculture and Food, 1978). Expansion was financed by a long-term mortgage loan at 9.25 ~o/annum to be repaid in 20 years. Salvage value was assumed to be 5 ~ , and the feedlot was given a lifespan of 20 years. Depreciation was based on the original value for 300 head plus depreciation on additional facilities using the straight line method. Interest on equity was calculated at 9-9 °/o/annum. Additional interest paid was handled by taking the simple average of the interest rates for equity and capital loans, and applying it to the average of the acquisition price and salvage value. Additional yearly costs for repairs and maintenance were assumed to be
Systerns for producing leaner beef 177
3 ~ while taxes and insurance were calculated at 1 ~ of the cost required to expand the feedlot facilities.
The simulation model was run 100 times in order to generate variable data which were analyzed across systems using Duncan's new multiple- range test (Steel & Torrie, 1980).
RESULTS AND DISCUSSION
Maize silage and maize yields were estimated to be 11 040 + 420 and 5064 ___ 193 kg DM/ha, respectively. Estimates of production parameters for each system and management option are presented in Table 3. Throughout this study, if P<0 . 05 , values were reported to be significantly different.
The effect of bread on feedlot performance (to a similar degree of finish) was determined by comparing system 1 with system 2, and system 4 with system 5. Within sex and diet, average daily gain favored Charolais cattle by approximately 1 I-7 °,, o, which was similar to the simulated results of Fox & Black (1977b). In addition, Charolais cattle required about 30 more feed than Herefords to reach a similar degree of finish. Charolais cattle were slightly more efficient (2 ~ ) in converting feed to liveweight gain. This may be accounted for by more efficient gains of Charolais cattle anticipated during the initial feedlot phase as a result of earlier weaning. Brungardt (1972a) showed that feed efficiency was not significantly different among Charolais, Angus and Hereford steers when fed to similar levels of finish.
The effect of breed on a weight-constant basis was determined by a comparison of systems 4 and 6. As expected, Charolais bulls (system 6) had a faster rate of gain (13 ~o) than Hereford bulls (system 4), which is in close agreement to the 12 ~ advantage for large-framed and medium- framed steers as predicted by Fox & Black (1977b). Daily DM intake was similar between Charolais and Hereford bulls, but due to the shorter period of time on feed, Charolais bulls had a significantly smaller (11 ~o) total DM intake.
The effect of sex on a weight-constant basis was determined through a comparison of system 3 with system 4. Bulls exhibited a 16.7 ~ advantage in rate of gain over steers, which is similar to the values reported by Bailey et al. (1966) and Martin et al. (1966).
Although bulls consumed 2.4 ~o more DM per day than steers, total
TA
BL
E 3
Est
imat
es o
f P
rodu
ctio
n P
aram
eter
s fo
r E
ach
Sys
tem
and
M
anag
emen
t O
ptio
n
Item
B
eef p
rodu
ctio
n sy
stem
Con
vent
iona
l Le
an
1 2
3 4
5 6
Bre
ed
Her
efor
d C
haro
lais
H
eref
ord
Her
efor
d C
haro
lais
C
haro
lais
S
ex
Ste
er
Ste
er
Ste
er
Bul
l B
ull
Bul
l In
itia
l ag
e (d
ays)
21
2 a
156
b 21
2 a
212
a 15
7 b
156
b In
itia
l w
eigh
t (k
g)
204
204
204
204
204
204
Sla
ught
er w
eigh
t (k
g)
478
b 56
8 a
478
b 47
8 b
568
a 47
8 b
DM
int
ake
(kg/
day)
6.
55 d
7.
19 b
6.
55 d
6-
71 c
7.
39 a
6-
76 c
W
eigh
t ga
in (
kg/d
ay)
0.97
c
1.08
a
0.78
e
0-91
d
1'02
b
1.03
b
Day
s on
fee
d 28
4 d
338
b 35
5 a
302
c 35
7 a
268
e A
ge a
t sl
augh
ter
(day
s)
496
c 49
4 c
567
a 51
4 b
514
b 42
4 d
Tot
al D
M i
ntak
e (k
g)
1 85
6 e
2420
b
2319
b
2024
d
2634
a
1 80
4 f
mai
ze s
ilag
e 1
207
f 1
573
e 2
103
b 1
836
c 23
89 a
1
636
d
shel
led
mai
ze
501
b 65
4 a
..
..
so
ybea
n m
eal
111
e 14
5 c
169
b 14
8 c
192
c 13
1 d
DM
int
ake/
gain
6.
77 d
6.
65 e
8.
46 a
7.
39 b
7.
24 c
6.
58 e
Opt
ion
(A)
Cas
h m
aize
lan
d (h
a)
31.4
d
10.5
f
37.4
c
45-5
b
28.8
e
51-5
a
Cas
h m
aize
(to
nnes
) 18
9 d
64 f
22
5 c
273
b 17
3 e
309
a T
otal
liv
e w
eigh
t pr
oduc
ed (
kg)
82 2
84 b
10
9 18
8 a
82 2
84 b
82
284
b
109
188
a 82
284
b
Tot
al c
arca
ss l
ean
prod
uced
(kg
) 29
499
e
38 9
06 b
29
499
e
30 1
87 d
39
723
a
31 7
04 c
Opt
ion
(B)
Nu
mb
er o
f ca
ttle
on
feed
42
8 d
330
f 46
3 c
535
b 41
2 e
598
a C
ash
mai
ze (
tonn
es)
12.4
bc
8.8
c 19
.5 a
13
-9 a
bc
12-2
bc
16-1
ab
Tot
al l
ive
wei
ght
prod
uced
(kg
) 11
7 39
2 f
120
107
e 12
6992
d
1467
40 c
14
9952
b
1640
19 a
Tot
al c
arca
ss l
ean
prod
uced
(kg
) 42
079
f 42
827
e 45
754
d
53 7
78 c
54
541
b 63
159
a
a, b
, c,
d,
e, f
: M
eans
fol
low
ed b
y di
ffer
ent
lett
ers
are
sign
ific
antl
y di
ffer
ent
(P <
0.0
5).
Systems for producing leaner beeJ 179
DM intake was lower for bulls as steers required an additional 53 days to reach the same slaughter weight. Due to their lower total DM intake, bulls were 12.6~ more efficient than steers in converting feed to liveweight gain. This is in close agreement with the 11"7~o advantage in feed efficiency for bulls over steers noted by Bailey et al. (1966): however, it is lower than the 18 ~o and 16 ~ advantage as shown by Klosterman et al.
(1954) and Warwick et al. (1970), respectively. System 1 was compared with system 3 to determine the effect of
withdrawing maize on the feedlot performance of Hereford steers. Rate of gain was reduced by 20 ~o, which is similar to the results obtained by Goodrich et al. (1974). Due to the lower rate of gain for steers on the high silage ration (0.78 ___ 0.07kg/day), an additional 71 days on feed were required to reach the same slaughter weight. Hence, steers on the high silage ration consumed 2 5 ~ more total DM, resulting in a feed conversion ratio of 8-46 ___ 0.38 kg DM/kg gain, while steers fed maize silage plus maize exhibited a feed to gain ratio of 6.77 ___ 0.24. Goodrich et al. (1974) estimated the feed conversion ratio of steer calves on a 65 ~o corn silage (DM basis) to be 7-49 kg DM/kg gain. This could be reduced by 10~o to 6.74kg DM/kg gain, which is in close agreement with the simulated results of this study, as no feed additive (e.g. monensin sodium) was reported to have been utilized in the experiments used in their regression analysis. Similarly, the feed conversion ratio of steers on the high silage ration is in line with results presented by Burroughs et al. (1981) using crossbred Charolais steers.
A comparison of systems 5 and 6 showed that rate of gain was not significantly different for Charolais bulls slaughtered at either 478 or 568 kg. The absence of a reduction in liveweight gain with increasing weight has also been shown by Dinkel et al. (1969), Hedrick et al. (1969) and Broadbent (1976). Due to the greater proportion of fat in the composition of gain as an animal increases in weight, especially during the fattening phase (Fahmy & Lalande, 1975; Broadbent, 1976), overall rate of gain would be expected to decline as a result of the higher energy cost of fat versus lean deposition. As rate of gain for systems 5 and 6 was not significantly different, this indicated that the equation used to predict liveweight gain was estimating the linear portion of the growth curve.
Overall, within option (A), systems 4 and 6 produced the same amount of total beef as system 1, but were able to market 44 and 63 ~ more cash corn, respectively. Similarly, systems 2 and 5 produced the same amount of total beef, but system 5 had 2.7 times more cash corn available for sale.
180 T.G. Forster et al.
Although cattle in system 3 required 25 ~o more DM per unit gain than cattle within system 1, system 3 was able to market the same amount of beef on a smaller land base, resulting in 19 ~o more land available for cash corn production.
Within option (B), systems 3, 4, 5 and 6 respectively produced 6.9, 23.6, 26-3 and 38 ~o more total beef than the average of the two conventional systems. As noted in option (A), feeding systems utilizing high silage diets resulted in more beef produced per hectare. In a linear programming model of the US beef production system, Yorks et al. (1980) indicated that feeding large-framed bulls (while maintaining a constant supply of beef) resulted in energy minimization as compared to feeding cattle to an average grade of low choice (US grade standards).
Thus, the potential for increasing the beef supply without additional land requirements is evident, as system 6 produced approximately 1.5 times more retail product (lean beef) than conventional systems on the same land base. Conversely, the supply of beef can be maintained while additional land can be utilized in other enterprises, such as cereal grain production.
ECONOMIC CHARACTERISTICS
Mean estimates of the costs and returns per system are presented in Tables 4 and 5 for management options (A) and (B), respectively. Within each production system option (B) exhibited higher net returns than option (A), with the exception of system 3, which had a larger interest cost on feeder purchase and a greater feed and bedding cost per kg of gain. The low rate of gain of cattle on system 3 and subsequent increased time on feed were responsible for these higher costs. As option (B) was generally more profitable than option (A), this indicated the profitability (over the past five years) of marketing maize through cattle rather than as cash.
Within option (A), income due to cattle sales was totally dependent upon slaughter weight. Thus, systems l, 3, 4 and 6 had identical incomes, as did systems 2 and 5. Gross income varied as a result of the extra land utilized in the cash corn enterprise.
As initial weights and numbers of feeder cattle purchased were identical for all systems, differences in purchase price reflected the premium of $0.17/kg, or approximately $35/head paid by the feedlot operator to the cow-calf owner for weaning and selling the Charolais calves about eight weeks early.
Item
TA
BL
E
4 E
stim
ates
of
Co
sts
and
Ret
urn
s (S
/yea
r) f
or E
ach
Sys
tem
Un
der
Man
agem
ent
Op
tio
n (
A)
Bee
J pr
oduc
tion
sys
tem
Com
'ent
lona
l L
ean
Inco
me
catt
le
cash
co
rn
tota
l C
attl
e pu
rcha
se
Pro
duct
ion
cost
s V
aria
ble
Inte
rest
on
cat
tle
purc
hase
d
eath
los
s fe
ed:
mai
ze s
ilag
e sh
elle
d m
aize
so
ybea
n m
eal
othe
r to
tal
vet
and
med
icin
e be
ddin
g m
ark
etin
g a
nd
tru
ckin
g ca
sh m
aize
pro
du
ctio
n
To
tal
Fix
ed
Tot
al p
rod
uct
ion
cos
ts
Net
ret
urns
1 2
3 4
5 6
219
340
b 26
0493
a
219
340
b 21
9 34
0 b
26
04
93
a
219
340
b 21
086
d
7091
f
25
03
7 c
30
428
b 19
274
e 34
451
a 2
40
42
6 f
2
67
58
4 b
2
44
37
7 e
2
49
76
8 d
2
79
76
7 a
25
3791
c
1050
31
b 11
5412
a
1050
31
b 10
5031
b
1154
12 a
11
5412
a
11 3
69 e
14
836
b 14
207
c 12
082
d 15
702
a 11
768
d
3 24
4 c
3 75
9 a
3 24
4 c
3 24
4 c
3 75
9 a
3 34
8 b
21 5
01 f
28
025
e 37
479
b 32
714
c 4
25
56
a
21 5
75 b
28
122
a
--
--
--
1228
3 e
1601
4 c
1864
2 b
1627
2 c
21 1
75 a
5
739
7 49
8 7
209
6 25
7 8
164
61 0
98 d
79
659
a
63 3
30 c
55
243
e
71 8
95 b
2
472
2 47
2 2
472
2 47
2 2
472
95
97
d
11 3
99 b
11
993
a
10 1
90 c
12
057
a 4
694
d 6
228
a 4
694
b 4
694
b 6
228
a 19
536
d 6
503
f 2
32
19
c
28
24
5 b
17
864
e 11
2010
e
1248
56 b
12
3 15
9 c
11
61
70
d
1299
77 a
16
098
b 16
098
b 16
098
b 16
908
b 17
850
a 12
8 10
8 e
1409
54 b
13
9257
c
1322
68 d
14
7827
a
72
87
d
11 2
18 b
c 89
e
1246
9 b
16 5
28 a
29 1
59 d
1450
4 d
5571
49
234
f
2 02
2 9
037
e 4
694
b 31
994
a
1120
97 e
16
098
b 12
8 19
5 e
10 1
84 c
a, b
, c,
d,
e, f
: M
ean
s fo
llow
ed b
y di
ffer
ent
lett
ers
are
sign
ific
antl
y di
ffer
ent
(P <
0.0
5).
TA
BL
E 5
E
stim
ates
of
Cos
ts a
nd
Ret
urn
s (S
/yea
r) f
or E
ach
Sys
tem
Un
der
Man
agem
ent
Op
tio
n (
B)
Item
B
eef p
rodu
ctio
n sy
stem
Con
vent
iona
l L
ean
1 2
3 4
5 6
Inco
me
Cat
tle
313
288
e C
ash
mai
ze
1 38
1 bc
T
otal
31
4 66
9 e
Cat
tle
pu
rch
ase
150
296
d P
rodu
ctio
n co
sts
Var
iabl
e in
tere
st o
n c
attl
e p
urc
has
e 16
208
c
dea
th l
oss
4 63
6 e
feed
m
aize
sil
age
30 6
04 c
sh
elle
d co
rn
30 7
09 a
so
ybea
n m
eal
17 5
05 c
o
ther
8
183
tota
l 87
001
c ve
t an
d m
edic
ine
3 53
3 be
ddin
g 13
665
d
mar
ket
ing
an
d t
ruck
ing
6 69
1 f
cash
mai
ze p
rod
uct
ion
1
240
bc
Tot
al
132
974
e F
ixed
20
092
e
Tot
al p
rod
uct
ion
cos
ts
153
066
e N
et r
etur
ns
11 3
07 c
2870
61
f 3
38
41
7 c
39
1 17
3 b
35
79
60
c
43
74
08
a
984
c 2
167
a 1
55
4ab
c 1
362
bc
1 79
4 ab
28
8 04
5 f
340
584
d 39
2 72
7 b
359
322
c 43
9 20
2 a
1274
45 e
16
2302
c
1876
07 b
15
8844
c
23
05
13
a
1632
1 c
21 8
70 b
21
517
b
41
45
f
50
07
d
57
88
b
3078
0 c
5763
9 a
58 1
65 a
b
30 8
86 a
17
610
c 2
86
96
b
28
96
4 a
b
82
50
11
103
11
144
87
526
c
97 4
38 b
98
273
ab
2
72
6
38
16
4
41
2
1252
2 e
1844
3 a
18 1
32 b
6
84
8 e
7
22
7 d
8
351
c 88
6 c
1 95
5 a
1 40
0 ab
c 13
0 97
4 f
155
756
c 15
7 87
3 b
1743
0 f
23 1
09 c
2
52
39
b
1484
04 f
17
8865
c
1831
12 b
12
196
c
-58
3
d 2
20
08
ab
21 5
50 b
51
68 c
58 3
29 a
29 0
49 a
11
206
98
584
a
3 39
9 16
530
c 8
540
b 1
227
bc
154
998
d 21
777
d
176
775
d 23
703
a
23
41
7 a
6
680
a
57 9
60 a
b
28 8
59 a
b
II 0
91
97
91
0 a
b
40
35
17
968
b 93
41
a 1
616
ab
160
967
a 26
968
a
187
935
a 20
754
b
a, b
, c,
d,
e, f
: M
ean
s fo
llow
ed b
y di
ffer
ent
lett
ers
are
sign
ific
antl
y di
ffer
ent
(P <
0.0
5).
Systems for producing leaner beef 183
Feed costs are indicative of the total DM intake and the diet fed within each system. Systems 2 and 5 had the highest DM intakes resulting in the highest total feed costs. Although system 5 had a higher total DM intake than system 2, total feed costs were greater for system 2, due to differences in diet composition and the respective cost of each ingredient.
Goodrich et al. (1974) and Fox & Black (1977c) have shown that as the amount of maize silage in a ration increased, total feed costs decreased when shelled maize was valued at $3.00 or more per bushel. This simulation study valued maize at $2.77/bushel (cost of production), and showed that Hereford steers fed a diet containing a moderate level of maize (system 1) had lower total feed costs than cattle on an all-silage ration (system 3).
Other variable costs were related to time on feed and quantity of beef marketed, causing systems 2 and 5 to have significantly greater variable costs than all other systems. Consequently, system 5 exhibited the highest total production cost, followed by systems 2, 3, 4, 6 and 1. System 5 also had a significantly greater gross income than any other system thus offsetting its high cost of production, resulting in the highest net return. System 3 showed the lowest net return due to the high costs of production and low gross income as compared to other systems. Further examination revealed that the beef enterprise (in system 3) was actually losing money ($5.76/head), and that the positive net income was a result of the cash corn enterprise.
With management option (B) (Table 5), the cash maize enterprise represented an average of those years in which slightly more feed was produced than could be fed and thus played a minor role in the overall economical analysis. Gross income was directly related to the number of cattle marketed; hence systems 6 and 2 exhibited the highest and lowest gross incomes, respectively.
As all of the land was to be utilized in the production of feed, systems with the same feeding regimes should have had the same feed costs. This was evident in systems 1 and 2; however, systems 3 and 5 showed a significant difference in total feed costs. This was probably due to rounding error when limits were set as to the maximum number of cattle on feed. System 3 could have utilized the land to produce more feed (and subsequently, cattle) and less maize as a cash crop, thus eliminating the observed significant difference. Significant differences existed between the cost of soybean meal for conventional versus lean beef systems due to extra protein supplementation required in the all-maize silage diets. This
184 T.G. Forster et al.
is the primary factor in the smaller total feed costs of the conventional beef production systems. Supplementation with some non-protein nitrogen (i.e. urea) would reduce observed differences in the cost of protein supplement and subsequent total feed costs.
As other variable costs were related to number of cattle on feed and time on feed, lean beef systems had higher values than conventional systems. Fixed costs (within option (B)) were significantly greater for lean beef systems due to the expansion required for the additional number of cattle on feed. Thus, lean beef systems had significantly greater total costs of production than conventional systems. However, gross incomes were also greater for lean beef systems resulting in significantly greater net returns (except for system 3).
The net returns of systems 1 and 2 were not significantly different, indicating that choice of breed had no advantage with respect to profitability as long as cattle were marketed at the same degree of finish. Brungardt (1972b) showed that net returns (per head) increased with larger, growthier cattle when the majority of non-feed costs were based on a per head basis, whereas Fox & Black (1977b), using a simulation model, predicted that average-framed steers would return a greater profit per head than large-framed steers. The procedure by which non-feed costs are allocated may bias results; this should be on a use basis. Crickenberger & Black (1976) suggested that due to uncertainty regarding the cost structure of feedlots, there is no significant advantage for a particular frame size, assuming sale values per kg are equal.
All lean beef systems, with the exception of system 3 as previously discussed, were more profitable than conventional beef production systems. However, income due to cattle sales was based on an equal carcass value ((A1)/(A2) grade) thereby biasing profitabilities of the lean beef systems. In order for lean beef systems to return the same profits as the average of conventional systems (within option (B)), the feedlot operator could afford to sell his cattle for 4.0, 5.1 and 3.1 cents/kg less (liveweight basis) than the (A1)/(A2) price, for cattle managed under systems 4, 5 and 6, respectively. Within option (A), these price differentials are basically reduced as a result of the greater profitability of beef versus cash corn production. The current price differential between an (AI) and (B1) carcass is approximately 13.2 cents/kg on a carcass weight basis which translates into a 10.6 cent differential on a liveweight basis, assuming a dressing percentage of 58 and 57 for (A1) and (B1) carcasses respectively. Thus, under the current pricing scheme lean beef production does not appear to be profitable.
Systems for producing leaner beef 185
In option (A), using a 10 cent differential between (B1) and (A1) cattle (liveweight basis), systems 3, 6 and 5 would become as profitable as the Charolais conventional system when maize prices respectively reached $174.01, $174.14 and $218.90/tonne, assuming the maize cost of production remained constant at $110/tonne. Compared to the Hereford conventional system, systems 6 and 3 would become as profitable at maize prices of $206.73 and $220.37/tonne, respectively. Hence, the prices that maize must reach in order for lean beef systems to become profitable were related to the additional amount of maize available for sale and the size of the profit differentials between the lean and conventional systems.
Cost efficiencies of the beef production enterprise for all systems are presented in Table 6 for management option B. Total cost efficiencies (i.e. total cost/kg gain) were slightly poorer in option (A) than option (B), which may be accounted for by economies of scale. On a cost per kg gain basis, lean systems were less expensive than conventional systems of beef production.
In summary, lean beef production reduced costs of production, but not enough to offset the reduced returns (due to marketing an 'inferior' product) received under current pricing schemes. However, processing technologies such as electrical stimulation, hot processing and vacuum packaging can be utilized in order to improve somewhat the quality of leaner beef (Kastner, 1981 ; Savell & Smith, 1981). Hence, it may become more economical to 'process rather than feed quality' into beef.
TABLE 6 Cost Efficiencies ($) of Beef Production Enterprise (Option (B))
Item System
1 2 3 4 5 6
Per animal Feed 203-27 265.23 210.45 183.69 239.28 163.73 Other variable 104.52 128.98 121.73 108.79 133.95 102.75 Fixed 46.95 52.82 49.91 47.18 52.86 45.10 Total 354.74 447.03 382.09 339.66 426.09 311.58
Per kg gain Feed 0.74 0.73 0.77 0.67 0-66 0.60 Other variable 0.38 0.35 0.44 0-40 0.37 0.37 Fixed 0.17 0.15 0.18 0.17 0.15 0.16 Total 1.29 1.23 1.39 1.24 1.18 1.13
186 T.G. Forster et al.
Fur thermore, lean beef might be marketed solely for use in the ground beef trade, directly to fast food chains, or could compete for export markets traditionally held by countries which export leaner forage fed beef. Development of these markets may result in a more economical outlet for lean beef.
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Systems jbr producing leaner beeJ 187
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