Genetics

Weekly genetics review: Whose job is it to make commercial cattle producers more profitable?

Genetics editor Alastair Rayner, 03/10/2023

INCREASING profitability for commercial producers is a common theme at any field day, workshop, or seminar in the beef industry.

Without doubt, there is a need to have very member of the beef industry aware of, and focused on the opportunities that exist for producers to achieve increases in their individual enterprise profits and contribute collectively to a profitable and sustainable beef industry.

At its most basic measure, profit can be described as the difference between the Average Price ($/kg) and the Cost of Production ($/kg).

More importantly, the basic measurement of Cost of Production ($/kg) is a metric that can be understood and used across the industry, regardless of location or enterprise size.

Producers can determine their individual Cost of Production by dividing their total operating expenses by the kilograms of liveweight they produce.

Looking back over data presented in “the Australian Beef Report 2023” by Bush Agribusiness, it’s fascinating to see the differences in Cost of Production between the average beef producer and those in the Top 25pc as an average between 2011 – 22.

Source: The Australian Beef Report 2023 – Bush Agribusiness

The Australian Beef Report offers a large number of insights into performance of herds and offers key insights that producers could use to measure and potentially improve their own enterprise profitability.

Despite the availability of data such as this, within the broader industry there remains an entrenched attitude towards the role of both the seedstock industry and breed societies which expects them to lead the industry to achieve greater levels of profitability.

This argument lies in a belief that seedstock producers are the ones responsible for supplying genetics to the industry and it is their responsibility to provide commercially profitable genetics.  While in the case of breed societies the expectation is they should ensure seedstock suppliers do this exactly so producers have access to those genetics.

Expecting to be ‘made’ more profitable is setting a business or an enterprise up for disappointment and eventual failure.

The reality is somewhat different. Expecting to be ‘made’ more profitable is setting a business or an enterprise up for disappointment and eventual failure.

Fundamentally, it is the responsibility of any business owner and manager to understand what actually contributes to profit within a business and develop strategies to best exploit them.

Business profit drivers in the beef industry fall into the categories of genetics, environment, and markets.  In an industry with such diverse production environments and over 100 market destinations, it is extremely unrealistic to expect the seedstock industry to take on responsibility for driving profit.

More realistically the responsibility for becoming more profitable has to come back to the individual producer themselves.  Foremost is the need to determine the Cost of Production for a business and establish a clear set of priorities to focus on in order to start improving that result.

Not every set of priorities will be the same, and while there may be overlap, what suits one business may be totally unsuitable for another.  In setting these priorities, it is worth remembering that a common trait shared by all producers characterized as being in the Top 25% is they “focus on the things they can control.”

So where do seedstock producers & genetics fit?

Genetics are clearly one of the key profit drivers for beef businesses. The decision to use a breed or complementary breeds in a crossbreeding program has to lie with the individual producer.

However these choices have to be made with a focus on exploiting the opportunities to reduce the cost of production. Selecting animals with greater genetic merit and leveraging this potential within an environment is a critical step.

Given the extreme variation in production environments and markets, as well as the numerous ways producers can choose to improve their cost of production, it is unrealistic to expect seedstock producers to try to cover all bases.

What is not unrealistic however, is to expect seedstock producers to undertake data collection and performance recoding in order to offer commercial producers the greatest accuracy possible in their decisions to select new sires.

Producers should be choosing the traits they require. However, they need to do this with confidence and accuracy if they are to make selection decisions in order to find the animals with the right genetics for their environment and market.

If there is to be an expectation of seedstock producers, it should be based on this requirement rather than expecting them to produce something for everyone.

What about the breed societies?

A frequent challenge levelled at breed societies, including in reader comments to Beef Central, are that breed societies should be doing more to help commercial producers, or that they are “pushing agendas on unrealistic carcase expectations” or have agendas for genetic change.

There is a difference between expectations and reality. In reality breed societies exist to promote a breed, to improve their breed, define breed standards and to record pedigrees.

The expectation that breed societies should again take on a role defining or directing commercial producers to undertake practices that may contribute to profit again fails to recognise the diversity of the breed industry.

In reality a breed society doesn’t set a direction. For the industry, nor does it define what specific traits producers should select for.

While some breeds do assess and record animals against breed standards, most others are focused on promotion and addressing the needs of members who contribute to the society through memberships and pedigree registrations.

Breed promotion is based on highlighting the genetic merits and the range of traits that breeds may have.

For a commercial producer, the role of a breed society lies in the role of ensuring accuracy of pedigrees and encouraging greater performance recoding across the breed. In this way, a breed can be better placed to offer commercial producers the accuracy they require to make selection decisions for their cost of production with the greatest degree of confidence.

Any more than this is simply unrealistic.

Ultimately there are many ways producers could choose to become more profitable.  Finding the most effective profit drivers may include genetics, and in that case accuracy of information to inform selection is essential.

Producers need to make the choices on genetics based on their needs and then rely on breeders and societies to be able to describe the genetics they have and make them easy to find when required.

 

Alastair Rayner is the Principal of RaynerAg, an agricultural advisory service based in NSW.  RaynerAg is affiliated with BJA Stock & Station Agents.  He regularly lists and sell cattle for clients as well attending bull sales to support client purchases.  Alastair provides pre-sale selections and classifications for seedstock producers in NSW, Qld, and Victoria.  He can be contacted here or through his website www.raynerag.com.au

 

 

 

 

 

 

 

 

 

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Comments

  1. Matt McDonagh, 04/10/2023

    HI Alister, I am not sure what the purpose of this article is, yes, profitability is the difference between inputs and outputs and phenotype = genotype x environment.

    The purpose of my comment is to correct some over simplifications about Breed Associations that you have put forward. Absolutely modern Breed Associations are focussed on commercial profitability of their genetics for beef production. To say that Breed Associations exist to register cattle, promote their breed and set breed standards is grossly over simplified and misleading.

    Three of the biggest Breed Associations handle cattle that would represent more than 50pc of the production cattle in Australia. These Breed Associations enable genetic gain in core profitability traits and use profitability selection $Indexes that target commercial production. In Wagyu, $Indexes also targeting crossbred production. Using Wagyu as the example again, the income base of its members is approx 90% commercial production and 10% seedstock production. Members absolutely use our genetic information to improve commercial productivity.

    Further, Breed Associaitons now offer commercial genomic tools to assist commercial producers (non seedstock) with identification and managment of their breeding and steer production efforts. For Wagyu, this includes cross-breeding applications as well. The Breed Association landscape has changed significantly and I suggest your assertions are dated and not accurate.

  2. Federico Maisonnave, 03/10/2023

    Hi, Alastair. Interesting article. Greetings from South America.

    Profitability of a cattle enterprise shouldn’t be measured as $/hectare? Cattle are not sitting in the air. They produce from an asset, which is the land. Would like to know your thoughts.

    Cheers.

    FM.

  3. Graeme McDonald, 03/10/2023

    It is the commercial producers responsibility to only subsidise the seed stock producer who is operating is a low cost business and passing the efficiency onto their client

  4. Greg Popplewell, 03/10/2023

    I as leader of my team, take full responsibility for creating genetic progress for our customers. Ww measure phenotypes, genotype, run genetic evaluation and mate selection to make genetic progress. We seek to understand my customers breeding objectives with them and align my breeding program and bull allocation accordingly.
    This is how successful breeding companies are run in other industries as well as Beef.

    • Matt McDonagh, 06/10/2023

      For readers information, some factual data from published reports:

      1. The value of genetic gain in the Southern Beef Industry at the commercial producer level was $486 million from genetic gain made over the 10 year period to 2012 (see MLA report B.EVA.0001 and B.EVA.0002). The majority of this value is attributed to commercial producers using information from seed-stock producers backed by BREEDPLAN EBVs (derived through Breed Associatons) to make improved selection decisions.

      2. The MLA L.GEN.2205 report published July 2023 shows that 59% of commercial cattle producers now use BREEDPLAN EBVs to inform their bull selection decisions.

      With increased rates of genetic gain occuring through seedstock producers working with Breed Associations to enable accurate and reliable EBVs and selection indexes and improved tools over the last 10 years, I expect the future net value delivery to the commercial beef production industry to be much much higher than stated in 2014. It would be valuable for MLA to run an evaluation of the commercial impact of the last 10 years of genetic gain. I am sure it will show that the current genetic improvement system is delivering outstanding gains for commercial producers.

      • Pat Harper, 09/10/2023

        Matt,
        Your defensiveness is quite telling and a little perplexing. You seem to be quite happy to correct the article which to my mind is pretty straightforward – and sums up what most cattleman think, which is we have the expectation that breed societies should be supporting their members and ensuring the data we use as producers is as useful and accurate as possible. Then your second comment has remarks such as this “With increased rates of genetic gain occurring through seedstock producers working with Breed Associations to enable accurate and reliable EBVs and selection indexes and improved tools”

        Surely thats the same point that was made in the article? Are you upset because the original article was too short or are you hoping for some major fanfare for doing your job?

        As a producer I can tell you that breed societies are pretty irrelevant to my daily production decisions. My only expectation is that when I buy bulls the information that is offered is accurate, reliable and can be held accountable if I need it. Its nice that breed societies offer lots of things to their members (which I am sure they pay well for) but ultimately those services boil down to the fact that you are helping to make their data more robust and ultimately allow me to make the right choice on which bull to buy.

        It seems really strange that your sentiment seems to support this article, but you want to argue the detail. Perhaps thats suitable for an academic argument, but pretty much a waste of time in the real world.

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