Quality grades: Why are we at a level never achieved before? By: Larry R. Corah,
Reprinted with permission from Progressive Cattlemen Are we producing the highest-quality cattle ever in the history of this great industry? Well, “ever” is right up there with words like never or best, often subject to debate … but it’s a fact that we are producing the highest percentage of choice and higher cattle since the USDA implemented the grade change in the mid-1970s. Starting in 1976, we entered a 30-year decline in the percentage of prime- and choice-grading cattle. Sadly, but not surprisingly, that was accompanied by a decline in beef demand that left the industry in a weakened state of decline. Eventually, consumer demand signals for better beef started to make their way to the ranch, and quality grades ended that long slide in 2006 when barely half of fed cattle could grade choice or prime (51.7 percent). Three years later, that had improved to 56.2 percent (Table 1). Researchers identified six reasons why that had occurred, ranging from management changes to genetics. What is impressive is that since 2009 the industry has continued that upward progress to near the all-time high of 70 percent choice and prime grades in 2014. As we proceed through 2015, the numbers keep getting better, reaching 73.2 percent choice and prime for the first eight weeks. That compares to 71.2 percent for the same period in 2014. Not to be overlooked is how the percentages hitting prime and premium choice have improved. Historically, only 2 to 3 percent of federally inspected cattle graded prime, and by 2006 the percentage of black-hided, Angus-type cattle qualifying for Certified Angus Beef (CAB) had dipped to only 13.9 percent. In 2014, the share of cattle grading prime exceeded 4 percent for the first time as an annual average, and CAB acceptance rates were at a record 25.6 percent, allowing continued sales growth of the largest beef brand. Why has this positive trend continued? Some of the reasons identified in 2009 still apply, but several other circumstances are dramatically different, partially related to structural changes in the industry coupled with the impact of the devastating drought in many regions. Let’s examine these reasons in greater depth. Higher cattle prices have changed how feedlots manage cattle As cattle prices started increasing in 2005 and 2006, culminating in all-time highs in 2014 and 2015, 18 pacdvms.com
Photo by David Cooper.
feedlots had to adapt management practices. In the past four years, feeder calf prices have increased 129 percent while fed cattle prices were held to near 71 percent. That rapidly widened spread in prices saw feedlots adjust by investing more time in existing pens to delay having to buy more expensive replacements. The shift continued regardless of corn prices and resulted in live and carcass weights never seen before, more cattle sold on formulas or grids and extended days on feed, making cattle somewhat fatter. Historically, fed cattle were marketed at a compositional end point of 0.52 to 0.54 inches of fat cover. With cattle being genetically different today, most can be fed to 0.6 to 0.65 inches of fat cover without excessive YG 4 and 5 problems. The years of record-high corn prices moved more cattle feeders to sell on some type of grid or formula, now perhaps 75 percent of the market. Their rationale is based on the high incremental muscle deposition compared to skeletal growth in the last 25 to 30 days on feed, again adding pounds. The impact that added weight, additional fat cover and
