BEEF x DAIRY CALVES: WHAT EXACTLY IS GOING ON?

By Pete Anderson, Ph.D., Midwest PMS, LLC

Change tends to happen slowly in the cattle business, but there are occasional exceptions and one is happening right now. Cattle feeders are experiencing one of the most rapid transitions in a long time – an influx of millions of BeefxDairy cross feeder cattle. These cattle are not exactly beef cattle but they sure are not dairy-breed cattle either. We all have some learning to do.

First, some numbers. There are about 9.4 million dairy cows in the US, so about that many calves are born each year with dairy cows as dams. For a long time, that resulted in 3.5-4 million Holstein (and a couple Jersey) steers to feed, plus a few open heifers. Out of a total fed cattle population of 26 million or so each year, that represents a significant amount.

That is changing. Straightbred dairy feeder cattle are rapidly disappearing. Over the past few years, dairy producers have shifted to using beef breed semen on a percentage of their cows, creating calves that are 50% dairy, 50% beef. Ten years ago, there were maybe a few hundred thousand such calves each year, but industry projections are for 3 million 50:50 calves in 2023. Maybe even more.

Why the sudden transition? Lots of reasons but three main ones. First, sex-specific semen allows dairy producers to get nearly 100% heifers out of their best cows. They can breed the top 30-40% of their herd to high genetic merit dairy bulls and get all of their replacements from them. The rest of the cows are then bred to beef bulls to produce feeder cattle, usually steers and heifers. This technology has been available for a while but recent improvements in the fertility rate with sex-specific semen make it a feasible strategy.

Another explanation is the increase in large dairies and the shift toward dairy production in cattle feeding areas like Texas, New Mexico, Colorado, Idaho, and Kansas. Smaller dairies in Eastern states are less likely to employ this strategy but larger dairies have adopted it rapidly, especially those in cattle feeding states that may already have business relationships with cattle feeders.

The third reason is the occasionally challenging dairy economics. Having a calf that is worth a few hundred dollars at one day old, instead of a dairy bred calf that may have no economic value whatsoever, creates a meaningful source of additional revenue for dairy producers.

So, a big change is occurring.

What does this mean for the beef industry?

There are three potentially very positive developments from the influx of BeefxDairy calves. First, they will create higher quality beef products than straight dairy calves would have. Adding beef genetics, especially the high quality genetics that most dairy producers are using, will result in high grading cattle with more acceptable muscle shape and higher red meat yield than dairy feeders would have produced.

This will accelerate a very positive trend in the industry. Current beef quality grading is at an all-time high. Beef demand and eating satisfaction for consumers have improved substantially over the past two decades. The premium product that we are all producing now allows beef to sell for much higher prices than competing proteins in the meat case. The transition to BeefxDairy calves should enhance that.

Also, feedyard performance will be improved. Midwest PMS data indicate that performance of BeefxDairy calves is not halfway between beef cattle and dairy breed cattle. Rather, these calves perform closer to, although still below, straight beef calves. High quality beef genetics and heterosis (hybrid vigor) are two of the reasons why. This improved performance (and cutout yield) means we can produce more beef with less resources, improving both efficiency and sustainability of the beef industry.

Third, this transition is creating alliances between cattle feeders and dairy producers. Done right (and they are not all) this allows for a large population of cattle that can be age and source verified and earn premiums based on that. Knowing more about genetics, health practices, and previous nutrition on incoming feeder cattle should all be positive for production results.

What does this mean for cattle feeders?

Cattle feeders will be getting a large population of feeder cattle that should deliver superior results, compared to the straight dairy feeders that we used to feed. They will probably get to the feedyard lighter than most yearling cattle so they will stay a long time and eat a lot of feed. That is the good news.

On the other hand, most facilities are not ideally suited for light cattle or small groups, which is the best way to manage BeefxDairy calves for at least the first part of the feeding period so that means either capital investment or a poor match between facilities and cattle. Also, incoming health and immunity of these calves could be better than typical feeders, or it could be way worse. In general, they are younger and have not been “hardened” by time on grass. Since they have been on feed for their entire lives, they could have impaired digestive tracts due to mismanagement prior to the feedyard. It is already clear that some of these calves are pushed too hard between weaning and arrival at the feedyard. It also appears that BeefxDairy feeders exhibit some of the worst behaviors of dairy cattle, which can be hard on facilities and employees.

What challenges and opportunities are presented?

Challenges abound. The biggest ones are on either end of the feeding period. First, we really do not know how packers will view these cattle in the long term. Already, concerns about liver abscesses and udder development are causing pushback from packers and it is clear that BeefxDairy cattle will be discounted, relative to fed beef cattle, but there is no consensus on how much. As one form of risk management, cattle feeders should have the sale of the fed cattle all buttoned up before they ever take delivery of BeefxDairy feeders or they could get in a position with even less leverage than usual. Another challenge is in pricing these calves as feeders. We simply do not have enough accurate historic performance data to precisely calculate their value, especially without knowing what discounts might be applied when they are sold.

The biggest opportunities are the improved performance and sustainability that these cattle bring, relative to straight dairy feeders, as well as the branded beef potential, especially for those that are source and age verified. These are great opportunities but will require much more cooperation and information transfer from feeder cattle producers to feeders than we are used to. Any organization that can create a solid lifetime database for the genetics, health, and nutrition practices of these calves will have a significant advantage.

The bottom line

Feeder cattle that are 50% beef genetics will certainly be better cattle to feed than those that are 100% dairy. That much is clear. What is not yet clear are the ideal health and nutrition programs between the calf hutch and the feedyard, the right way to market them, or what these calves are worth, at any stage of production. We have a lot to learn. Let’s get to work.

Pete Anderson is Director of Research for Midwest PMS, LLC, a provider of liquid suspension nutritional supplements and consulting services to cattle feeders and dairy producers. Dr. Anderson directs research conducted and sponsored by MWPMS and provides technical support to MWPMS nutritionists and clients. In addition, he leads the company’s efforts in the areas of performance records analysis and business consulting and has quality assurance, feed safety and regulatory responsibility for the fi rm’s production facilities. Pete received a B.S. degree in Animal Sciences and Industry from Kansas State University in 1983 and a M.S. (1987) and Ph.D. (1989) from Michigan State University with emphasis on growth and muscle biology, particularly as affected by exogenous agents. Pete and his wife, Denise, reside in Loveland, Colorado, and have three adult children.