You can be for implants or against
them. You can believe that dewormers add to the bottom line or
are nothing more than hogwash. Never doubt, though, the level of
production efficiency and cost competitiveness these and other
technologies add to the beef industry.
According to a recent landmark
economic analysis conducted by John Lawrence, director of the
Iowa Beef Center at Iowa State University, selling prices would
have to increase by 36% to cover the increase in costs if the
following pharmaceutical technologies were not used: parasite
control products, growth promotant implants, sub-therapeutic
antibiotics, ionophores and beta-agonists
Across all production segments, this analysis indicates these
technologies produced a combined direct cost savings to
producers of $365 per head of beef cattle raised. Keep in mind,
this is gross dollars not accounting for the cost using the
technology.
Also, the more cynical in the crowd
will note this study was funded by the Growth Enhancement
Technology Information Taskforce. This is basically a
collaborative of major animal health companies who fund research
and provide information to producers, relative to the
technologies these companies manufacture and market. So, yes
this group has a vested interest in the study’s outcome. But
that’s why you allow folks like Lawrence at Land Grant
universities to take the reins and provide a third-party
analysis.
Moreover, this study is unique in
that it is built upon what is termed meta-analysis. In simple
terms, the impact of multiple studies for the impact of
dewormers on cattle performance, as an example, were combined to
arrive at an average impact and distribution, weighted for the
populations of each study.
Information from more than 170
research trials—most conducted by universities—during the past
quarter-century were included in the analysis. In other words,
using the impact of implants on the Average Daily Gain (ADG) of
stocker cattle as an example, the analysis accounts for the fact
that some trials report a negative impact, while some a indicate
a positive outcome, and they account for the range in between.
These results were then used to estimate the economic value of
the technologies mentioned earlier at the farm-ranch level in
2005. You can find the complete report and methodology at
www.beeftechnologies.com.
Pharmaceutical Gains Across All
Segments
Cow-Calf Impact
Deworming made the largest economic impact in the cow-calf
segment, effecting weaning rate by 23.62% and calf weaning
weight by 4.24%. Growth implants came next at 2.54% and 3.07%,
respectively, (Table 1).
“In combination, these three
technologies have a significant impact on the cost of production
in beef cow operations. Removing these three technologies is
expected to increase the breakeven selling price nearly 47
percent or $225 per head with the results being different than 0
with a 99 percent confidence,” says Lawrence. “In many cases,
producers have a fixed land base which limits the number of beef
cows they can maintain. As weaning rate and weight decrease,
there are fewer calves sold to cover the cost of maintaining the
herd. Producers must still retain replacement heifers but do so
from a smaller number of calves. Thus, the cost-per-calf sold
increases dramatically.”
Pregnancy rate and calf weaning
weight were the considered performance variables. The changes in
calf ADG affect the weaning weight and, therefore, the sale
weight.
For analysis, researchers assumed
that: the calves are weaned on a fixed date and sold at weaning;
feed consumption was the same at higher weaning weights as it is
at lower weaning weights when pharmaceutical technology is used.
Lawrence notes, “This analysis is
based only on the impact of pregnancy rate and sale weight and
not on any value difference due to a prescribed vaccination or
treatment program. A sensitivity analysis determined that the
results are robust to changes in feed costs in all cases.”
Stocker Impact
At stocker level, dewormers also made the largest economic
impact of the included technologies. In the study dewormers
impacted production costs $20.77 per head, followed by implants
at $18.19 and ionophores at $11.51. Along with fly control and
sub-therapeutic antibiotics, the total is $80.79 (Table 2).
Since ADG is the only change in
production efficiency for stocker operations attributed to
technology and consistently reported in research, it was the
only parameter included in the analysis. Researchers assumed
animals were sold when they reached a desired live weight. The
changes in ADG affect the number of days the cattle remain in
the operation to reach the desired final weight and, therefore,
impact costs.
“The greater the effect of a
technology on production efficiency, the larger its impact on
cost of production,” explains Lawrence. “Eliminating dewormers
affected the breakeven price by 2.7 percent, which represented a
cost of $20.77 per head produced. The second most important
technologies are growth promoting implants which have an effect
of 2.3 percent on the breakeven price, a cost of $18.19 per
head. Ionophores and sub-therapeutic antibiotics have an
expected cost-of-production impact of $11.51 per head and $9.57
per head, respectively. Fly control has a smaller impact. All
the results are robust to changes in feed prices and feeder
cattle prices.”
The study estimates the impact of
eliminating these five technologies on breakeven stocker prices
to be 10.4% or $80.79 per head.
“As expected, efficiency and
performance-enhancing technologies have a larger impact when
feed prices are higher. The cost savings decreased when higher
calf prices were compared to the base price of feed. Operating
costs were then a smaller percentage of total costs,” says
Lawrence.
Feedlot Impact
As many would guess, implants in the feedlot made the most
significant impact on ADG at 14.13%. Also as some might have
suspected beta-agonists impacted feed conversion (FC) the most
at -12.59%. The impact of implants on FC was -8.79%;
beta-agonists had a 14.04% impact on ADG (Table 3).
“Of the technologies considered,
implants have the largest cost savings effect with a savings of
6.5 percent or $68/head — savings that would be lost if these
technologies were eliminated,” say researchers. “Dewormers
generated the second largest cost savings. Ionophores and
beta-agonists reduce costs approximately $12-13 per head or
about 1.2 percent. The impact of beta-agonists is smaller
because they are used for a relatively few days at the end of
the feeding period. Sub-therapeutic antibiotics have an
important, but smaller cost reduction.”
Pharmaceutical technologies also had
a significant impact on breakeven selling prices in the feedlot
segment. Combined, implants, ionophores, antibiotics,
beta-agonists and dewormers in the study impacted breakevens by
12% or $126.
Increasing or Capping Potential
Perhaps the most provocative finding of this study is the impact
that eliminating these technologies would have on the industry.
Lawrence also analyzed these results
using the Food and Agricultural Policy Research Institute (FAPRI)
model of U.S. agriculture to estimate the impact on beef
production, price and trade if these pharmaceutical technologies
were not available. The FAPRI model indicates that U.S. beef
industry would be impacted as follows:
14% smaller calf crop
18% reduction in total beef produced
180% increase in net beef imports
13.5% increase in retail beef prices
Pork and poultry production would
expand to fill the void for domestic and export customers.
“Cattle prices (in this scenario) do increase, but not as fast
as cost of production. Packers and feedlots adjust to maintain
operating margins similar to current levels resulting in lower
returns to beef cow herds and a smaller feedlot and packing
industry. Pork and poultry production expand to fill this void
for domestic and export customers,” says Lawrence. “The complete
elimination of efficiency-enhancing technologies would result in
high beef prices to all consumers, and the U.S. would need to
import significantly more beef to meet its demand. The smaller
beef industry would mean fewer cattle operations and less
employment in rural communities.”
What’s just as true, though less
readily apparent is that such a move would also cap the
industry’s prospects to grow.
In this case, more cows and more
acres would be required to produce less beef, rather than what
has heretofore been cattle producers’ enviable ability to feed
more with less. |
