How Do Current Market Incentives Affect Genetic Selection Decisions?

Dr. Lee Schulz
Iowa State University

Genetic selection should focus on long term profitability, but cattle producers live in a short-term price world.

"The market signal is pretty clear; more calf production is needed and will be rewarded." -Peel

We need to increase the pounds of calf weaned per exposed female. Need to increase conception rate, increase calving percentage, decrease pre-weaning calf death loss, and increasing weaning weight.

The beef industry operates as a textbook commodity industry. Long-run economic (not accounting) profits are zero. Profit levels lead producers to 'bid away' margins.

The inventory cycle has become more variable, e.g. longer troughs.

Beef replacement heifers now make up 20% of the national beef cow herd. Growth has been largest in Great Plains.

Because of short-term price fluctuations, we should us management to address short-term price changes.

How much expansion should be expect? FAPRI and USDA projects vary greatly.

Should you buy or raise replacement females?
Raise:

• Does it cost you less to raise than buy?
• Is Genetic base acceptable? (Calving ease, milk, weights, quality, etc.)
• Your environment is not stressful to "imported" heifers

Buy:

• Cost you less to buy than raise
• Value alternative uses of money or time

If you buy heifers, rather than raise, you need to have increased performance from the progeny of the purchased female. Typically, this means you need heavier weaning weights from that purchased heifer.
Expanding is very expensive now. Risk management becomes a priority.

Decker's Take Home Message:
Using genetic and genomic selection to focus on increased performance, efficiency, and quality can be an effective risk management tool.

*Note, Dr. Schulz often referred to reproduction as lowly heritable. This is not actually born out by the data. Genetics influences 14% of the variation in pregnancy; for comparison, genetics influences 20% of the variation in weaning weight. We can make substantial improvement in reproduction using genetics!