By Angus Brown | Source: JBS.
We had an interesting query from a reader this week regarding price premiums being offered for high Meat Standards Australia (MSA) indexing cattle. The main factor influencing whether cattle achieve the premium is intramuscular fat (IMF), which for grass-fed cattle is largely influenced by genetics. The question is whether spending more on high IMF bulls will pay off when cattle are sold.
Being largely ignorant to the intricacies of both cattle breeding and genetics, the numbers presented here are open to the correction. We can, however, throw some scenarios in and see how it plays out.
To gain the 20¢ premium, cattle need to grade better than better than 64 on the MSA index. This basically means cattle need to have very high marbling or intramuscular fat. These sorts of levels are generally achieved through feeding grain but can be done on grass with the right genetics.
Regardless of the grid price, the 20¢ premium for the high indexing animals equates to $56 per head on a 280kg cwt animal. Simple enough, but how do we achieve this?
A herd which is currently getting few cattle grading above 64 needs to improve its intra-muscular fat genetics. So we are looking for bulls which have high Estimated Breeding Values (EBV’s) for intra-muscular fat.
Our correspondent has provided the sales figures for a stud breeding for last autumn, broken down into IMF low, average and top 10%. The top 10% bulls, likely the ones which are going to get a herd towards indexing above 64, cost $2,100 more than the bulls which were the breed average for IMF.
A bull can service around 40 cows, and figure 1 shows a basic payoff chart if the high IMF bull can see 25% or 50% of its 40 progeny achieve the premium. The payoff will take three years if 50% of progeny achieve the premium, and five years if 25% make it. This is assuming all else is equal with the bull, which will obviously not be the case.
Interestingly the average number of joining’s for a bull is only 3, with the maximum often 4. This tells us that bulls would want to get at least 50% of progeny to achieve the premium to make the extra cost worth it.
Additionally, it is likely some heifers would be retained, and the high IMF genetics would start to filter through the herd. This would mean the payoff would take longer, but over time more cattle would reach the premium level if the premium is still being paid.
Key points
* Processors are now offering premiums for high MSA Indexing cattle.
* Higher Intra Muscular Fat Bulls are required for many herds to increase MSA Indexes.
* If more than 25% of progeny can achieve premium prices, paying $2000 more for bulls will have a payoff in five years.
What does this mean?
Quantifying the payoff from improving genetics is always difficult, but the basic calculations here should give some idea whether spending on high IMF bulls is something which will offer a positive payoff.
Herds which are getting some cattle achieving an MSA index above 64 are likely to get a positive payoff by buying higher IMF bulls. Herds which have few or no cattle gaining the premium might be better off concentrating on improving other traits, or spending money on fertilizer or improving pastures which might have a better payoff.
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