Practically Ranching

#7 - Troy Marshall, Beef's "S-Words"

July 06, 2022 Matt Perrier Season 1 Episode 7
Practically Ranching
#7 - Troy Marshall, Beef's "S-Words"
Show Notes Transcript

Troy Marshall is the Director of Commercial Industry Relations at the American Angus Association. Throughout his professional career, he has served in a variety of roles within the beef industry, working for breed associations, CattleFax, publishing The Seedstock Digest and helping develop his family's progressive seedstock herd at Marshall Cattle Company.

Troy has made a habit of studying industry trends, consumer preferences and market drivers to envision the future of seedstock production.  In this episode, Troy and I discuss the issues of Sustainability,  Seedstock Selection and adding value to Angus-influenced commercial cattle through  Angus Link and the Genetic Merit Scorecard.

www.angus.org/AngusLink

Matt:

Welcome to practically ranching. I'm your host, Matt Perrier. Each episode, we'll deliver a mixed ration of tradition, business philosophy, and the emotions evoked when these principles collide. We won't try to make you the world's smartest rancher. That's not our goal. But each week we will hold a discussion that will stimulate critical thought, broaden our perspective and help determine practical solutions for the challenges facing ranchers today. And in the process, we may even offer some worthwhile wisdom while we are practically ranching. This week we get to visit with Troy Marshall, the director of commercial industry relations at the American Angus association. Troy has held a variety of roles over the last several decades. And we'll talk a little bit about those, but one of the things I like about visiting with Troy is his, his, width and breadth of, of industry perspective, and so we sat down over the phone a week or so. A few days, I guess, after the beef improvement Federation symposium down in Las Cruces, New Mexico in early June, and just talked about a couple things that stood out to Troy as he was there. And, and then, uh, also got a chance to talk about a program that he works with there at the American Angus association that helps add value to commercial cow calf producers, calves that they're selling. A couple of different programs. And so, we called it the three S words of the beef industry:, sustainability. Beef cattle selection. And then genetic merit scorecards for selling calves. Admittedly, this week's podcast will be a little more beef industry focused a little more tactical in its presentation but most of you all in the industry will probably appreciate a few of these uh don't necessarily get quite as philosophical as troy and i can sometimes get but i think you'll enjoy the content here and again thanks for listening. With us today is Troy Marshall, the director of commercial and industry industry relations for the American Angus association. Troy, one would think that a guy who had the same title 20 years ago could actually say it, but I still, I still guess I can't. Um, but Troy's been up there at St. Joe for how long now, year and a half?

Troy:

18 months. Yeah, right at that.

Matt:

Yep. And I just got to see Troy last week in Las Cruces, New Mexico at the beef improvement Federation symposium. And, and I wanted to circle back and get Troy on here as quick as we could to kind of pick his brain on some things that he heard there. Through the years I've always had a lot of respect for you, Troy, and your, your way of capturing more than just a talk, more than just a conversation, more than just a concept, but seeing how it truly affects farmers and ranchers in all different aspects as we go forth and in that vision and that, ability to kind of sort the important issues from just the ones that are maybe top, top of the, headlines, but, but really get at the important ones. So I guess as you were sitting there and cruises. And hearing from everybody at BIF, what, what were some topics or some discussions that hit you?

Troy:

Yeah, Matt too, I just want to say, really appreciate the opportunity to be on your new podcast and we wish you the best of luck with it and, uh, appreciate the leadership you've provided BIF in the last year as well. I think the biggest, uh, topic by far, you know, are the most talked about in all the hallways was of course sustainability. Um, I think all of us are still trying to figure out what that means. But, it was obvious... whether you talk to the cattle feeding side of the business, the packers, the retailers, um, and now even the seed stock side of the business and the cow calf; sustainability is going to be one of the drivers in the marketplace. And that was, uh, I think that was by far and away. The most talked about conversation there, BIF.

Matt:

Yeah. I call that the new S word, because, I remember the first time I heard it used in the way that today it's used 90% of the time. It was, gosh, it's probably been 15 years ago. I was visiting my sister out in Colorado when they lived north of Denver. And that was on every single billboard, every single everything in, in suburban Denver. And I remembered asking myself, how has sustainability become environmental activism? Because that is so often how it was used and even today, sometimes how it is used. And I think what, what I heard and what I've continued to hear from the discussions, at least the ones that have ag leadership involved, whether it be through the global Roundtable for sustainable beef production or so many of these others, the ones that farmers and ranchers are at the table talking about it, it has a whole lot wider description and wider meaning than just environmental friendliness. Um, because all of us know that for us to sustain and to us, sustainability means generational transfer of a business, I think, in most discussions, but for us to do that, one of the first things we have to do is make sure we take care of the resources and the environment and make sure that that this place is left in a better spot than even we found it, so that our next generation can, can carry that on. And so, um, I I'm, I'm shocked because that, I feel like most of us have, have recognized that not only is sustainability, something that we have to come to the table and talk about, but it's been front of mind with us for generations and generations.

Troy:

I think you hit it on the head. I saw once where they said it actually means three things to different people and the different segments of the business to the corporate world. Uh, they're getting pressure from their stockholders and it is about the environment and carbon and methane. but when you talk to the consumer it's animal welfare, and when you talk to the producer, it's profitability and really we've always done, uh, taking care of the land and the animals and, and providing for the business in such a way that it's able to be passed on to the next generation. And that's what excites me too. Even when you talk about, uh, if you going to boil it down from a genetic standpoint, sustainability is production efficiency and it's reproductive efficiency. And those are things that are driven by genetics and it's, it's things we've been focusing on for a long time.

Matt:

Yeah. And I think as, as we hear within our industry discussions of whether we should or shouldn't even be addressing the issue, I guess my feeling is whether we actually talk sustainability and define sustainability within our production system or not... If we look at things that drive sustainable... There, I used it again. Let's call it long-term profitability. If we address things like function and fertility and turning low digestability type of crops, like forages and grass and things that we can't make much else out of... If we talk about using cattle, genetics, and lines and management that optimize the efficiency of, of turning that fiber and forage into protein. What could be more sustainable than that? And so let's, maybe we don't talk about sustainability. Maybe we talk about reproductive efficiency and, and, cow longevity and function and things like that. And we take care of sustainability by just doing the right thing business wise.

Troy:

I do, I think sustainability is running your business with a long-term outlook and perspective, and that's, that's kind of the code of the west. And why we already got in this business was to, as I said, take care of the land and the animals. I do think the one dynamic that's. And where you mentioned earlier about the industry being involved or producers being involved in this discussion, it really comes down to the metrics and that's probably the one part of the equation that really hasn't been ironed out yet. And it's a little scary when some of these outside sources and governments and stuff... some of the metrics and the way they calculate some of this, I think that's going to be the challenge and, and is one of the reasons why it's really important that we're, um, at the table, not on the menu, so to speak on that side.

Matt:

Yep. Yeah. And that's, that's just it. Whether, whether we like the discussion or not, when our customer wants to hear it, I told the guy out in the hall there in New Mexico. Um, I got called for jury duty about three weeks ago. And in the process of being screened by both attorneys, the prosecuting attorney and the defense attorney for this criminal that was on trial uh, Accused criminal at the time, the defense attorney stood there and looked at our jury and said, now during the selection process, I need to make sure that you don't already have some preconceived notions about my client. You understand that he has the right to remain silent and he's going to choose to take advantage of that right. He's not going to take the stand. Okay. And you understand that we don't have any witnesses to tell you that he is innocent. don't just go into this... um, since they have more witnesses and they have more evidence that that automatically makes them guilty. Does anybody have a problem with that? And I'm sitting here going, yeah,

Troy:

Yeah.

Matt:

I have a problem. The guy already by his body language is kind of an indicating that he's guilty. You're telling me that he can't stand up on the stand and tell me that he's innocent and you have nobody to tell me otherwise. Uh, yeah, I, I'm probably gonna have a hard time believing if I hear evidence from the other side that, that, uh, they're wrong and you're right. Um, so I, that's probably a poor analogy, but in some ways our customers, our consumers, I should say when they want to hear a story from us and we refuse to tell it... They're going to believe, whatever BS they hear from some other entity who quite likely doesn't have our best interest in mind in terms of, of defending farmers and ranchers in the way that we do business. We've got a wonderful story to tell. Um, and Yeah, you're right. The metrics we do need to measure things. We can't just take pictures of green grass and black cows and pretty horses and say that's enough. We, they, I think consumers are wanting a little bit more than. But I don't know that they necessarily want to be knowing every single day, every single thing that we do to every single animal, um, if we're doing it right, and we've got evidence to prove that why not share it?

Troy:

I couldn't agree more. And I actually really like your analogy. Uh, The consumer, they believe in ranchers and they have faith in us that I think that's one of the really good things that we have going into this debate. They have basic faith in what we're doing, and I don't think they do demand a lot of documentation, so they just want to be in, they want some verification, but they trust us initially. I, I really think it will be the. You know, the government and some of those others that are going to be, making the programs either more stringent or putting guidelines around it. But, the consumer just wants a simple validation that we're doing things right. And we have the story to tell.

Matt:

Yup. I would agree. I would agree. Besides, uh, besides this sustainability piece, uh, what else did you learn at BIF 22.

Troy:

As always some of the best conversations are in the hallways, uh, while there was a lot of good stuff in the meetings. I think one of the things that kind of struck me was that, you know, we've gotten really good at describing, genetics, uh, for an overall population of cattle, but I really think the focus is kind of increasingly getting to be on, specific management and for specific marketing programs and, specific goals, uh, how do we combine those with genetics to, create better indexes and better metrics and, and, and really start to focus on not just making genetic change, but making sure we're making genetic progress. And that was probably the other takeaway message I had was just that we've got the tools to make the cattle better to change the cattle. Um, now our focus is just making sure that we're moving in the right direction and with all the traits we can manage and measure, how does that work in your production system, your marketing system? And so I think that's kind of the challenge as we go forward.

Matt:

Yeah. The. The metrics since you used that word earlier, in genetic selection have been there, they continue to be more and more robust. And as we see new and hopefully better genetic selection tools come about, I think we do have, uh, a touch of, of information overload on some, in some cases,

Troy:

Okay.

Matt:

And I think that's one of the things, you know, BIF for those that aren't familiar. It's had a pretty rich history of bringing what I would call the research community within the beef cattle, genetic evaluation, or really the beef cattle industry in general. The folks that did some of the initial research on genetics and on, um, heritability estimates. And then of course later, age adjusted weights, for instance, that's where kind of accepted adjustment for 2 0 5 day waits came from, BIF brought those academics. I I'm sorry, those research folks, the beef cattle extension folks from different universities across the nation, but then a key part of that is they brought in producers and pretty visionary producers that would sit down and say, Hey, these are some things that we need to measure and wouldn't it be cool if we could measure both birth weight and weaning weight and yearling weight and see if we could make cattle that broke that correlation between the three weight traits. Well, guess what? They proved that they could do it. And now here we are 20 traits later and however many multi trait indexes and, and, uh, we continue to grow. But, it does, I mean, for a lot of the folks listening out here that maybe you've got some commercial cows and buy bulls every fall or spring, How best if you're, if you're talking to whether he's got a hundred cows or a thousand cows, maybe there's two different ways of doing it, but how best does he or she go into a bull sale or go onto the internet and decide, Okay, I'm going to buy my next bull. I'm going to get the most bang for my buck. What do they need?

Troy:

Wow. That's a great question, man. You know, for me, the first thing is knowing where you're at, both from a genetic standpoint. And, um, it was kind of a fun thing going down to Las Cruces for that symposium. But, that was a pretty extreme environment, that you're going to have a lot different cow size and level of milk production, et cetera, in that environment than you're going to have, and maybe the Flint Hills of Kansas even. And I think knowing your ideal cow is what fits there. Um, and then you kind of almost need a job description for the bull. I know that sounds pretty simplistic, but you know, are you utilizing this bulls or raise replacements, um, or you doing it more from a terminal side of things? I think one of the real challenges is in our business is we have gotten really good at describing terminal genetics. We made a lot of progress there. And I think we can add a lot of growth and carcass weight, um, red meat, yield, feed efficiency, and of course, quality grade in these cattle, we can do a really good job of that, but the challenge is probably more on the maternal side of things. That's a little harder to define and it's specific to everyone's environment. Um, The reason I said the job description, I was always a big proponent of balanced trait cattle and thinking we could make cattle that can do all things for all people in a way. And, um, we've gotten so good at, making these cattle or changing the genetics that I think it's really hard to have a, that all purpose bull anymore. I think we're going to have more maternal and terminal lines in our industry. And, and so knowing what we're utilizing that bull for and what our goals are, uh, becomes increasingly important. Does that make sense?

Matt:

You? Yeah, it does. I, first thing I thought of was the, and it's in another breed, but, the line one and line two Herefords from mile city and um, how those cattle were kept separate almost to a point where they may have looked the same in terms of hide color, but in terms of their performance, they were almost like two different biological types or two different breeds. Most of us as seed stock breeders, whether we are focused on maternal genetics or whether we are focused on terminal genetics, or like, I think a lot of us where we're trying to find you know, best of both worlds type... right down the middle. Um, are we doing the world a disservice by not saying you're going to come to me for your steer raisers and your terminal heifer raisers, and, and you're going to go to somebody else to buy genetics that you turn out onto one small set of cows that are going to raise your heifers? Uh, is it, and we've talked about that for years or, or do you have two bull suppliers and you say, "I buy my terminal bulls from him and I buy them my maternal bulls from her", or vice versa. Not trying to get you fired. I promise Troy. Uh, it's it, I'm one of your members who is asking this so clearly got a.

Troy:

I don't know how we got down this road so quick here

Matt:

It's.

Troy:

Yeah. That's but no, you know, I, I still think that the seed stock producer can provide genetics and I think those. We have the tools. I don't think terminal maternal are exclusive, but I do think, uh, increasingly, you know, probably as you, as a seed stock producer are going to have to help your customers identify those cattle in your lineup or bull offering that's more maternally oriented, if that's what they're looking for, keeping replacements; and those they're more terminally oriented. Um, and I think the biggest thing is just to make sure that we're producing the cattle that fit that work from an economic standpoint, you know, that'll reproduce in our environment. Um, we've got to take care of that factory, uh, but we can't ignore what we're seeing on the terminal side of things. It just amazes me that 10 or 15 years ago, we would a brag about a set of cattle that went 35 or 40% cab. And, uh, you know, those are industry average. Yeah. They're par now. Um, it's just amazing the improvement we've had and you look at like carcass weights. Um, I remember when I started at Cattle Fax, I'm aging myself, but we use 1,250 pounds as our breakeven on steers, and we were less than that on heifers and, You know, somebody laugh at you. If you told them you were figuring a 1,250 pound breakeven, we're figuring those at 1450 or 1500 pounds at least.

Matt:

Yup. Yup. I just saw a press release that was talking about the winners at at the beef empire days, a live show last weekend. And, uh, one of them was 1,606 pounds. I don't, I mean, those, those steers were all 15 plus and the heifers were, we're not that far behind them. So, yeah it's, it's a different beast, and I think as we talk about some areas where we've maybe. Um, maybe lost some ground, unfortunately in terms of the maternal function of the, of the industry's cow herd, not just one breed, not just one breeders herd. I think a lot of it is that, I mean, it may not be the genetics fault. It may be the fault of, of our grass that, um, can't necessarily push past, you know, 600, 700, 800 pound weaning weights and things like that. So, you know, I'm not sure that there's any ceiling to what we can do with enough pressure on a trait to make cattle bigger, smaller, higher marbling, whatever we want to talk about from a genetic standpoint, I'm, I'm not sure there's any ceiling, um, mother nature and/or input costs, cost gain, you know, land cost grass lease, whatever the case may be... those become the limiting factors. And then it's up to us as managers to decide okay, where where's the sweet spot? And where is that optimum size? Where is that optimum production level? And that's, I know what we've tried to do in our own herd and everybody. Uh, probably has a similar deal, whether their optimum may just be a little different spot. But I think that's what we have to do. I mean, mother nature can either be our, our friend or foe. And, um, here we, we figure she makes pretty good partner because she's real, similar to a lot of our customers'. And if we let her tell us when push that a little toward the extreme, whether that be growth or whether that be any kind of production that requires energy and protein inputs, um, she usually tells us in a way of an open cow or in the way of, uh, uh, you know, something doesn't, something falls out, uh, when you let her kind of work in tandem with, with genetics selection.

Troy:

Well, I liked your use the term sweet spot. Cause I think that's really the key and the sweet spot keeps moving. Um, you know, at one point we thought the 6807s and EXTs had all the growth in the world and, and. And now we're producing cattle with probably 140 pounds of Yearling Weight with similar mature sizes and reproductive rates. Um, you know, we've, we've moved the herd. It's, it's pretty exciting when you look at what we've done from an efficiency standpoint, you know, when they talk sustainability, but in the U S we produce 18% of the world's beef with 6% of the cows. And, uh, we've really continued to gain in that respect. And so we've done a lot of things right. We bent the growth curve. Uh, I know a lot of producers are really putting a lot of constraint on mature size and still increasing growth. And, um, we have the tools to make these cattle better and fit the environment. And of course we now have the tools that we can make them. We can screw them up pretty fast too.

Matt:

Yeah. That's well said because you know, it used to be somebody looking at set at EPDs and say, Is that a good EPD or a bad EPD? Where should it be? And my answer always was, I don't know yet, because I need to know what it is that your production goals are, where it is that you're running these cows. I mean, milk EPD is a classic example. growing up, Milk EPD was just like growth is to some people today. You couldn't, you couldn't push it high enough, fast enough. And then we realized that that extra milk came at a cost, uh, specifically energy for production, cow's ability to do what she needs to be doing for that calf, but also do what she needs to be doing for herself to make another one. And, um, I shoot, it would have been. Well, it was prior to 2004 because it was before I moved back here, I was still at the Angus association. But somewhere in that 2001, 2, 3 area, um, I had a conversation with, with a coworker of mine about a bull that had a plus 16 Milk EPD, and, um, I said that was why I was using him. And he looked at me cross-eyed and at the time I think, uh, an average was probably an 18 and there really weren't that very many bulls that were below. I just half of them were, but the ones that you'd want to use for growth and everything else. And I couldn't talk to him long enough to explain why I was already thinking that we needed to put selective down pressure on something like milk. Um, and today I think that's one of the sweet spot, optimum level ePDs that we just stay out of the ditches on the high and the low side, and try to find ones that work in the middle. And I think we'll find, we'll continue to see that there's there's optimum levels in the, some of those traits.

Troy:

No, I think that's a really good point. You know, you have these traits I think that our threshold and then others that are you optimize to your environment or your management or marketing scheme and, and then there's others that you do maximize within the context of just keeping the whole system; and really, I think that's what most commercial cattlemen are asking from seed stock producers today is, uh, Just do it, right and keep me out of the ditches. As you said, you know, they just want to avoid the problems and, um, make sure we do our part to make sure those cattle will work.

Matt:

Yep. Sure enough. that makes a lot of sense. And again, it's a balancing act. Uh, whenever you go to selecting genetics, whether it be for commercial cow... bulls going on commercial cows or, or seed stock producers, you know, picking their own replacements or selecting AI sires or whatever the case may be, there's, there's a lot that goes into it. And, and, Um, and I think a lot of us have recognized that, uh, Are huge proponents of the performance information and the data and the tools that, that we have been able to make so much directional and hopefully positive change with. There's also, I think, a renewed interest in making sure that the cattle fit from a, um, I hate the word phenotype because I think it gets abused. A phenotype is anything that genetics plus environment result in. So phenotype can be weight or a phenotype can be marbling, but a look of these cattle, so that at least in our selection, They have to be sound enough to travel and get the job done. Both gals and bulls, and they have to be easy fleshing enough to be able to convert hopefully we've got better data at some point in time, but convert God's forage into meat, milk, another calf, whatever the case may be. They don't have to be the class winner at Denver. Um, but, but I think that we have seen a renewed interest in cattle that, that look the part and are able to function and, and, um, and have those traits as well so there's still, there's still some value of going out in the pens and looking at them and making sure that, that, uh, they meet your needs that way as well.

Troy:

Yeah, it's funny. I think the better the science gets and our ability, the art of breeding cattle becomes more and more important as you said, you know, and I know a lot of people don't like the word convenience traits either when you talk about those, but you mentioned a few of those and whether it be disposition or outer quality or mother and ability and all those type of traits, uh, those really do matter. And. I have a lot of impact and yeah, there was a lot of conversation. I think there's been frustration. The industry has been really good over the last 20 years of telling us, well, we need to improve carcass traits or we need to improve, you know, bursts the year lean spreads or whatever the case may be. Um, and there's a lot of people going in a lot of directions right now. And I really think that diversity, um, is not necessarily a bad thing. I think, uh, uh, We have a lot of different demands for these genetics and, um, when used appropriately, there's a wide range of genetics that can really add to the bottom line.

Matt:

Yeah, I would, I would agree. Um, Dr. Don good, uh, who for years and decades and decades provided so much leadership for all of us in the industry, but specifically here in Kansas, he always. I believe he was the first one that I heard this attributed to... pick your breed that you want to use first, take your breeder second, and then pick the individual a distant third. And in other words, find your find the big 30,000 foot view and the needs, um, and, and figure out which breed or breeds can, can help you get there and find somebody that you can trust, and that has enough understanding of your needs that hopefully they're breeding cattle, that that might fit those needs and will do it consistently and honestly, and with some integrity and then go out and find the bull or bulls in the pen. Um, and know that even if you miss the mark a little bit... if you've got step one and two, right, you're probably in decent shape.

Troy:

Absolutely. You make me want to go back backtrack. I want to add to pick the right. Seed stock provider that you have a good relationship with because this is a people business. And that's probably the most important step in the whole process.

Matt:

Yup. Yup. I would agree regardless of, of what we're buying, but I think especially on genetics, um, that, that gets to be pretty important. And, uh, since you went back tracking, I'm going to go backtracking. Remember w brother Elliot, if he heard this. Um, podcasts he'd want to correct is it's not, they aren't, they aren't convenience traits anymore, they're foundation traits.

Troy:

That's right.

Matt:

Yeah. Yeah. I, I wanted to make sure and give Joe credit where credit was due and it is better... convenience... Um, I don't know how convenient I would call things like having to trim a cow's foot or nurse a cow out because she. Had too big of an order for a calf. I think we've gone way past that being a convenient to me, That's a necessity trait or that's a foundation trait that ought to be the first thing they have to do before they do any of the rest of it. And if we don't get that right, uh, I really, my mind, it's kind of like being open. I don't care how good everything else is. If she's open, there's not a head scratch and can't, we do something else with her and, and, um, and let her bring some value to us. Uh, the value she brings me is whatever she's worth as a, as a Big Mac, unfortunately.

Troy:

Well, that discipline is something we'll talk about and we brag about, but you probably have never done this, but I have a let other things override my policies occasionally on some of those things too, and I've usually regretted it when I've got it, but it's, uh, it is tough to stay disciplined to your, criteria from time to time, but it really pays off in the end.

Matt:

Yeah, I think it's easier if you're tasked with continuing a long-term program that you don't want to screw up. I look and again, selfishly or personally, um, I don't want to be the one that, that messes up 150 years worth of, of progress. And so when I look at it that way, I don't worry about taking a loss on a few animals in the next couple of years, as long as I get rid of the genetics that are going to hurt me 20 years from now, um, by losing a customer or whatever else. So, uh, that's part of it. So through the years, we've, we've relied on the Angus association as commercial cow calf producers to do a couple of things. And I would say the first priority is to give us tools that we can use to buying his bulls, um, and, and hopefully source those types of bulls that meet our needs for whatever the selection criteria might be. we've also relied on things like the Angus beef bulletin and, and, Um, so much information that comes from either Angus media or through the PR side of Angus association in terms of information and things, to help us do a better job raising cattle, regardless of breed, really, but especially for Angus cattle. You have worked specifically in the commercial programs areas and others before you over the years with some different programs that may help us do even more. So tell us about a couple of those things that commercial cow calf producers can use through Angus to, to hopefully recoup some of that value that they're getting out of the genetics that they're using.

Troy:

Thanks, Matt, for the opportunity to kind of talk about some of that, I'm probably as excited, I guess, of what we're doing on the commercial front as, you know, anything right now, just because I think it's just so vitally important. These ranchers are doing things right. They're putting the right genetics, they're doing the right management, and, uh, it's just been always a frustrating thing to me that has been very difficult for commercial cattlemen to differentiate their calves in the marketplace and really get rewarded for those superior genetics and management. Um, we have always had reputation cattle, but it's a difficult to extend reputation beyond just a few buyers and that sort of thing. And, um, we just, and the interesting thing is I've seen the change and it's been dramatic within the cattle feeding industry. They understand the value of genetics. They know those genetics or infecting economics in a big way. Um, and even compared to 10 years ago, they're more willing to share information and pay for those cattle and, and reward those genetics. It's just we were short of having a, you know, an objective or a reliable way to measure. The value of those calves are what the genetic merit was in a pen of feeder cattle. And so I'm excited with what we're doing with the genetic merit scorecard. It basically just takes the bull inventory and their historical bull information. And, um, I guess Matt I'd call it most similar to just calculate in a set of EPDs for Penn of feeder cattle, uh, based off of their herd bull genetics, but, um, We give them a score for G, uh, which is for the grid feedlot score and a Wells, the overall beef score. Um, and with that scorecard, it really just gives those buyers away of evaluating those cattle, having a little more confidence in what those genetics are and knowing if they manage them appropriately, what those genetics should be able to do. And, um, I guess what excites me is we've started to see some pretty good premiums there and. I just think that's going to grow. I, um, you know, we wouldn't think of selling bulls without EPDs or some sort of measurement to tell us about the genetics. And I think in five to 10 years, we probably wouldn't, we won't sell too many sets of feeder cattle that don't have a, uh, a way of really validating the genetics that are in those calves.

Matt:

Yep. And I think we see that and everybody for decades has asked where's my premium. And, um, you know, whether it be for whatever it might be through the decades that we've done ...weaning calves, background in calves, getting them vaccinated, um, all these extra things that we keep on saying, you should do this, you need to do this, there's value in this. And you know, it is always hard to value and say, well, you got exactly this much return for that $3 investment mean you got exactly that much return. It there's the market is what it is. And we reward condition on these cases. We, some days, some weeks they're rewarding the light cattle and they turn around a week later because of what the market did and all of a sudden the heavier worth more. And so it is difficult for producers to say, Yeah, i, I spent. I spent two bucks and I got five bucks back. And, and, um, uh, but what do they have? What does, what do folks have to do to get these, for instance, the genetic merit scorecard back on a set of set of feeder cattle, that there are marketing?

Troy:

Our Angus link programs, age and source verification is kind of the baseline, and that's kind of how we verify that the right cattle are being described. And so, uh, really the only cost of the program is having that EID. and they need, they just need a birth date to, uh, beginning and ending of that calving season so we can age and source verify them and then we just need a list of their bulls, uh, that they're currently using, and if they have historical information that even makes it better. Um, but then we just take those, bulls that have been transferred into their name, and can utilize that information then to create the scorecard.

Matt:

Gotcha. And on the date of birth, it's just the beginning and ending of that calving season,

Troy:

Yeah, it's just as simple as, so you just, uh, if you have a calendar with a first calf born circled on, you know, March one and, uh, June one, the last calf born, and that's all we need, you know, if you have a calving book that works as well, but it doesn't even have to be as sophisticated as that. And of course we to, offer, the USDA process verified programs with the NHTC, all natural. We have a partnership, uh, we can provide gap certification as well. And so for those producers who can qualify for those programs, those premiums have been, um, really consistent and fairly substantial over the last three to five years, and so I think that's another great opportunity for those producers who want to take part in those programs. We can offer those beyond the genetic merit scorecard as well.

Matt:

Okay. What's the tag cost and or what does it cost per, per calf?

Troy:

Yeah, roughly $3 per head is what that cost is there. So

Matt:

basically the same, if you were buying that RFID

Troy:

yes.

Matt:

any other, any place else.

Troy:

And that's what makes it exciting. It's really kind of a low risk, uh, from a financial standpoint and really from an effort standpoint too, it doesn't take that much to really take advantage of our marketing services and getting those cattle listed and having that scorecard. And, um, we just started last summer, having those, uh, genetic merit scorecards by all the major video auction markets and stuff, and putting them up on the screen and really promoting those scorecards and On average that calves with just the scorecard, it was about $8 per hundred weight as what we saw last year through the video auctions.

Matt:

Wow.

Troy:

So that's a pretty good return on your investment for $3 to get a, you know, $48-50 back on those calves.

Matt:

I'll take that trade any day. yeah. Yeah.

Troy:

And while I'm bragging, uh, we did calculate with cattle enrolled in the program, we've returned about $12.4 million in premium, back to producers. And I guess I just use that number to validate that there's, there is an opportunity to gain some premiums and differentiate these cattle in the marketplace. And with, while we saw. COVID and all the other black Swan events and the disruptions, having that additional market access and market flexibility, it matters in the marketplace today, more than ever has.

Matt:

Yeah. Yeah, I think, and I think that, uh, it will continue to do so. And as we talked early, Telling that story of sustainability or whatever it is to the consumer. I think a, a 15 digit ID is, is probably a small token to pay to be able to have that verification, as you said, to show where those cattle came from, um, show that age, um, you know, it used to be, I remember the discussions 20 years ago that, uh, we don't want to, you know, we don't want anybody tracking that calf back to my place and saying that something that happened after he left was my fault. Well, I think today we have found out that if they want to get back to where that calf came from, it's, it's not that difficult to do. Um, having that ID in there probably gives us more cover than it does, liability of, of somebody coming back to us and saying something was our fault.

Troy:

Yeah, no, actually, that's kind of the, one of the benefits of the third-party verification. You've done everything to document that you've done it. Right. And so, you know, I think you actually reduce your liability in the case, but.

Matt:

Yep. Yeah, I would say so. I remember... there's probably a few of these PowerPoint slides shows still on somebody's server there in, in St. Joseph. But I borrowed a quote that I heard somebody use from Hormel foods from way back 30 years ago, that said "what's premium today is commodity tomorrow." And, um, again, I mean, it doesn't seem, I'm getting a lot more gray hairs, but it doesn't seem like it was that long ago when black hided caves brought. And you'd go through a lot of these feed yards. And there may only be a few percent that were even black hided, um, fast forward to today. And I don't know what percentage of the cow herd now is, is Angus or Angus based. But, uh, um, the minority is probably those calves who aren't black hided, uh, whether they were sired by an Angus bull or a black hided bull of another breed, um, who quite likely, by the way, Got that from the Angus breed, but, uh, that's, that's, that's another podcast for another day. Um, but regardless... that, that premium for black hatted cattle is no longer there is it? I mean, honestly, maybe, maybe there is some there, but, uh, it takes more than just being black hided anymore, in my opinion.

Troy:

Well, what's interesting that Matt is the premium is still there. It's it it's really running about four to $5 per hundred weight. We're, you know, consistently. We're still paying a premium for black hided cattle, but we're seeing a tremendous amount of variation within those black hided cattle. And you mentioned the numbers and on any given week, depending on the mix, you know, most of the times CAB is in the seventies, low seventies to upper seventies on the amount of cattle that are going through that qualify for the A stamp, which means they meet the, you know, the Phoenix. Black hide requirement. Um, and when you travel through the central us, that's, you know, I I'd say most of the features are approaching 80% black cattle. And so, um, it's surprising to me actually that the black hided premium is still there, but I think it speaks to the quality of the genetics, uh, that we've been able to produce. And one interesting thing, I think too, as we look at, uh, going forward, there was a time last, just this last fall, uh, where they were leaving those good, you know, black nosed Charolais or even something with just a little bit of red or something else. They left him standing in the pens. Um, we had that quality premium and stuff there as high as it's ever been. And, um, that's really, there's probably more talk about the black hided premium now than we've had in maybe four to five years. So, uh, but we do need to differentiate those cattle and, You know, it's just like you just having a blue pickup or something's not enough. We, you're going to want to know more details than that. And the thing to, I guess, throw out there on that that makes me excited when you mentioned most of these programs are built on scarcity and, you know, we saw the preconditioning premiums that were pretty significant when we started out with the VAC 45 programs and all those, and, and now there's really just a discount if you don't precondition your calves. um, the one area that that doesn't hold true is on the genetic side of the equation. That value is, um, there, and the feeder is able to recognize that value, whether, you know, there's a hundred of them or there's 10,000 up in that value is still there. Um, you know, whether it be quality grade, growth, uh, conversion, uh, superior health, you can just go down that list. Uh, uh, and that's what kind of excites me. And I really think is the scorecard grows and acceptance and, and the industry begins to have these measurements and metrics on these calves and, uh, grows more comfortable with them. It's kind of the network effect, uh, like with Facebook or your apps on your phone, you know, the more that, uh, the out there, I think the premiums are actually going to get larger. the thing I think I love about the genetics of it and why I always want to focus on that is because that genetic premium is going to be there in the value every day. And we saw this shift from $4 to $8 dollar corn that you know, that we're seeing right now... that actually has increased the value of genetics. I mean, it's decreased the value of feeder cattle, but, uh, having those cattle that go to the right compositional end point, convert efficiently and grow rapidly and, uh, stay healthy... that just, uh, is magnified in these high cost environments as well.

Matt:

Yeah that's a good point. What else does kind of going off on a different tangent, but leads right into it? What else does $8 and $9 and $10 corn do to our industry in the next couple of years?

Troy:

Ironically, as you go through the, uh, as we make the transition, it's always painful and it, it, it decreases the value of feeder cattle just because we have breakevens that increase and that sort of thing. As you look out a little longer, you know, these higher input costs. Uh, on the feed side, especially around the corn side, it's going to reduce days on feed. Um, and it's going to reduce carcass weight as well. And so that helps us from a supply standpoint. And I think it kind of offsets itself in the long run. Uh, we take tonnage off, um, and that kind of balances itself out. And it's also gonna put more emphasis on, quality grade. And the reason I say that is just because we aren't going to feed these cattle as long. We're not going to feed as many yield grade fours and fives. You throw all the sustainability work on this too. And the idea of killing these cattle, uh, reduce an age to slaughter is going to be a big driver or days to slaughter and all these type formulas. And even more so with $8 corn. And so I, um, I think having those genetics that, will grade, and will grow efficiently are all going to be a premium in the say, dollar market.

Matt:

I think there's so many different things. Like you said, we, we have turned cattle that genetically probably would have graded CAB into prime and a few that would have just graded choice into CAB, B. Um, and the flip side of that is, Yeah, we've, we've got an immense, a number of huge carcass. Fives, um, a lot of waste and, and, again, These feed yards, didn't get to where they are by not being able to push a pencil. They, they will figure out what that's costing them. When a cost of gain is a buck 50, and the fed price is a buck, 30 something. Uh, those cattle are not, I mean, carcass weights are going to come down as will grade on some. And, and, uh, there's some genetics that, that will. Hit that CAB mark as a yield grade two. And there's some that you can feed them clear to a five and they still won't make it. But, uh, I think we'll see those higher, higher marble and type cattle that'll make it. And, uh, the other ones will probably have to settle in where they probably should have been in the first place without those extra 30 days or 60 days or 90 days or whatever they may have fed them for.

Troy:

W the one interesting thing to you? I think that I've had several feed yard managers mentioned to me that I hadn't really thought of with $8 dollar corn is... When it was, you know, when you had a 60 or 70 cent cost of gait and fed cattle were trading at a dollar 40, you weren't really that concerned about compositional end point. And, uh, you, you were taking those cattle, the pretty heavy weights and managing the cattle by an average of a pen. You know, that worked pretty well. Uh, but when you've got cost of gains approach and a buck 40 in the fed market at a buck 40, you get a lot more sensitive about that. And then, um, I think the uniformity of the calves and the calf crop and the calves we can do, and I think that's the commercial guys that really have a breeding program, uh, you know, and that goes back to even length of calving season. But, you know, primarily that bull battery being, um, pretty uniform and consistent in terms of the type and kind of cattle, uh, It's really vital. We've seen some cattle with some really good genetics that are ...in the Angus breed right now, for example, we could have two bulls with similar dollar B's that can be quite a bit different from a growth and maturity pattern and that sort of thing. And that becomes problematic. I think we're going to see a lot of value being placed on, consistency and uniformity of these pens of cattle as well.

Matt:

Yeah, because we're better than we were 30 years ago in terms of, of uniformity and consistency as an industry...

Troy:

Oh, absolutely. Yeah.

Matt:

on, on undoubtedly and 70-some percent that are either sired by one breed or at least got enough influence to be black hided has, has obviously driven a lot of that, but there still is even within a pan that may have come off the same ranch. There's there's some inconsistency there. Uh, what's the biggest change as we finish up here. What's the biggest change you see in the beef industry in five years?

Troy:

wow, Matt, you...

Matt:

I left the easy one. I love the easy one. I should've started with that right off the bat. And then you would've just hung up.

Troy:

This is probably gonna sound too simplistic and I'm not sure we have anything revolutionary... I think we continue to make, um, incredible incremental change on a variety of traits moving forward. Uh, but I do think that we will be in a system that really documents all the management, the genetics, the inputs that we put into the cattle all the way through the system, and that there's going to be much more accountability in our marketing system than what there used to be. And I think that's actually a really positive thing for seed stock producers, commercial cattlemen that are breeding, good cattle. But I think the opportunity to, you know, honestly, some of the best profits in our business are those that have been able to take advantage of the commodity system and sell below average cattle at average prices. Um, and I think we're going to see the pricing structure, and the marketing system evolve, it's going to be much harder to operate with a commodity mindset. I think we're going to have to be more value oriented. And I think that's the biggest change I see in the next five years. There's a lot of them, but that's probably the one I think that down the road, when we look back will be the biggest change we'll see.

Matt:

Yeah, well that, I mean, it drives a lot of different things, um, that are tertiary to that. I mean, it's not, it's not all just about source verified or tagging. I mean, it's so many producers and I'm going to say the vast majority, if not everyone, who's listening to a podcast like this are already doing everything that they can to give the best product that they can out there to the next guy or gal up chain and, and eventually the consumer, And yet some of these same folks are, are pretty anxious about telling that story about, um, believing that this sustainability thing isn't just a left-wing hoax, that's being pushed on all of us. And that's an interesting perspective that you have that, that these types of folks are the ones that probably stand to gain the most. Instead of having to compete with somebody that a bunch of cattle together, tried to mark them up, tried to clean them up so that they were average and made more than the guy that's putting the genetics and the time and the management and the vaccine programs and the weaning programs and everything else that, uh, that we all know probably leads to more value in the end.

Troy:

Well, you know, we see some pretty significant premiums, whether it be for good bulls or for, you know, good pens of feeder cattle. But I think when you really look at those premiums and put an economic analysis to it, most of the time, they're still, I don't know if I should use the word subsidizing, but, uh, the lower end, um, more than anything else. So,

Matt:

Yup. It can happen. Well, Troy, I appreciate your time here and, um, uh, good to see you last week, New Mexico, and, um, we'll, uh, continue the conversation and appreciate all your, all your help.

Troy:

Always appreciate it. Matt wish you the best of luck with your podcast, practically ranching, we're excited to see that move forward and you do a great job and I'm envious that you worked the word tertiary into this. So I will, I'm going to go look that up when I get off here.

Matt:

Um, sometimes with my distance between the brain and the mouth, I never know what exact word is going to come out, but, uh, if you look it up and it wasn't in the correct context, make sure and leave a comment and tell me I screwed up. Well. Yeah. All right. Thanks. A bunch of joy.

Troy:

Thank you, sir.

Matt:

Thanks for joining us for practically ranching, brought to you by Dalebanks Angus. We hope we made you think. Or chuckle or even yell a little, if you enjoyed the podcast. Heck even if you didn't, help us improve by leaving a comment with your review wherever you heard us. And if you want to listen again, click subscribe and catch us next week. God bless, and we look forward to visiting again soon.