Push for feed efficiency to drive value based marketing

Push for feed efficiency to drive value based marketing


Commercial
Kerwee Feedlot’s general manager Steve Martin says feed efficiency represents big potential for gains.

Kerwee Feedlot’s general manager Steve Martin says feed efficiency represents big potential for gains.

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Big money spent on realising the value of feeders.

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LOT FEEDERS are crying out for better tools to accurately determine the value of the stock they are purchasing and feed efficiency is the area with the most potential.

It’s a pertinent issue for the Wagyu breed because projected growth will only be sustainable if the accuracy of genetic values can be lifted, according to one of the country’s larger Wagyu feeders, Stockyard Beef’s Kerwee at Jondaryan on the Queensland Darling Downs.

Kerwee’s general manager Steve Martin urged seedstock producers at this year’s Australian Wagyu Association conference to take a more holistic view of the beef supply chain.

“We focus a lot on the breeding side but that genetic input is only ever a percentage of the net outcome,” he said.

“There is a lot of variability between that point and the customer.

“If you’re a speciality breeder, you must be thinking about where your genetics are going to end up, rather than just focusing on how you are going to maximise revenue at your farmgate.

“The players who are putting information in and generating data to manage genetic gains will be the ones the larger brand owners and corporates source bulls from. The rest will fall off and struggle to find markets.

“We all need to make money from our asset but you have to consider the long-term viability of the whole supply chain.

“Those in for a quick buck out of the Wagyu edge, we don’t really want in our industry.”

Mr Martin presented financial analysis of the Wagyu supply chain which put some eye-opening figures on the economic significance and impact of feeding costs.

With 140,000 registered animals on AWA’s website at $5000 a head there is $700m tied up in seedstock.

At the other end, 36,589 tonnes of beef production forecast in 2018 at $8.50 per kilogram equals $311m to sell.

Sitting in between, however, is 110,363 head a year on feed at an average cost of $3200/head, equalling $353 million.

Mr Martin speaking at the recent Australian Wagyu Association conference in Mackay.

Mr Martin speaking at the recent Australian Wagyu Association conference in Mackay.

A lot of money was being turned over annually by feedlots to realise the end value of a feeder, he said.

And feed efficiency represented big potential for gains.

Feed accounted for 46 per cent of production costs last year in the feedlot and net feed intake (NFI) is moderately heritable with any population typically having 10 to 15pc variability.

“Feeding makes up the majority of production costs between birth and slaughter regardless of your position in the supply chain,” Mr Martin said.

“We have an opportunity to measure it quite accurately in the feedlot system.”

Kerwee joined forces with the AWA two years ago to launch Australia’s first sire progeny test where NFI was assessed in a commercial feedlot situation.

Four cohorts are being monitored - two have already been processed with full kill data measurements.

The aim, Mr Martin explained, is to share data and develop value based marketing options through using feed efficiency testing and potentially Wagyu genotype profiling.

Lotfeeders need to be paying the right money for stock, so everyone progresses the quality together and increases their revenue potential within the chain, he said.

There has been no evidence of a correlation, positive or negative,  between residual feed intake and marbling so selecting for feed efficiency is not going to compromise the profit-driving traits, he said.

Kerwee’s future was focussed on increasing the selection intensity of breeding, a move to value based procurement and genetic profiling at purchase.

Mr Martin made the point that based on the premium Wagyu is achieving over the Eastern Young Cattle Indicator, average Wagyu genetics should be worth 1.3 times the average Angus price, which was $7634 for 2017.

“This means Wagyu bulls should average $9924. The reason they are not, is the data and confidence in the genetics has not been well established,” he said.

In 2016, 5567 females and 3600 bulls were registered with the AWA.

That’s 65pc of male calves registered as bulls.

At the same time the member survey indicated 42pc of fullblood breeding was by artificial insemination or embryo transfer, negating the need for bulls.

“That means there a very large number of below-average bulls being kept in the industry, further increasing the inconsistency being seen by the production side,” Mr Martin said.

“With around 200,000 joinings estimated last year, imagine the variability in the 500,000 joinings forecast by 2022.”

Feedlot capacity has been touted as a limiting factor in the growth of Wagyu but Mr Martin says the space will be there if there is sufficient margin in the cattle to place them over other programs.

“That margin is determined by genetic quality and if it’s not there then the cattle will be unwanted,” he said.

“It’s the goal of every brand owner to be in the high end market but we can’t put them in our feed spaces if we’re tearing money up on them.”

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