Realizing more value from your Bull Calves - USDA Rural Development Grants

Morris Halliburton, Hallibuton Farms, had a great newsletter this week as always. One topic Morris addressed was that of bull selection . . ."only about 1 out of 125 or more bulls born get to be a herd bull." The rest of those bull calves are destined for a place on someone's plate somewhere in the USA or across the oceans. So it is pretty critical to both small and large ranching operations that a fair price is realized upon sale at the local auction barn, or in sizeable lots sold straight to an order buyers' truck.

The value received at the local barn for the small producer is impacted by lots of variables; including the age, fatness, hide color, verifiable backgrounding, and probably the reputation of the seller to some extent. As well, each local barn has it's own variables in terms of facilities. Some barns are equipped and eager to recieve age and source verified cows and calves, which realize a premium in today's beef market -- but most local livestock barns are not.

The charming article in the Cattleman Magazine, "A Lifetime of Cow Sense", by By Ellen Humphries, comments on the now defunct National Identification System (NAIS). The veteran cowboy that is the focus of the article, Joe Fenn, correctly foresaw just how unworkable that plan was. The local auction barns would have to participate, and that participation would require technological advancement, and that would require dollars that most local barns could ill afford to part with to comply with the proposed NAIS.

Of course, if some of the 2009 stimulus money had been directed to upgrading local livestock barns across the country, providing tax credits to small ranchers for building pens and chutes, purchasing new ear tagging devices as well as the tags -- maybe the federal governement could have accomplished their goal. Apparently, Uncle Sam just wasn't just real motivated.

As Joe Fenn so astutely commented,

“Here’s another man up the road from where we live. He pens his cattle once a year. We ship the calves and they turn the cows back out. He hasn’t bought a bull in 19 years. The cattle are gathered by helicopter and from the rice fields. Now, how is he going to tag a calf? There are a lot of people who do just like these people. I’d say 40 percent are that way,” from the Coastal Plain up through the eastern part of the state."

British White seedstock producers have the pleasure of raising a remarkable breed of cattle, a breed so uncommon that it is not often seen in larger numbers at most local auction barns in the USA. When you consider that typically . . ."only about 1 out of 125 or more bulls born get to be a herd bull.. .", then the issue of realizing optimum fair value for those "herd bull" quality animals becomes one of great economic importance to the seedstock producer of rare British White cattle.

The feedlot industry today is operating on very slim to none margins, as I noted in a blog a week or so back. So risk taking by livestock order buyers on beef calves of a breed they aren't familiar with, is undoubtedly less likely to occur in today's economic environment.

Given that it is only the very few bull calves that ought to make it in life as a "herd bull", then British White seedstock producers have a ready supply of bull calves that ought to be steered and directed into a value-added beef program, or to participation in official feedlot tests for documenting carcass traits and value. Both would work toward realizing better value and perhaps more importantly, increased demand, by the commercial beef industry for your herd bulls through the documented carcass results -- as well as better value for your steer calves at your local barn. Documentation and education is a wonderfully influential marketing tool.

The establishment of 'regions' within the membership of the BWCAA will be discussed at the next annual meeting, scheduled for September 18 in Minnesota. It may be that through regional groups of British White seedstock producers, we can accomplish feedlot testing of our steers and establish regional value-added programs for marketing our beef calves, and maybe even with some financial assistance from Uncle Sam. The USDA via the Rural Business Cooperative Service has a Value-Added Producer Grant Program, established in the year 2000, to help producers move into value-added agricultural enterprises.

A Certified British White Beef program wouldn't be a fit with the requirements of the grant program, but a Certified British White Grassfed Beef or Certified British White Natural Beef, would perhaps meet the requirements of the grant program as they would be value-added.  Grant funds are available for 'planning' as well; which includes studies, etc... With a 'planning' matching grant, we could feasibly accomplish feedlot testing to determine which British White genetics perform the best under either a Grassfed or Natural approach, or both, as well as to help establish minimum carcass quality parameters for such programs as is typically done by other breed associations with value-added beef marketing programs.

This USDA program is a matching funds program, and is available to individuals and groups, including some non-profits. "Planning grants of up to $100,000 and working capital grants of up to $300,000 to successful applicants. Applicants are encouraged to propose projects that use existing agricultural products in non-traditional ways or merge agricultural products with technology in creative ways. Businesses of all sizes may apply, but priority will be given to operators of small to medium-sized farms operating as a family farm – those with average annual gross sales of less than $700,000."

The following are links which discuss the USDA's Value Added Producer Grant Program:

Center for Rural Affairs - Nebraska
North Texas E-News
National Sustainable Agriculture Coalition
USDA - Rural Development

In the USA we eat French Fries and Baby Beef - In France, they just eat "Fries" and Cow Beef

Excerpt of a great archived article from the Stockman Grassfarmer and Alan Nation.  If you don't have a subscription to this unique publication, you should put it on your to do list to subscribe - whether you are a meat producer, or a consumer, it's a pleasure to read and will help you understand just what is a healthy pleasure to eat.  Click the blog title link for the complete article.

The French believe beef from older cows is Choice grade

by Allan Nation

"When you think of French food what do you think of? Over fattened geese? Snails? Heavy sauces? Coq au vin?  Paris native, Jerome Chateau, said that a far more typical French meal would be steak and fries. (They aren't called French fries in France.) "

"He said the French are by far and away the biggest beef consumers in Europe and treasure a tender, flavorful, grilled steak. The only major difference between French beef eating tradition and North America is that the French tend to eat their grilled steaks rarer and are more lavish with the use of salt and pepper."

"Chateau said the wide-spread American belief that meat from older animals has to be tough strikes most Frenchmen as incredibly naive. In fact, given the choice - as they are - the extremely picky French actually prefer their beef to be from older animals."

"Only 11 percent of France's internal beef consumption comes from animals less than two years of age and only two percent is from young males (mostly as dairy veal).  Eighty seven percent of internally consumed beef is grass finished and 75 percent of French beef consumption is from culled cows - of both beef and dairy breeds.

"He said there were dozens of breeds of cattle in France. Each is bred to work in the highly varying climatic regions of the country. These adapted cattle traditionally take that region's name as the breed's name. For example, Charolais, Tarentaise, Normande (bull pictured above ;jlw), and Simmental."

"He said he believed the primary cause of beef toughness was stress on the animal. He said the French are very cognizant of this fact and genetically select for docile and quiet animals."

French dairy cows that are to be sold for beef are allowed to graze and fatten for at least 90 days after being dried off. He said a typical practice was to dry the cows off in the winter and sell them as beef the following summer after they had fattened on the lush spring grass.

"At the abattoir French cattle are individually penned and never mixed with strange cattle. Free choice water is available to them at all times including during road transport.  Many abattoirs play Classical music in their holding areas to calm the cattle handlers and possibly the cattle."

"He said the oldest labeled beef brand is the Normande breed label. This highly successful beef label is 95 percent from culled dairy cows. He said the average age of the cows used for the premium priced beef was six years. The Normande beef label requires:

1. The cattle have to have been on one farm for at least four months before slaughter.
2. The cattle must spend at least eight months of the year on pasture.
3. The cattle must not spend over four hours on the truck to the abattoir.
4. The cattle must not stand for over 24 hours at the abattoir before slaughter.
5. The cattle are to be kept in individual stalls with free-choice water.
6. The cattle must be handled with a minimum of disruption.
7. The beef must be aged for seven days as a carcass or for 12 days in plastic wrap as individual pieces."

Pineywoods Cattle - Maybe we need a few of these in the East Texas Pineywoods

Follow the blog title link to the Pineywoods Cattle Association's listing of cattle for sale. Amazingly, there is a bit of a predominance of the white Park color pattern in this old American breed.

But perhaps I shouldn't be so amazed, after all this same color pattern is present in the Texas Longhorn. Every British White breeder in Texas is well familiar with their calves getting docked at their local auction barn for being 'longhorns'. If you don't ask to see the scribbles on the auction ticket when you drop your cattle off, you can be assured they designated your British White cattle as Longhorns. Even if you correct the fella checking in your cattle, the order buyers really don't care. They've been buying British White crossbred cattle at a low ball price for years, and no doubt they like it that way.  So stand up when your fat calves are on the auction barn floor and let the crowd know what they are. 

I bought my first British White, my old bull 'Doc', from the late Bob Stanley.  I recall Bob telling me how hard he'd worked to promote both his cattle and the breed at his local auction barn, and he was excited at the response to his efforts.  Bob Stanley had a good eye for cattle and no doubt brought first rate calves to the local barn.  The offpsring of Bob's herd of Britsh White cattle are important genetics in our breed today.

What are Pineywoods cattle??

Pineywoods cattle are an endangered breed of “heritage” livestock that are descended from the original Spanish stock left along the Atlantic and Gulf Coasts of FL, GA, MS & AL by the Spanish explorers in the early 1500’s. The cattle evolved naturally in the brushy wooded terrane of the Gulf Coast. They have evolved to be naturally resistant to most diseases and are able to forage on rough vegetation that commercial cattle will not touch. Pineywoods are also “dry land” cattle and have evolved to avoid predators by spending only a minimum of time at their water hole. This makes them very low impact cattle, as they do not contribute to bank erosion and fouling of streams like most domestic stock. (Source:  http://www.pcrba.org/index.html )

Unfortunately, I was not able to provide a photo as an example of a Pineywoods cow with white Park markings; but, just follow the link to the their site.  And take note of the pretty horns of these Pineywood cattle!  Look familiar?

There are a myriad of examples of the white Park color pattern historically present in some very old and respected breeds, including the Galloway, the Durham, the Welsh White (now only black), the Longhorn, the Highland, and the Shorthorn.

Global Economic Recovery or Chinese Stockpiling of Commodities?

To continue the blog thread here about the significance of the performance of the Baltic Dry Index, here are some excerpts from "Where's the Economy Headed? Insiders Watch This Key Index", Published: Wednesday, 26 Aug 2009, By: Jeff Cox, CNBC.com .

For some analysts, the shipping index's plunge is indicative that the slowdown in demand for shipping will mean more troubles for the US economy, despite its recent signs of growth that have led some to call the recession over. Thus, the increasing popularity of the BDI as a yardstick.   "The reason it's becoming more popular is it has been a very accurate indicator of recessions," says Tony Sagami, editor of Weiss Research's Asia Stock Alert newsletter.

Sagami sees the BDI drop as showing a fall in metals prices, which generally portends an economic slowdown; signal of a short-term correction in the Chinese markets; and a sign that the global economy remains in trouble.  "The US is headed for a Japanese-style recession," says Sagami, who recommends investors increase cash positions.

The rise in the U.S. stock market off it's scary March lows has been nothing short of phnenomenal.  Much of the increase that's been hailed as so promising is the bounce back of a lot of commodities, mostly not the agricultural kind, soybeans being an exception. Anyone could have thrown a dart at a group of steel stocks and had themselves a winner from April to August.  But is the rise in price of steel, copper, and other various hard commodities sustainable? 

As far back as at least June it was noted that China was actually stockpiling commodities, rather than buying them up for use in the normal course of the business of their once bustling economy. 

"Commodities and shipping executives describe Chinese stockpiling in recent months of a range of other commodities as well, including aluminum, copper, nickel, tin, zinc, canola and soybeans. Starting in April, China began stockpiling significant quantities of crude oil."  (Kieth Bradsher, The New York Times, June 2009)

There is lots of speculation as to why China is stockpiling these basic essential commodities.  The scariest reason proposed is that this hoarding of economic essentials is in anticipation of a drastic collapse in the value of the Dollar.  In effect, it is China's way of hedging against a possible collapse of the dollar.  If China, the largest foreign holder of our national debt, deems it prudent to hedge against the collapse of the dollar, it would be wise for the individual investor to take note and take care to have themselves hedged against the very real possibility.

But back to the Baltic Dry Index.  If you look at the chart of the BDI you see a blip upwards beginning early April and beginning to falter by the end of June, marking the beginning of a downward trend that continues today.  Despite this, the  Dow continued it's phenomenal run upwards, with only one barely noticeable blip down in July.  The HangSeng index on the other hand began a downward move toward the end of July, the beginning of which correlates well with that tiny little July blip down of the DOW.  Which market is living in the real world?  Your guess is as good as mine.

China's commodity stockpiling materially contributed to that blip up in the BDI.  Essentially, that makes it an articifical blip upward -- not a rise in shipping traffic and freight rates due to 'normal' rising global demand indicative of a recovering world economy.

The Agricultural Economy and the General Economy are Inversely Related

Thanks to an article written by Stu Ellis, University of Illinois, here is an answer to the puzzle of why the stock market is rallying on perceived economic recovery but the agricultural sector, including commodities and live cattle, is lagging or worse. The following are excerpts from his interview with Kansas State Economist Allen Featherstone:

Featherstone says the farm economy and the general economy do not always move together, since the linkage is an inverse one that has farm income low when the US GDP is higher. He points to the relationship between the US stock market and the Illinois corn price and says the correlation has been nearly neutral since 1960, "Therefore, while the general U.S. economy may be slow there appears to be little long term evidence that there will be major spillovers into the U.S. farm economy. In fact, based on history, it is more likely that the agricultural economy and the general economy are inversely related."


The Kansas State economist says the overall strength of the farm economy is as strong as it has been in nearly 20 years and . . . if farm income remains high, so will land values, but if incomes fall, there is a good chance for declines in land values, and he says USDA forecasts have a lot of uncertainty about future farm income.


Given Featherstone's warning about declining farm income and land prices, does he think farm income will drop? He says US agriculture has been reliant on trade, but the trade surplus agriculture enjoys will decline more than 50% this year due to reduced overseas demand. That will impact different commodities and will impact farmers who produce those commodities, "A reduction in agricultural exports may lead to a building of commodity surpluses (stocks) and a reduction in crop prices and ultimately net farm income." And he says the two prior "busts" in the land market were caused in part by a softer global demand for US farm products.

Featherstone inadvertently provides part of the answer to why the Baltic Dry Index, normally a leading forward indicator to a period of rising economic bliss, has actually lagged markedly behind the current stock market rally. Featherstone indicates there has been a more than 50% decline in overseas demand for our commodities 'this year', and all those commodities would have been transported on various types of ships to many foreign ports. If demand for basic commodities produced in the USA remains 50% and more below normal, that would necessarily have a continuing material impact on freight rates as measured by the Baltic Dry Index.


While Featherstone doesn't address where he sees demand for our commodities in the coming year, the tone of the interview is on the negative side for a rapid global recovery and increased demand for our commodities in the coming months.


Click the blog title link above for the full text of the8/26/09  article by Stu Ellis.