Though cattle production is steeped in tradition, it has also seen remarkable advancements in production and management practices in recent decades. Some of these advancement benefits have been clearcut and have been readily adopted, with immediate and direct impacts on the bottom line. Others have been a point of debate due to questions about their value and impact. Many have been skeptical about progressions in genetic information and selection tools. As a result, considerable opportunities and profit potential are left on the table.

As a beef cattle producer, you are continually making genetic selection decisions in your breeding programs. Some may find these decisions challenging and difficult, others may find them quite easy, but all know the significant implications that poor genetic selection decisions can have on their business. Some may use all the tools available and others may not. Some may feel confident in their decisions, but others may not. For decades, there has been more and more genetic information available to those trying to make breeding decisions — fertility, growth, feed efficiency, disposition, calving ease and carcass measures, to name a few. Use and interpretation of this information can feel overwhelming as variations and shifts in the tools continue to evolve faster than we can adapt in some cases. This has added to the uncertainty and skepticism of the tools and information.

As animal breeders, you undoubtedly know that the observable physical properties of an animal (phenotype) are determined by its genetic potential (genotype) and how that animal is managed (environment), or as geneticists say: phenotype equals genotype plus environment. This is the key concept to understand when considering genetic decisions within your herd.

While the genetics you choose are important, your management heavily influences the optimization of those genetic choices. You can evaluate those decisions with individual animal record-keeping and benchmarking or by comparing the data over time. Only then can genetic decisions be monetized or translated into profit.

All beef breeds capture individual data on economically important traits for beef production, and conduct genetic evaluations to estimate the genetic breeding potential of animals within the breed, which are then reported in the form of EPDs. As data is captured on the animal and its offspring, the accuracy of its performance estimate (EPDs) increases. In other words, the EPD will be more accurate in predicting the resulting expression of traits.

Genetic evaluations and resulting EPDs for the various breeds have evolved as the economically important traits for the specific breeds and the entire beef industry have shifted. The days of pushing for maximum performance are past and we now understand that optimization and balance are more desirable goals. Most of the beef breeds report EPDs on very similar traits (birth weight, calving ease, weaning weight, yearling weight, etc.). However, because these tools were developed to compare and advance the trait within the breed, the EPDs are not necessarily comparable across all breeds.

While genetic evaluations and the EPD model can assist in genetic decisions, it is critical to remember that EPDs are an estimate calculated using large amounts of data across many herds. As the science and calculations improve, so too do the models change and evolve to more accurately estimate genetic potential. It is not an exact science, but it is extremely helpful in choosing genetics that will help you reach your business’s production and profit goals.

As genomic technology has advanced to interpret genotypes from DNA within beef cattle, the accuracy of genetic evaluations has improved, particularly on young animals with limited or no data available on offspring. The genotypic data is commonly integrated into the genetic evaluation to increase the prediction accuracy or the EPD. Therefore, an animal’s DNA or genotype becomes another necessary tool to help you reach your business’s production and profit goals.

The genetic selection tools available to ranchers today are all cumulative and help to make better breeding decisions. No one tool is a silver bullet and none should be used in isolation. Used correctly and collectively, they will move you closer to your business’s goals and help drive profit on the ranch. Continuous improvement and advancements in beef cattle genetics is a reality at both the ranch level and the industry level. Tools will continue to improve and evolve and so too will our breeding strategies. Therefore, we must get comfortable with constant change. We will never complete our job of genetic selection as continuous improvement drives our success.

So what does this all mean for your business? It is clear that genetic selection decisions have significant implications for your production and the resulting profit of your business. Every operation has specific areas for improvement and goals — the genetics you choose are the foundation required to achieve these goals combined with optimum management. Thus, considerable gains (or losses) in profit can be realized through your genetic decisions and so it is worth your time and investment to:

1. Define the goals within your operation that will increase profit potential and the impact breeding decisions have on those goals (i.e. improved fertility, increased weaning rate, increased weaning weight, etc.).
2. Understand the tools available and how to accurately interpret and use them in your operation.
3. Measure the important traits that will help you achieve goals within your herd. Compare them over time (benchmark) to ensure advancements are in the direction you desire.

There is no doubt that genetic improvements have improved production and added value to the Canadian beef industry. There is also no doubt that further genetic improvements can be made and that access to premium genetics is not the limiting factor. The question is: Are you using the optimal genetics within your business to drive increased profit? Implementation, application and continuous progress of innovative genetic improvement tools can achieve your production and profit goals, whether at the individual business level or across the entire industry. You have the resources, but you need to translate them into value.

If you would like to better understand genetic selection tools or have questions, please contact one of the beef breed associations. We would be happy to discuss how you can drive profit through genetics on your ranch.

Sandy Russell is a beef producer and partner in Spring Creek Consulting, as well as the director of business development at the recently formed Canadian Beef Improvement Network. The Canadian Beef Improvement Network includes the Canadian Beef Breeds Council, as well as the Charolais, Hereford, Angus and Simmental breed associations, and aims to communicate information about beef genetics.

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As ranchers know all too well, beef production is a complex and diverse business that has many unforeseen challenges. The demands of the day-to-day operation combined with the vast financial management requirements of the business can be overwhelming and often neglected.

It is easy to get bogged down in the daily demands of ranch operations and the all-encompassing facets of financial and organizational management of beef production, especially when the entire operation and management of the business from production to marketing is often done by one or two people. Financing requirements, cash flow, cost analysis, tax implications, market volatility and risk management are all extremely time-consuming and require significant management consideration. The demands of these aspects of management on top of the day-to-day operations of the business often means some elements of management are neglected, and without careful consideration and management, financial and organizational issues can gradually build up over time and erode the business’s viability.

It is also critical for any business to have solid financial management to sustain and overcome the possible disasters and inevitable challenges that can strike without warning. If a business is not on stable financial footing when disasters strike the crisis can pull a business down very rapidly like quicksand. Drought, market disruption, an animal health crisis, just to name a few, are some of the quicksand issues that can very quickly threaten a ranch’s viability. Even when financially sound, these situations can have severe consequences for the business; however, if strong financial management and monitoring is in place the operation is more likely to sustain such circumstances and more quickly recover.

The most common question from ranchers regarding improving overall financial management of the operation is: “Where do we begin?” There is no doubt that the complexity and diversity of beef production makes financial assessment and management more challenging than in some businesses; however, that makes it that much more essential to success. Ultimately, the first place to begin is with a current assessment of the financial and production situation, and this begins by determining the overall profitability of the operation.

In recent decades, considerable focus has been placed on the importance of determining cost of production and maintaining a low cost of production in ranching. While this is a fundamental metric for financial assessment the ultimate measure of success is profitability. Profit factors in both the cost of production and the value of production and are an essential measure of a business’s long-term viability and unless put in the context of overall profitability, trying to minimize cost or maximum value can be futile.

Once an assessment of the business is completed, ongoing monitoring or benchmarking of the key business performance metrics, both year-over-year within the operation and with industry best practices for similar operations, is crucial for ongoing success and continuous improvement. Benchmarking also allows businesses to persistently strive to improve in areas that are critical to the success of the operation. Undertaking this type of financial assessment and ongoing monitoring also ensures the business is quantifying and monitoring key production variables that are paramount to overall success and often clearly identifies areas for improvement.

The immediate followup to the first question of “Where do we begin?” is “How do I improve the bottom line?” Although ranches are extremely complex and diverse, there are definitely a few key areas to focus on to improve the overall profitability of an operation. The main areas of focus fall into three key areas: production optimization, information utilization and innovation adoption.

Production optimization is essentially self-explanatory and refers to those key production variables that we all know are essential to successful operations. This includes increasing conception rates, decreasing calf death loss, improving weight gain and optimizing feed utilization. As with all decisions within the business, these must be put in a financial context. Focusing on one or any combination of these key production measures in the context of overall profitability will ultimately improve the overall success of the business.

Beef production generates an immense amount of data and as an operation begins to focus more on the financial and organizational components of the business, even more data is captured and available to management. Data is only as valuable as the analysis for which it is used and so collecting data in and of itself does not derive value. It is crucial that the information be shared and utilized if the full value is to be captured. It is for this reason that benchmarking, or internal and external comparison, is so important for the business.

The final common trait of a successful business is innovation adoption. Successful businesses persistently strive for improvement through ongoing education and early adoption of innovations that may benefit the business. Whether this is through genetic improvement, feed efficiency or marketing strategies, successful businesses exploit innovations and are continuously seeking out novel ways to remain competitive and profitable.

It is unquestionable that an increased focus on business planning, economic monitoring and marketing strategies improves the overall sustainability of a beef operation, nevertheless this is a daunting and overwhelming undertaking for ranchers. All decisions, whether production, marketing or financial are easier when supported with information. As the business of beef becomes more and more competitive, ultimate success must concentrate on intensified management of all facets of the business, especially the financial and risk management aspects. Long-term viability of ranching operations has and will continue to hinge on the optimal utilization of resources to maximize production while minimizing costs and securing profitability. Only through enhanced management can you find that balance.

Sandy Russell is a partner in Spring Creek Consulting, Outlook, Sask.

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