*Productivity of the National Beef Herd-Updated for 2017*

*Productivity of the National Beef Herd-Updated for 2017*

February 13, 2018

**Highlights and Observations on Updated 2017 Data**

The Total Output or Productive Capacity of the industry declined 2.8% from 2016 to 1.34 Million Tonnes Carcass Weight Basis or 980,000 Tonnes on a Retail Weight Basis. The main reasons for the decline are that total steer and heifer supplies were down 1.6 and 1.2% respectively while cow slaughter was up 2%. Also, Average Carcass Weights were 2.7%. The decline in steer and heifer numbers is not surprising given that the beef cow herd that produced the 2017 marketings was 1% smaller as well. Beef imports declined 11% while beef exports increased 5.6%. Of interest is the fact that beef exports to countries other than the USA and Mexico increased 12%.

According to these calculations, per capita disappearance of consumption declined from 54 to 52 lbs. per capita. While this decline appears large on a year to year basis it is the combined result of reduced production and imports and increased exports.

The accuracy of this spread sheet is demonstrated by the fact that the per capita consumption levels estimated in this spread sheet have averaged 58.21 lbs. from 2010 to 2016 while the Statistics Canada estimate has averaged 58.52 lbs.

Productivity per 100 cows and output adjusted for cow size has not changed significantly since 2010. The best indicators of this are Steers Marketings since steer supply expressed on a per cow basis is not influenced by cyclical expansion or contraction of the national herd. The following two indicators are;

Steer Marketings per 100 beef cows - (2010, 41.7 vs 2017, 41.95)

Steer beef /cwt of cow weight (2010, 20.9lb. vs 2017, 21.0 lbs.)

Please find related spread sheet here

The data base that describes the supply and disposition of annual beef production can also be used to analyse the productivity of the national herd and, potentially, to measure changes over time. The spread sheet that accompanies this article uses the same data base as the “Beef Supply and Disposition Sheet” except that the data in this version is based on carcass weights instead of retail weights. The carcass weights are in kilograms rather than pounds but I switch back to pounds in the analysis sections, and in this discussion.

Limitations of this Analysis

Any analysis of beef industry productivity is complicated by the contribution that the dairy sector makes to the annual beef supply. Because dairy herd culling rates are now known it[1] is possible to measure, quite accurately, the contribution culled dairy cows make to the non-fed beef supply. However, no records exist to depict the number of fed steers and heifers that are supplied from the dairy sector. This limitation will be discussed further in the analysis that follows. The other limitation is the fact that the number of beef cows is provided by Statistics Canada and this number is an estimate that is often subject to quite large adjustments in following years. Nonetheless these limitations should not prevent a quite close approximation of industry productivity.

Productivity in this analysis is discussed in three ways

Number of annual marketings of Steers, Heifers, Cows and Bulls per 100 beef cows

Kilograms, or pounds of beef produced per Beef Cow annually, and

Kilograms, or pounds of beef produced per hundred weight of Beef Cow.

This last analysis is necessary to take account of the increasing size of all classes of beef cattle in the national herd.

It is important to define what is meant by the term “per 100 beef cows”. The number of beef cows is the July 1 estimate of beef cows provided annually by Statistics Canada. The July 1 number is chosen in preference to the January 1 number because of the predominance of late winter and early spring calving. The logical assumption is made in this analysis that the vast majority of cows estimated as at July 1 are cows at grass with calves at foot. Further, the appropriate cow count for steer and heifer marketings in any year is a weighted average of the cow herd two years previous (x0.33) and the cow herd one year previous, (x0.67)[2]. These “lagged” cows are the cows that produced the steers and heifers marketed in the subsequent years. Also, since the cow count is of cows with calves at foot this analysis does not measure reproductive efficiency. However, it may be possible to draw an inference about reproductive performance from the size of the “gap” that will be revealed between actual and optimal output, reproductive failures and post natal death loss.

Productivity Tab

In Lines 96 to 103 the annual production of Steers, Heifers, Cows and Bulls is displayed and a summary table, which includes the years 2000 to 2016 inclusive, is displayed below;

Table 1

2000 -2016

NOTE Beef Cows/100 excludes yrs 2003:2005 due to BSE

Steers

Before commenting on the table above, the methodology whereby the dairy steer contribution is estimated is explained.

The best way to estimate the MAXIMUM contribution that dairy steers might have made to the fed beef supply is to calculate the maximum size of the male dairy calf crop. In 2015, it was approximately 450,000 head.[3] From this total one next deducts the reported veal slaughter which was 239,000 head in 2016 leaving a potential maximum of 211,000 head. This number represents, 11.7% of the total steer slaughter. Presuming a further death loss in feedlot I feel confident in estimating that the absolute maximum contribution of the dairy sector to the steer supply in 2016 was 10%. Thus, the minimum supply of beef steers in 2016 was 1.622 million head.

Two entries relating to steer slaughter are shown in the table above, steers per 100 cows (36.37) and steers per 100 beef cows (40.18). The first number is unrealistically low because the denominator is “total cows”. The second number (40.18) indicates the estimated number of beef steers marketed per 100 beef cows. This latter number appears somewhat short of optimal. However, an allowance must be made for the male calves left intact for breeding purposes; and the appropriate number for that is 3 males per 100 beef cows. Obviously, the retention of intact males is concentrated in breeder herds but the number is still appropriate on an industry basis. So, this accounts for about 43.2 males and this in turn suggests an average shortfall of 6.8 steers per 100 cows or 6.8%.

The error in this analysis could be that the estimate of dairy steers in the annual slaughter is too high. To demonstrate the effect of this I recalculated on the assumption that 8% of the steer slaughter were of dairy origin. This did not alter the number of steers per 100 cows (36.37) but it increased the number of steers per 100 beef cows from 40.18 to 41.03.

Heifers

The analysis indicates that on average 30.74 heifers were marketed per 100 beef cows. It is noted that heifer marketings over the period studied averaged 75.7% of steer marketings. Since only 31 heifers were marketed per 100 cows the remainder must have been retained for breeding. In the steer analysis, it was estimated that the average “gap” between actual performance and the biological maximum of 50 head is 6.8 head. There is no reason to suppose that heifer survival is any different than steer survival so one must posit that the heifer gap should also be 6.8 head. That means that the total available heifer count per 100 cows was 43 (50-7) of which 31 were marketed. That in turn means that 12-13 heifers on average would be retained for breeding. In a static herd, where the culling rate is 10%, and allowing for a natural death loss in the cow herd of 2%, it would take this full supply of heifers to maintain breeding numbers.

This however is not the present case because the herd has not been static but has been in fairly rapid decline particularly between 2006 and 2015. The average culling rate since 2006 was 9%. During this period the beef cow herd has declined by 1.35 million head. It cannot, therefore, be argued that the replacement rate had to equal the culling rate. At most an average heifer replacement rate of 7% of the cow herd would suffice. This would mean that no more than 7 replacement heifers would be required to replace 9 culled cow. This added to the known heifer slaughter accounts for 37.71 heifers per 100 cows and leaves a shortfall of 12.3 heifers per 100 cows. This “gap” is 6.5 head greater than the steer gap and is difficult to explain. If all the additional shortfall were retained for breeding there should have been a larger cull cow than that which actually occurred.

In any case, the analysis of steer marketings above is the more accurate because there is no confusion about replacement rates. Thus, it seems valid to assume that the heifer “gap” is the same as the steer gap on the grounds that there is no biological reason that heifer survival to slaughter would be any different than is the case for steers. On that basis one would conclude that the performance gap in the industry is about 7%. That however doesn’t explain the larger heifer gap.

A more conservative approach would be to do a weighted average calculation as follows:

((6.8 x 0.6) + (12.5 x 0.4)) = 9.1%

In Chart 1 of the spread sheet, extrapolated from Table 1 (above), a trend line has been fitted to both the "beef Steers per 100 cows" and the total "Steers per 100 Cows" and there is only a barely distinguishable rise in the trend line. The trend line for heifers is perfectly flat. The rising trend line for cows reflects herd attrition, especially since 2005. Steer marketings are the best measure of productivity and of any trend or change in productivity. This is so because steer marketings per cow or per hundred cows is unaffected by herd expansion or contraction.

Conclusion

The conclusion from this analysis is that, in terms of numbers marketed, the industry is performing at between 90 and 93% of its maximum biological capability. The cautionary further conclusion is that any analysis such as this is subject to the accuracy of the data available.

However, Chart 2 (extrapolated from Table 2), Pounds of Beef per Beef Cow per Year 1998 to 2016, shows a decidedly upward trend line for “Pounds of Beef /per Beef Cow. This applies to Steer Beef, Heifer Beef and Total Beef. But since there was no increase in numbers per 100 cows the increase in tonnage can clearly be attributed to larger cows and heavier market weights of all kinds. This is confirmed in Chart 3, Pounds of Beef per Cwt of Live Cow Weight where pounds of beef produced are expressed as “Pounds per Cwt of Cow Weight”, and when that is done the trend line for both steers and heifers is as flat as it was for number of head. The rising trend line for cow beef is obviously the result of both an increase in cow size and in numbers marketed during a long period of herd attrition.

Table 2, 2000 - 2016

Chart 2

Table 3

Chart 3

This data strongly supports the conclusion that there has been little or no increase in industry productivity. Such increase as has been claimed to have occurred is simply the result of increasing animal size but when output is adjusted for animal size there has been no discernible increase in output.

[1] Source Canadian Dairy Info. Centre

[2] This is an approximation based on marketing patterns of cattle of known age. This ratio could be improved with more data on age verified marketings.

[3] The number is derived by assuming a 2% death loss and a 2% retention of intact males deducted from half the cow herd size.

END