Cattle Provisions Cut From GIPSA Rule

On November 3, the USDA submitted a modified version of its proposed Grain Inspection Packers and Stockyards Administration (GIPSA) marketing rule to the Office of Management and Budget (OMB) for review. Reports regarding USDA’s action indicate the rule sent to OMB contains four of the five provisions required by the 2008 Farm Bill. These provisions apply to the pork and poultry industries, but do not impact the beef industry. OMB has 45 days to review the rule.

The modified rule also eliminates the ban on packer-to-packer sales, and the requirements to only have one buyer per packer and to maintain records in order to justify the price paid for cattle.

The fifth farm bill provision relates to definitions of unfair practices and undue preference. The USDA postponed action on this provision. These definitions, along with potential language relating to competitive injury, remain a concern to USPB.

…continued on page 4

How Would Japan’s Move to 30 Months Affect ASV Premiums?

In August, USPB announced that it will pay a $35 per head age and source verified (ASV) premium through March 31, 2012. Reflecting the seasonality of supply and demand, USPB’s ASV premium will be adjusted to a $25 per head floor premium for April 2012 and a $20 per head floor for May and June of next year.

Recently, reports from Japan indicated that it is considering allowing imports of product from cattle less than 30 months of age from the U.S. As we said in announcing our ASV premiums in August, if the border opens to product from cattle under 30 months of age, we will assess the ASV pricing structure and subsequent premium implementation schedule as needed. However, our intentions at this time are to maintain the premium schedule we announced through June 2012, so we encourage you to continue age verifying calves.

…continued on page 4

Looking at Gender Differences

By Brian Bertelsen, Vice President of Field Operations

Many factors go into deciding whether to feed steers, heifers or mixed sex pens of cattle. When marketed on the USPB grid, each type of cattle has their own strengths and weaknesses.

Table 1 on page 2 summarizes grid performance in Kansas plants for steer, heifer and mixed sex lots during the last five fiscal years on the USPB Base grid. Natural program cattle are not included.

Steers are usually preferred for their superior growth and feedlot performance. As a result, they had the heaviest carcass weight. Their average carcass weight was an impressive 66 pounds heavier than heifers. In turn, their greatest challenge on the grid is Heavyweight discounts.

Over the years, it appears USPB producers are now more selective in the steers they choose to market on the grid, leaning toward those with lighter placement weights and more English breed influence. They had the highest percent black-hided and their in weight was only 16 pounds heavier than heifers.

Although they have the lowest percentage of Choice and Prime, steer lots have less quality grade discounts with the lowest Ungraded, Hard Bone and Over 30 Month percentages. Compared to heifers, they had a larger percentage of Certified Angus Beef (CAB) carcasses due to both a greater black-hided concentration and a slightly higher certification rate within the black individual cattle. As a result, their Quality Grade premium was larger than heifer lots.

Historically, steer lots have had even less Yield Grade 4 and 5 carcasses than heifers. However, during the last few years, they have been very similar.

During the first four years of USPB history, steers had lower subtotal (grid only) premium. However, since then, steers have had a small advantage, as shown in the table on page 2. This change is due in part to feedlots gaining more experience and being more selective in the steers they chose to market on the Base grid. The steer lots also had the greatest concentration of age and source verified (ASV) cattle during the last five years and therefore, the highest total premium of the three cattle types.

Heifer lots are the most popular type of all USPB cattle. I like to describe heifers as being the “easiest” type to market on the USPB grid. They tend to have the highest Yield, or dressing percentage, primarily because they reach maturity and finish, or fatten, quickly. In addition, they eat less feed per day, so they have a little less gut fill.

They have the least Heavyweight discounts, but heifers also have the most Lightweight carcasses. On a per head basis, the Lightweight discount is much smaller because the discount per cwt applies to a lot less pounds per carcass. In general, heifers tend to have a little better Quality Grade than their steer mates. These are all factors that have allowed feedlots to market a greater percentage of their heifer pens on the Base grid including a greater variety of breed types compared to steer pens.

…continued on page 2