High Plains cattleman optimistic about beef production
Lee Leachman dresses the part of a High Plains cattleman, with a black cowboy vest, jeans and boots, but as well as being a lifelong cattleman and Colorado graduate in Animal Science, he's a Harvard-educated businessman with an eye to what lies ahead for the future of the beef business.
He was a featured speaker at the recent Wisconsin Cattlemen's and Cattlewomen's Winter Conference in Wisconsin Dells and shared with state beef producers his many reasons for optimism in the cattle business.
Leachman is owner and manager of Leachman Cattle of Colorado, a business that sells 1,000 bulls a year. He said many cattle growers are looking at the sky high price of corn and dwindling pasture lands and the possibility of a continuing drought.
They wonder if it's time to expand or get out of the cattle business. He offered Wisconsin cattle producers a number of reasons to expand rather than exiting the beef business.
"There's a rising demand for high quality food around the world and people are becoming wealthier." As incomes rise in developing countries, those people choose to add better foods to their diets.
Add to that the fact that the world population is going to rise from the current 6 billion people to 9 billion by 2050 and Leachman makes the case that food demand is going to double in the next 40 years.
"Theirs is little new farmland to exploit; we need more production from existing farmland." In this new reality, the value of food is going up.
Also changing the global picture is energy and the environment. "Worries over climate change have forever changed the energy playing field," he said.
That concern has driven politics here and abroad and affected global economics. He sees oil prices staying at $100 a barrel or more. That's important because it affects the ethanol/corn complex.
Leachman said that about half of the world's corn production will end up being used for ethanol production, leading to high commodity prices. "If oil is $100 a barrel corn is at $6 a bushel."
FEWER STEAKS HERE
Fewer Americans and residents of the United Kingdom are lighting up the barbeque to grill steak, and Leachman expects that trend to continue. "Steak that is $8 a pound now will go up to $16-a-pound steak by 2020."
But he sees that as a good reason to stay in the beef business. "Steaks will be eaten by this world's richest people," he said, but most of them won't live here.
Increasingly those very rich people will live in developing countries, according to Leachman. In 2009 there were 3 million U.S. millionaires while India had 185,000 and China had 600,000.
The number of millionaires in those nations is growing by 20 percent a year and now there are 6 million millionaires in India and China, he added. "Most of the world's richest people will live in Asia in the future. That's where we're going to sell the high-end beef."
CattleFax, a member-owned company that has built the largest cattle information database in the country, estimates that global cattle production is down by 6 percent over the last decade and 3 percent last year in the United States. Production of row crops is considered to be one of the contributing factors to the loss of available grazing land.
Leachman believes this situation will continue into the future. "Global cattle numbers have peaked forever."
He argues that that is a good reason for U.S. producers to stay in the cattle business. Their production will be needed to fill global demand.
Pressure from animal rights groups will continue to impact the cattle business. "We will not win the public relations battle with consumers. We will have to alter our animal handling to satisfy the public."
Leachman noted that the productivity of the beef business will be increased in the future with what he called "high tech meat" - increasing the use of various technologies to get the most meat per beef animal.
"We will produce more meat per head but have fewer cattle."
The use of beta-agonists as a growth-promoting feed additive will continue to make it possible for beef growers to produce more lean muscle on their cattle and change the yield on those animals.
These growth promoters, intended for use in the last month of finishing cattle, first became available in 2004 and help cattle turn feed into lean muscle instead of fat. In turn, these cattle weigh more, have larger rib eyes and have a greater yield of red meat.
Feed efficiency can be improved from 9-40 percent in finishing cattle and increase the hot carcass weight by anywhere from 10-28 pounds. Leachman argues that these kinds of efficiencies are going to be needed to feed a hungry world population with a shrinking amount of farmland.
He predicts that DNA indexes and sexed semen will aid in the genetic improvement of the herd allowing the production of more meat per head with fewer animals.
In the future, market forces will improve the "value signals" for beef producers, he said, and as source verification becomes more commonplace there will be added value to producers.
Not all feeder calves are created equal, he said, and the experience with Japan's import restriction on cattle over 20 months of age confirms that for him. "It proved to me that some cattle are really very, very much better than others."
The difference in value may be as much as $150 between the best feeder cattle and the worst calves, he said. "Change is coming and this is one of them," he said, predicting a future with feeder calf certification based on how efficient they are likely to be and their future value in the market.
Leachman sees a time when growers will be able to predict the average daily gain of a calf, its carcass weight and rib eye area as well as verifying its age and source.
OLD TECH TOO
Besides a number of new technologies that will impact beef production in the future, there are some old ideas that bear further scrutiny. Leachman said crossbreeding, which produces the well-known hybrid vigor is a case in point.
More and more beef producers will crossbreed, he predicted, because it's possible to produce 23 percent more pounds of meat weaned per cow. "It's a shockingly big number."
Cattle growers are seeing a benefit from using terminal cross bulls, something that the pork and poultry industries already do. (Nearly all seed corn is also hybrid, he added.)
Choosing the best animals isn't always possible by the use of even a very well-trained eye, he said. That's something Leachman learned as his ranch began using specialized feed bunks to measure the feed going into their animals so they could compare it to meat produced.
Feed efficiency is one of the most economically significant traits, he said, and it is the number-one selection criteria in hogs and poultry. With cattle it is difficult data to collect.
The only way to select for this trait is to measure it, he said, by measuring feed consumption and growth output. Those cattle that eat less and grow more are the ones the industry needs to have more of.
Leachman now has 11,000 animals with individual feed intake and conversion records. For their bulls, they have information on this trait with more accuracy than any other trait, he said. Once this kind of information becomes commonplace in the beef industry, cattlemen will seek out the top cattle because they will be more profitable.
"Why don't more seed stock breeders measure for this trait? Because it's hard to do."
The specialized weighing bunk his ranch uses to determine feed intakes cost them $10,000 and produces 174,000 data point a day - all numbers that need to be crunched. It took a while for computer power to catch up to the point where it could collate all that data. But he feels it is worth doing.
"This is the most heritable trait we can measure."
This data can be used to select for the best animals to eat efficiently and produce the most meat from that feed. "We can build a set of cows that will eat less and produce more."
Profit selection indexes in several of the beef breeds can be used to look at inputs and outputs and predict the most profitable genetics and Leachman sees cattlemen using these indexes more in the future.
These indexes "do the math for you" as they calculate important traits like maternal milk, weaning weight and others, he said. "They will be better cattle on the ranch, in the feedlot and on the rail."
Leachman said the new technologies and improvements in livestock selection will "make cattle that break the barriers of what we think is possible."
The numbers are important, he added, because even seasoned cattlemen cannot make these selections with their eyes. "Visual techniques are not going to tell you which cattle are more efficient and that's a bummer because we all grew up judging cattle."
This rate of genetic change is already happening in chickens and pigs, he said, and will happen in the cattle business. "The next five years could be the best ever to be in the cattle business."
Leachman's business is very keyed in on genetics. They sell black and red Angus bulls as well as stabilizer bulls for maternal traits and some Charolais bulls designed to sire terminal animals.
Leachman Cattle has a network of 35 cooperators who have 6,500 cows and a pool of donors for embryo transfer work. Eighty percent of those herds use artificial insemination.
Leachman said his family puts 1,200 bulls per year on test at his alma mater, Colorado State University and they do some export business - to the United Kingdom, Australia and South America.
Their cow/calf herd in the High Plains numbers over 500 cows.