The decision to enroll feeder cattle in a USDA Processed Verified Program for age and source verification can be based on historic value as well as possible future opportunity costs. The benefits of age and source verification ranges from access to foreign and domestic markets as well as disease traceability. As of December 2017, age verification can also be used to determine carcass maturity as part of the USDA Quality Grading process.
Kansas State University (K-State) just released an analysis on the number of lots and financial reward for cattle enrolled in an age and source program that were marketed in Superior Livestock Video Auction’s summer sales from 2010 through 2017.
K-State’s historic analysis of the value of age and source verification accounted for all other factors such as sex, base weight, etc., as well as enrollment in any of 10 value-added programs such as Certified Natural and Superior Progressive Genetics. This allowed them to isolate the effect of age and source verification.
There were 61 summer sales between 2010 and 2017 with a total of 36,570 lots. A lot must be a minimum of one truck load but can include very large strings of cattle. For instance, at Superior’s January 2018 special sale in Denver, CO, a particular lot had 800 8-weight calves that would fill 13 loads.
The number of cattle age- and source-verified in a given year ranged from a low of 21 percent in 2015 to a high of 55.6 percent in 2011 (see table). The notable decline in lots verified in 2013 coincided with Japan loosening its age restrictions for import from 20 months to 30 months. The percentage of cattle verified took an upturn in 2017, most likely in anticipation of the opening of the Chinese market.
There was a premium paid every year for age and source verification, which ranged from $1.02 cwt in 2013, to a high of $4.07 cwt in 2014. The average premium paid over the seven-year period was $2.25 cwt. At this level of average premium, a producer would need to pencil out if it would be profitable to enroll calves. However, there are significant benefits to the industry if cattle are enrolled in an age and source verification program.
The primary reason people enroll cattle in age and source verification programs is market access. The opening of China will fuel the need for cattle to be verified. Export is vitally important to the industry, and although the U.S. exports to numerous countries, the Asian market is particularly significant. Asian countries buy both the U.S.’ high-priced middle meats as well as being the primary market for U.S. variety meats such as tongues.
There are also a number of domestic branded programs that require age and source verification. These programs tend to be niche markets, but eligibility for them will add value to a lot.
Disease traceability is also vitally important, and the industry has discussed mandatory animal identification to trace possible disease outbreaks. A case of BSE (bovine spongiform encephalopathy or “mad cow”) can shut down exports overnight as they did in 2003. This would be devastating because, without the approximate $250 export value per carcass, the industry would no longer be profitable.
If there was an incidence of tuberculosis or foot-and-mouth disease, it would also need to be traced and eradicated quickly to protect the integrity of the industry. Although a producer would not be paid a direct premium for source verification for disease traceability, they would receive the discount from closed markets in the case of an outbreak. This makes it in the best interest for producers to voluntarily participate in source verification.
Only young animals are eligible for the USDA Quality Grades of Prime, Choice and Select. Historically, bone ossification has been the primary means to age carcasses. According to K-State’s Dr. Ken Odde: “Recent research has indicated that carcasses from grain-fed steers and heifers that are deemed less than 30 months of age, based on dentition (mouthing), are similar in palatability to A maturity carcasses determined via physiological maturity (primarily bone ossification). Thus, they could be classified A maturity for grading purposes even though the physiological maturity characteristics of B or older maturity groupings may be present.
“In June 2017, AMS (USDA’s Agricultural Marketing Service) sought public comment on proposed revisions to the beef standards through a notice in the Federal Register. Based on comments received, AMS proceeded with this revision to incorporate dentition and documentation of actual age as means of determining maturity groupings, and thus eligibility for Prime, Choice, and Select grade designations. A final notice indicating the changes was published to the Federal Register on December 5, 2017.”
To date, it is not known if any cattle have graded using dental or age verification to qualify for A maturity. However, it may hold application particularly for fed heifers that can have “hard bone” physiological maturity at a young age.
Age- and source-verified cattle received a premium each year of K-State’s study, but in some years, the premium was not significant enough to pay for enrollment in most USDA Processed Verified Programs. However, there are many reasons to enroll cattle in an age- and source-verified program including access to markets, disease traceability, and the possibility of its use in carcass quality grading. — Dr. Bob Hough, WLJ correspondent
