It can be frustrating trying to understand prices received for your market cows. I will review what buyers see and why they bid accordingly.
Although small compared to milk sales, gross income from the sale of cull cows is significant, especially now, when milk prices are low. Therefore, it makes sense to optimize the price received for this byproduct of the dairy enterprise.
Improving the value also means improving the quality of the beef produced. This is important because beef from market cows and bulls represents 20 percent of overall U.S. beef production and 30 percent of U.S. ground beef production. Also not all of the carcass is made into ground beef. Approximately 60 percent ends up as whole muscle cuts, being marketed to economy steak houses, and the fast food roast beef trade such as “philly steaks” and roast beef sandwiches.
Market cows are described based primarily on external fat cover. USDA cull cow grades are listed in Table 1. Fatness of the cow increases from top to bottom. USDA market reports will often combine lean cows into canner/cutters. Cows that have been fed some grain for 70+ days will have white (versus yellow) fat and have some amount of marbling. Good cows, as listed in local market reports, would be boners and breakers.
Fortunately, if you can evaluate your cows using body condition score (BCS), you can approximate the grade of the cow. Lean cows would be less than a BCS of 2.5, while fat cows would be greater than BCS 4. If selling through a livestock auction, buyers are predicting the grade of the carcass. If you sell direct to the packer, actual carcass fat, lean and fat color will be used to determine grade, however, most cow packers do not utilize the services of a USDA grader. The grades you receive with the check are determined by employees of the packer.
Unlike finished cattle, where carcass quality is determined by the presence of marbling, cull cows are valued based on the percent lean. At first this seems counterintuitive as cows with the highest percent lean generally bring a lower price than fatter cows with a lower percent lean.
Levi Geyer, USDA Agricultural Marketing Service explained, “Cows classified/graded as Lean bring less per hundred weight, due to having a lower dressing percent-less carcass weight relative to live weight as compared to the average boning or breaking cow. This is attributed to being thin fleshed and often having muscle atrophy. While the boneless meat is worth more per hundred weight, there is less of it. Also, as mentioned previously, the Utility Grade (Boning and Breaking) will have the tenderloins, striploins, and rounds removed and used for a non-graded boxed product, which has more value going into the roast beef fast food trade, family steak houses and buffet style restaurants. So in short that’s why the Boning and Breaking Utility prices quoted are higher than for the Lean slaughter cows.”
Finally, for exceptionally lean cows, buyers are concerned about the cow becoming disabled during transport. As downer cows are no longer allowed in the food chain, she represents a high risk.
The seasonality of pricing of market cows is well documented. Prices usually peak May through August and decline through January when they begin to increase again. This is simply a matter of supply and demand. As the majority of cows (beef cows having the major impact) are marketed in the fall, there is an oversupply, which causes the market to decline. It also coincides with the cooler seasons when less families are grilling.
Factors that affect price
Results of a research project on the factors that affect the price of Holstein cows are reported in Table 2. The greatest discounts were for thin cows that were visibly sick, had a poor locomotion score, and showed signs of recent surgery.
Applying the discount/premium to a 1,400-pound cow (Table 2) shows the reduction in your check from the sale barn for each cow sold. It’s important to understand that these discounts are additive. For example a cow with a BCS 2 will be discounted for being too lean and, if she weighs less than 1,400 pounds, will receive an additional discount. So a cow that is lean, underweight and is lame could be discounted as much as $600/hd compared to a cow without these conditions.
In another example, the reduction in gross receipts can be greater than shown. Based on the current market, gross receipts from a 1400-pound, BCS 3 cow will be $344 greater than if she had been sold as a BCS 2 cow. This is due to weighing 120 pounds less because of lower body condition and receiving a lower price as a lean cow ($0.88/lb versus $1.05/lb).
It doesn’t take too many deficiencies to add up to real money. Not all of these problems are in your control, however. By working with your staff and veterinarian, there are cows that could be marketed in a timelier manner, which can increase gross receipts from this valuable resource.
Next month, we will review the research on feeding cull cows to add value.
Read more: Increasing Market Cow Value Part 2