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Determining How Idaho Beef Cattle Producers Value Bull Selection

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Determining How Idaho Beef Cattle Producers Value Bull Selection Determining How Idaho Beef Cattle Producers Value Bull Selection Characteristics Hernan Tejeda, Assistant Professor and Extension Specialist, University of Idaho Benton Glaze, Beef Extension Specialist and Associate Professor, University of Idaho K. Scott Jensen, Extension Educator-Owyhee County Chair, University of Idaho Abstract1 Bull expected progeny differences (EPD) and actual performance data were examined along with their auction prices in order to identify the significant impact of different traits on the resulting bull’s price, in specific regions of the Pacific Northwest. The objective was to determine the characteristics most valued by bull purchasers for this region of the country, which receives less precipitation and has higher elevation when compared to the Plains or the Midwest, where most similar studies have been focused in the past. Auction catalog information of bull sales and final sale price, from two different regions in Idaho, are used to estimate hedonic models, with price as a function of their simple performance measurements (SPMs), EPDs and value indexes. For the north central region of Idaho, the catalog provided SPMs – birth weight (BW), 205-day weight (205 WT) and 365- day weight (365 WT) – had a significant positive effect on the price paid by cow/calf producer. In addition, EPDs for milk (MILK), docility (DOC) and birth weight (BEPD) were significant, thoughBEPD had a neg- ative effect on the bull’s price. For the southwest region of Idaho, the only SPM provided in all the catalogs – birth weight (BW) – was found to have a significant negative effect on price. The yearling age EPD YEPD( ) was found to have a significant positive effect on price. In this southern region of Idaho, both the index of weaned calf value ($W) and of cow energy value ($EN) were found to have a significant positive effect on prices. Some results corroborate previous study findings, though others appear to be related to the geographic region of the U.S. More data are being sought to provide further insights and measure their robustness. 1 This work is supported by USDA NIFA, Hatch project IDA 01581 and the Idaho Agricultural Experiment Station. WEF DECEMBER 2018 Determining how Idaho beef cattle 78 Figure 1: Average Number of Cattle and Calves per 100 Acres of All Land in Farms. (2012) Introduction The cattle industry entered a new cattle cycle in 2014 (Tonsor and Mitchell, 2017). These cycles generally last about 10-11 years, and begin with a few years of herd expansion and lower cattle prices (Feuz and Umberger, 2003). This cycle period is characterized during its first few years by a larger cattle inventory and lower prices. In Idaho, the cattle sector is second only to the dairy industry as a major contributor to the state’s agricultural economy. In 2014, cattle and calves cash receipts reached 2.04 billion. However, this amount decreased to 1.95 billion dollars in 2015 and in 2016 it dropped further to about 1.74 billion dollars: a decline of almost 11% from 2015 and about 15% from 2014. The cattle and calves cash receipts in 2016 represented 25.4% of all agricul- tural receipts in Idaho. Most recently in 2017, cattle and calves cash receipts in Idaho were 1.66 billion dollars, representing 22.6% of all agricultural receipts in the state. A substantial portion of the Idaho cattle industry, over 70%, consists of beef cow-calf production. Prior to weaning calves, cattlemen tend to maintain beef cows and their calves on rangeland and irrigated pasture, and also may utilize harvested forages (Feuz and Umberger, 2003). The majority of these calves are sold either to feedlot or post-weaning stocker/backgrounder operations. As noted by Dhuyvetter et al. (1996), bulls play a sig- nificant role in determining the economic returns of commercial beef cattle producers, since they represent 50% of the genetic composition of the calf crop. For producers who retain their own heifers as replacement females, WEF DECEMBER 2018 Determining how Idaho beef cattle 79 Figure 2: Land Elevation in Plains and Western U.S. 87.5% of the genetic makeup of the herd after three generations will reflect the genetics of the last three bulls used. Therefore, heritable traits/characteristics are highly important and one of the major relevant determinants of bull market price differentials. Cattle and calf operations in the Pacific Northwest (PNW) area are shown in Figure 1. Idaho cattle and calf operations are primarily in the southern part of the state. However, a substantial number of cattle and calf operations are in Idaho’s north central region. This area possesses parts of terrain with over 5,000 feet of eleva- tion as seen in Figure 2. WEF DECEMBER 2018 Determining how Idaho beef cattle 80 Figure 3: Average Annual Precipitation in Inches Moreover, it is a region of semiarid climate conditions with less than 10 inches of annual precipitation as shown in Figure 3. Cow-calf producers seek to improve the efficiency of their operations by purchasing /incorporating bulls with traits that favorably match their production and marketing environments. During the process of purchasing bulls, prospective buyers are often provided numerous pieces of information pertaining to each bull offered at auction or through private treaty sales. The provided information may include SPMs such as a bull’s own birth weight, weaning weight, yearling weight, scrotal circumference, ultrasound measures, within herd performance (e.g. actual weight) ratios and lineage. In addition, EPDs may be included for a variety of traits, which consid- er additional biological information from the animal’s performance as well as from its relatives’ performance. While many of the characteristics used in bull selection are measured and reported numerically, some traits can only be evaluated visually. Therefore, buyers often prefer to see animals in person, prior to purchase, to evalu- ate the bulls’ conformation, movement, and other visually appraised characteristics. The results of these visual appraisals are also included in the information that is considered before purchasing a new herd sire. A study by Chvosta et al. (2001) investigated the usefulness of these two types (SPMs, EPDs) of char- acteristics for bull buyers in their evaluation of future bull performance. The study was conducted using data specifically from Angus Bull auctions held in Montana, Nebraska, and South Dakota. The authors found that despite many EPDs already containing much of the SPM information, buyers made use of both types of infor- mation when valuing bulls. Moreover, when buyers compared bulls within a herd, information from SPMs were found to have more relevance than EPDs in the final price. However, when potential buyers compared an- imals across different herds, information revealed by EPDs had more influence on bull prices. Earlier, Dhuyvet- ter et al. (1996) studied the market value of the bull’s physical and genetic traits, as well as EPDs and marketing factors. This study considered bulls from the Simmental, Charolais, Hereford, Red Angus, Gelbvieh, Limousin, WEF DECEMBER 2018 Determining how Idaho beef cattle 81 and Angus breeds. Sales of bulls from Kansas in 1993 were used in the study. Results suggested that EPDs and the bull’s physical characteristics had a significant effect on the price paid by bull purchasers. Jones et al. (2008) studied the economic values of purebred Angus Bulls based on SPMs, EPDs, ultra- sound EPDs, and carcass quality predictors. As mentioned in the study, data from 11 bull auctions in the Mid- west, Rocky Mountain and Northwest regions of the U.S. were used, without identifying specific states from each region. The authors obtained the actual weights, EPDs and pedigrees from the American Angus Asso- ciation (AAA). In line with Dhuyvetter et al. (1996) and Chvosta et al. (2001), the authors applied a hedonic modeling framework. Results found that both SPMs (age and weights) and EPDs (birth, milk production, and others) were significant. Moreover, the authors estimated a second model that included carcass traits, such as actual weights, production EPDs and marketing factors. Each of the ultrasound EPDs were significant; e.g. additional units of intramuscular fat and ribeye increased the price of the purchased bull; while increases in fat thickness resulted in a lower price. More recently, a new set of genetic technologies (DNA markers, genomic enhanced EPDs, etc.) and tools have been developed for use in beef cattle selection. Vestal et al. (2013) were among the first to investi- gate the value attributed by bull buyers to different information provided through DNA profiles. They used data from three Oklahoma Beef Inc. (OBI) performance-tested bull sales and focused on the data obtained for Angus Bulls. The study compares revealed preferences (RP) with stated preferences (SP) collected from mail surveys of prior OBI bull buyers, including their willingness to pay for particular characteristics. They separately model the attributes from RP data and SP data and then pool the common parameters to model and estimate a RP-SP model. Results suggest that including more (genomic) information leads to higher prices paid for bulls. The study by Chvosta et al. (2001) notes that yearling weights of calves, and the corresponding yearling weights of bulls are affected statistically by regional effects such as weather and geography. As noted, Idaho’s topographic and climate conditions are quite different from both the Plains and Midwest. Thus, the objective in this paper is to investigate the bull characteristics valued by cow-calf producers for this PNW area and contrast them with those from prior studies. That is, are the bull characteristics identified in prior studies the same ones most valued by bull purchasers in Idaho? What specific traits, considering SPMs and EPDs, are of greatest eco- nomic importance for cow-calf producers? Data For this purpose, we obtained data from three bull auctions representing two regions of Idaho, including the selling price as well as EPD values and SPMs described in their respective catalogs.
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