ProfitableBeef

ProductionA Guide to Beef Production in

New Zealand

Published by the New Zealand Beef Council

ISBN: 0-473-09533-5

Published May 2003.

Editor: D.C. Smeaton, AgResearch Ruakura Research Centre.

Editorial Committee:S.T. Morris Associate Professor, Animal Science, Massey University.S.D. McIvor, R & D Programme Manager, Meat & Wool Innovation Ltd.R.G. Priest, Beef Genetics Co-ordinator, Meat & Wool Innovation Ltd.P.M. Packard, Past Chairman, New Zealand Beef Council.G.B. Gleeson, Sheep and Beef Farmer.

Publishing Consultant: Dinniss & Associates.

Typesetting: Unicorn Design Studio Ltd.

Copyright © NZ Beef Council.

Free to Meat Levy Payers.Price: $35.00 incl. GST.

iii

Acknowledgements

This book was brought together with the help of an editorial committeecomprising Graeme Gleeson, Steve Morris, Sam McIvor, Peter Packard andRussell Priest, under the supportive guidance of Meat New Zealand and theNew Zealand Beef Council.

Without their total support and guidance (and at times coercive pressure!)this book would never have happened.

The contributions of all the above are greatly appreciated as also are thoseof the individuals cited as authors at the beginning of each chapter, namely:Nick Beeby, Graeme Gleeson, Steve Morris, Nigel Coddington, Russell Priest,Roger Purchas, Bruce Thorrold, Bob Thomson, Warren Parker and NicolaShadbolt and many others who have provided technical support.

Thanks are also expressed to the sponsors of the project: Ballance Agri-Nutrients Co-operative Ltd, Merial New Zealand Ltd, Richmond Ltd, MAFSustainable Farming Fund, NZ Society of Animal Production.

Lisa Julian from Massey University provided valuable editing and proofingsupport. Debbie Ross, Laura Sloan, Sonia Veelenturf and Sue Wood selflesslytyped the manuscript.

Duncan Smeaton (Editor)

Special TSpecial Technical Noteechnical Note

Throughout the book, examples citing bull finishing systems are often used. Inmost cases, the examples could equally well apply to steer and heifer finishingsystems. The only differences that will apply are the slower growth rates andlower finishing weights of steers and heifers and the different carcass gradingsystems that apply to different cattle types.

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Preface

The New Zealand Beef Council, funded by Meat New Zealand, is in thebusiness of technology and information transfer to achieve its missionstatement “more profit from beef”. Other functions are to assist in identifyingany gaps in research knowledge and to participate in the overall coordinationand prioritisation of beef research in New Zealand.

Generally technology and information transfer is from research centres tobeef producers who can then apply this knowledge for productivity gains.These increases in productivity are generally associated withimprovements in profitability. Such increases, together with controls onproduction costs help to offset any short or long term decline of beef prices inthe marketplace.

In recent years over 5000 beef farmers per annum have been targeted by theNew Zealand Beef Council at regional field days, seminars, on the internet orfrom ‘beef hits’ on Meat New Zealand’s 0800 phone number. The degree ofuptake of the information and its application on-farm is of extreme importanceto our beef industry and therefore to the economy of New Zealand. In 2001,Meat New Zealand commissioned an independent survey to measure theCouncil’s effectiveness. The results indicated that on-farm application ofknowledge gained from the Council’s activities was between 56% and 79%depending on the topic, far above accepted figures.

This book brings together a great deal of information on intensive beefproduction in New Zealand from many sources. It has evolved in theknowledge that major productivity and financial gains are possible. Leadingfarmers achieve performance levels four to five times greater than the nationalaverage in aspects such as ‘total product per hectare’.

The Editorial Committee has brought together key information on beeffinishing by well-known authors and presented it in a digestible and veryaccessible format for farmers, consultants, students and industry people.Duncan Smeaton from AgResearch has been the driving force heading thisEditorial Committee as well as one of the key authors. The New Zealand BeefCouncil wishes to acknowledge Duncan’s input along with the contributions bythe respective authors and other members of the Editorial Committee.

Various sponsors, described in the Acknowledgements, have assisted in thefinancing of this book. Without their valued support the publication of thisbook would not have been possible.

Peter PackardImmediate Past Chairman, New Zealand Beef Council

v

Comments frComments from the sponsorsom the sponsors

MerialAs a principal sponsor of the New Zealand Beef Council, Merial saw thispublication as a wonderful opportunity to add value to beef finishingoperations by informing and educating farmers with the latest knowledge andtechniques.

Information transfer and education of farmers is a core value for Merial asevidenced by the number of Territory Managers we have in the field. They havethe ability to add value to farm businesses and we would encourage farmers tocontact their local Merial Territory Manager to discuss their individual animalhealth programmes.

A huge amount of time and effort has gone into this publication by manypeople and Merial would like to thank and congratulate them.

Balance Agri-NitrientsBallance Agri-Nutrients are delighted to support the Profitable Beef Productionbook. We strongly endorse and identify with the philosophy it promotes, “thatthrough knowledge there is growth”.

Ballance spends around $2 million on research and development annuallyand can access the products and knowledge of Norsk Hydro, the world’s largestfertiliser producer, who spend over $US30 annually on R & D.

We congratulate the New Zealand Beef Council on the production of thisbook and encourage all farmers to use the information contained in its pages.Ballance’s technical sales representatives are always available to advise onspecific ways in which we can help lift farm production while at the same time,caring for the land.

RichmondAs New Zealand’s largest exporter of beef products, Richmond is pleased tosupport the efforts of the New Zealand Beef Council in assisting farmers toincrease the productivity and quality of the product that leaves the farm gate.

Our business is a partnership between farmer suppliers, customers andultimately the consumer who is looking for an outstanding food experience.It is only possible to achieve the ‘great experience’ where we are constantlyevaluating, benchmarking and improving quality throughout the process.

This publication aims to provide farmer suppliers with a resource thatassists them in that quest, and we recommend the information containedwithin these pages. Constantly taking a fresh look at the business of meat.

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Table of Contentsable of Contents

LIST OF ABBREVIATIONS AND TERMS USED ................................ xv

CHAPTER 1THE WORLD OF BEEF AND ITS MARKETS .......................................1

Summary ......................................................................................................1Introduction .................................................................................................1The New Zealand beef industry and drivers of returns –an overview ..................................................................................................2The US beef cycle .......................................................................................4Trends in the New Zealand beef industry .................................................. 5Composition of New Zealand’s beef exports ............................................ 7Destination of New Zealand beef exports ................................................. 7Size of the International Market ................................................................. 8New Zealand’s place in the world market ................................................ 10Grass-fed Producers .................................................................................10Domestic beef consumption.....................................................................11Beef consumption relative to other proteins: recent trends ................... 11Major factors driving consumers during the present 10 year period ..... 12Further reading: .........................................................................................13

CHAPTER 2SYSTEMS OF BEEF PRODUCTION ................................................. 14

Summary ....................................................................................................14Introduction ...............................................................................................14Beef product types ....................................................................................15Alternative systems ...................................................................................16

Steer finishing .....................................................................................................16Bull finishing ...................................................................................................... 17Heifer finishing ....................................................................................................17Cattle age at buying and selling ........................................................................ 18

Examples of different bull systems based on age atpurchase or sale ........................................................................................19

Weaner (3 months) finished at 15-18 months age ............................................. 19

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Weaner to age 18-20 months ........................................................................... 2018 month to 2 year old bulls .............................................................................. 20

Systems for finishing older bulls .............................................................. 20Compensatory growth ........................................................................................21Typical liveweight targets for different finishing beef systems ............................ 21

Once-bred heifers......................................................................................22Cull “boner” dairy cows ............................................................................24Making it work on the farm – an example ................................................ 24Further reading ..........................................................................................25

CHAPTER 3NUTRITIONAL REQUIREMENTS FOR BEEF CATTLE ..................... 26

Summary ....................................................................................................26Introduction ...............................................................................................26Feed digestion in cattle .............................................................................27

Description of the digestive tract ....................................................................... 27Rumen microbes ................................................................................................28Products of rumen digestion ............................................................................. 28Details of digestion .............................................................................................29Microbial growth .................................................................................................30Lipid digestion ....................................................................................................30

Metabolisable energy ................................................................................30A description of the value of feed ...................................................................... 30

Pasture quality ...........................................................................................32Effects of quality on animal performance ........................................................... 32Sward composition, maturity, season ................................................................ 32Animal diet selection and nutritive value ............................................................ 34Other factors affecting pasture quality ............................................................... 36Controlling and sustaining pasture quality ......................................................... 36

Further reading ..........................................................................................36

CHAPTER 4REQUIREMENTS OF ARTIFICIALLY REARED BEEFCALVES TO AGE 6 MONTHS .......................................................... 38

Summary ....................................................................................................38Introduction ...............................................................................................38Requirements of the artificially reared calffrom birth to weaning ................................................................................39

The newly born calf and colostrum ................................................................... 39

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The rumen of the new calf ................................................................................. 39Calf rearing systems, rumen development ........................................................ 40Essential nutrients for calf growth ...................................................................... 41Restricted milk feeding regimes for calves ........................................................ 42A cost effective calf rearing system ................................................................... 42Calf health ......................................................................................................... 44Common causes of scours ............................................................................... 45General comments about artificially rearing claves ............................................ 46Target weights for artificially reared bull calves .................................................. 47

Requirements of artificially reared weaner calvesup to 6 months of age ...............................................................................48

General comments .............................................................................................48Nutrition and pasture quality .............................................................................. 48

Further reading ..........................................................................................50

CHAPTER 5FEED REQUIREMENTS OF BEEF CALVES FROMAGE 6 MONTHS TO SLAUGHTER ................................................... 51

Summary ....................................................................................................51Introduction ...............................................................................................51Feed requirements and rate of liveweight gain ....................................... 52

Factors affecting targeted feed intake and performance ................................... 53Feed Conversion Efficiency (FCE) or Ratio (FCR) ............................................... 56Target liveweight and sward criteria ................................................................... 58

Conclusion .................................................................................................59Further reading ..........................................................................................60

CHAPTER 6OPTIMISING BEEF PRODUCTION FROM PASTURE ...................... 61

Summary ....................................................................................................61Introduction ...............................................................................................62Some general principals ...........................................................................62Pasture growth and production ................................................................64Effects of animal management on pasture performance,competition and growth ............................................................................ 66Impacts of grazing on pasture growth .....................................................66Pasture growth and utilisation ..................................................................68Feed budgeting and assessment of pasture mass and quality ............. 69

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Maintaining a supply of high nutritive value feed forgrowing cattle ............................................................................................70Optimum stocking rate .............................................................................75Use of supplements to maintain animal performanceduring pasture deficit periods ..................................................................77

Wastage ............................................................................................................ 77Substitution ....................................................................................................... 77Risks of supplementation .................................................................................. 78Available supplements ........................................................................................79

Further reading ..........................................................................................79

CHAPTER 7CATTLE ANIMAL HEALTH ............................................................... 81

Summary ....................................................................................................81Introduction ...............................................................................................81Animal health plans ...................................................................................82Monitoring ..................................................................................................82Internal parasites (“Worms”) and their control ........................................83

Liver fluke .......................................................................................................... 87Worm challenge and pasture quality ................................................................. 87Worm challenge and mixed animal species or age class grazing ...................... 88Cooperia ........................................................................................................... 89

Facial eczema ............................................................................................90Spore counting ...................................................................................................90Prevention ......................................................................................................... 91

Trace element deficiencies .......................................................................93Copper .............................................................................................................. 93Selenium ........................................................................................................... 94Cobalt ............................................................................................................... 95

Other diseases ...........................................................................................95Bovine Tuberculosis ............................................................................................95

Animal status declarations ............................................................................. 97National identification (ID) of cattle ................................................................. 97

Bovine viral diarrhoea (BVD) .............................................................................. 98Clostridial disease ..............................................................................................98Coccidiosis ........................................................................................................ 98Rotavirus ........................................................................................................... 99Bloat .................................................................................................................. 99

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Management measures to reduce the risk of bloat ........................................ 99Anti-bloating treatments or products ............................................................ 100

Ryegrass staggers .......................................................................................... 100Ticks................................................................................................................ 100

Monitoring meat company slaughter sheets .........................................100Further reading ........................................................................................102

CHAPTER 8GENETICS ..................................................................................... 104

Summary ..................................................................................................104Introduction .............................................................................................105Estimated Breeding Values .....................................................................105

What is an Estimated Breeding Value (EBV) and how is it calculated? ............ 105How does an EBV relate to profitability? ......................................................... 106

Mature Liveweights .................................................................................108Feed conversion ratio or efficiency ........................................................109

Definitions of terms .......................................................................................... 109Growth versus maintenance and FCR or FCE ................................................. 109Genetic factors affecting growth and FCE ....................................................... 109

Breeds and crossbreeding ......................................................................110Hybrid vigour or heterosis ............................................................................... 110Terminal breeds ............................................................................................... 110Maternal breeds .............................................................................................. 110Dual purpose breeds ....................................................................................... 111Composite breeds ........................................................................................... 111Performance of different breeds ...................................................................... 111The environment in which the animals are to perform ..................................... 112The requirements of the processor customer .................................................. 112Traits that are going to be financially rewarded ................................................ 113Carrying capacity ............................................................................................ 113Comparisons of different breeds and their crosses ......................................... 113Producer options ............................................................................................. 114Summary of breeds and crosses ..................................................................... 115

Sex............................................................................................................116Age ...........................................................................................................117Technologies to meet industry requirements ........................................118Dairy industryintegration .........................................................................120Sourcing calves for finishing ..................................................................122Further reading ........................................................................................123

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CHAPTER 9FACTORS AFFECTING CARCASS COMPOSITIONAND BEEF QUALITY ..................................................................... 124

Summary ..................................................................................................124Introduction .............................................................................................125Saleable meat yield .................................................................................126Meat quality .............................................................................................128Factors affecting saleable beef yield .....................................................133

Breed and breed-cross effects on composition ............................................... 135Within-breed genetic effects on composition .................................................. 137Composition differences between the sex/castration classes ......................... 137Nutritional effects on beef cattle composition at a set weight .......................... 139Effects of growth promotants on beef cattle composition ............................... 140Composition changes during pre-slaughter handling ...................................... 140

Factors affecting beef quality characteristics .......................................140Changes in quality characteristics with increasing age and weight ................. 143Breed and breed-cross effects on beef quality ................................................ 144Within-breed genetic effects on beef quality .................................................... 144Beef quality differences between sex/castration classes ................................. 145Nutritional effects on beef quality .................................................................... 146Effects of growth promotants on beef quality .................................................. 148Pre-Slaughter handling effects on beef quality ................................................ 148

References ...............................................................................................150

CHAPTER 10MANAGEMENT TO MINIMISE ENVIRONMENTAL DAMAGE......... 153

Summary ..................................................................................................153How To maintain a sustainable beef cattle farm ...................................153Soils ..........................................................................................................155

Soil fertility ....................................................................................................... 156

Water ........................................................................................................157General ............................................................................................................ 157Soil nutrients and water ................................................................................... 158Water borne pathogens ................................................................................... 158Sediment ......................................................................................................... 158Habitat modification ........................................................................................ 158Links to farm management .............................................................................. 159

Bio-diversity .............................................................................................160

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Greenhouse gases...................................................................................161A cautionary note ............................................................................................ 163

Managing the farm’s natural resources for intensification ...................163A process for intensification whilst managing the natural resources ................ 163

Environmental issues associated with intensification ..........................164Possible future direction of environmental management ................................. 164

Farm planning and planning of development ........................................165Further reading ........................................................................................165

Chapter 11MARKET INFORMATION, OTHER DATA COLLECTION ................ 167

Summary ..................................................................................................167Marketing and associated information for decision making ................167

Working with marketing uncertainty ................................................................ 168The cost or price of risk ................................................................................... 169Know your market ........................................................................................... 169Know precisely what stock the farm is selling ................................................. 170Where can market information be sourced? .................................................... 170

Analysing meat processing company kill sheets ..................................171Advanced information ..................................................................................... 171What meat characteristics to analyse and for what benefit? ........................... 172

Weighing cattle – working out LWG correctly .......................................172Animal identification/traceability ............................................................173Animal health monitoring ........................................................................174Soils/water quality/environmental health...............................................175Further reading ........................................................................................175

CHAPTER 12MANAGEMENT, PRINCIPLES, PROCESSES AND TECHNIQUES .....176

Summary ..................................................................................................176Introduction .............................................................................................176Management framework .........................................................................177Strategic planning ...................................................................................177The functions of management ................................................................178Levels of planning ...................................................................................180Monitoring ................................................................................................180

The management context for monitoring ......................................................... 180Making formal monitoring work in practice ...................................................... 181

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Benchmarking..........................................................................................181Practice change and learning .................................................................182

Path breaking .................................................................................................. 183

Risk management ....................................................................................183Analysing options ....................................................................................183

Supplementary feeding decisions .................................................................... 184Two examples of calculating the benefits of supplementation ......................... 185Be$tFeed™ ..................................................................................................... 187

Gross margin or enterprise budgets for comparing enterprises ..........187Full farm financial analysis ......................................................................188Conclusion ...............................................................................................188Further reading ........................................................................................194

CHAPTER 13MEASURING FARM PROFITABILITY ............................................. 195

Summary ..................................................................................................195Introduction .............................................................................................196Determining profit ....................................................................................196

Income and inventory changes ........................................................................ 196

Expenses .................................................................................................197Operating costs ............................................................................................... 197Funding costs .................................................................................................. 198

Sources of capital ....................................................................................... 198Cost of capital ............................................................................................ 199

Profitability ...............................................................................................199Profitability measures ...................................................................................... 201

Return on equity & family labour .................................................................. 201Operating profit or economic farm surplus ................................................... 201Return on capital (RoC) ............................................................................... 202Return on assets (RoA) ............................................................................... 203Return on equity (RoE) ................................................................................ 203Economic value added (EVA©) ................................................................... 204Key performance indicators (KPIs) ............................................................... 205

Costs of production.................................................................................205Costs per unit of output .................................................................................. 206

Sheep and beef cattle farm ......................................................................... 207Costs per unit of input ..................................................................................... 208

Conclusions .............................................................................................209Further reading ........................................................................................210

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APPENDIX IThe feeding value of various feeds commonly availablefor feeding livestock in New Zealand. ........................................ 211

APPENDIX IIAssessment of pasture mass and pasture quality ..................... 214

APPENDIX IIIThe “wash” method for facial eczema sporecounting on pasture ..................................................................... 217

Appendix IVThe “faecal” method for spore countingto assess facial eczema risk. ...................................................... 220

xv

GLOSSARY

ABC Activity Based Costing

BSE Bovine spongiform encephalopathy

CWT Carcass weight

DM Dry matter

DO% Dressing out percentage

EBIT Earnings before Interest and Tax

EBV Estimated Breeding Value

EFS Economic Farm Surplus

EMA Eye Muscle Area

EVA© Economic Value Added

FCE or FCR Feed conversion efficiency, feed conversion ratio

FMD Foot and mouth disease

FWE Farm Working Expenses

GFR Gross Farm Revenue

HxF Hereford x Friesian cross

IRD Inland Revenue Department

kg Kilogram

KPI Key Performance Indicator

LMY Lean meat yield

m Million

M:B Muscle: bone ratio in a beef carcass

MJ ME Megajoules of metabolisable energy

MWI Meat and Wool Innovation Ltd

P:E Protein to energy ratio

RoA Return on Assets

RoC Return on Capital

RoE Return on Equity

SMY Saleable meat yield

Meat NZ Meat New Zealand

US(A) United States of America