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The effect of zilpaterol hydrochloride on beef producer and processor revenue of calf-fed Holstein steers † † † † ‡ Trent J. McEvers, Nathan D. May, Jacob A. Reed, Lee-Anne J. Walter, John P. Hutcheson, and †,1 Ty E. Lawrence Beef Carcass Research Center, Department of Agricultural Sciences, West Texas A&M University, Canyon, TX 79016; Merck Animal Health, Summit, NJ 07901 ABSTRACT: A serial harvest was conducted every (P ≥ 0.14) were detected between ZH and CON car- 28 d from 254 to 534 days on feed (DOF) to quan- casses for premiums and discounts related to HCW, tify changes in growth and composition of calf-fed yield grade, or quality grade. Moreover, no differences Holstein steers (n = 110, initial BW = 449.2 ± 19.9 (P = 0.98) were detected for overall adjusted carcass kg). One-half were supplemented the β-2 adrener- value between ZH and CON carcasses. Fabrication gic agonist zilpaterol hydrochloride (ZH; 8.33 mg/ values revealed that ZH carcasses had greater (P kg 100% DM basis), and the remainder fed a con- < 0.01) revenue than CON carcasses for primal trol (CON) ration during the final 20 d followed by round (+$36.23), loin (+$38.16), flank (+$8.95), rib a 3 d withdrawal prior to harvest. Cattle were ran- (+$16.33), and chuck (+$27.49) regardless of DOF. domly allocated to dietary treatment and harvest Increased primal values ultimately led to greater (P < endpoint (254, 282, 310, 338, 366, 394, 422, 450, 478, 0.01) processor revenue (+$138.94) and carcass value 506, and 534 DOF) using a 2 × 11 factorial treatment per 45.4 kg (+$6.45) for cattle-fed ZH compared with structure and a completely randomized experimen- CON cattle. Overall, increased carcass weight and tal design structure. The objective of this ad-hoc improved fabrication yield led to greater revenue at all investigation was to quantify changes in value across harvest endpoints for cattle-fed ZH. Linear increases multiple harvest endpoints and marketing strate- in live and dressed values indicated the daily change gies for cattle supplemented with ZH. Cattle-fed in live value was $3.48, which is less than an increase ZH had increased (P < 0.01) value when sold on a of $3.77 daily for dressed carcass value. Greater beef dressed basis (+$82.64) or on a value-based formula processor margin and profitability are expected when (+$75.59) compared with CON cattle. No differences this growth technology is used. Key words: beef, economics, Holstein © The Author(s) 2018. Published by Oxford University Press on behalf of the American Society of Animal Science. This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is properly cited. For commercial re-use, please contact email@example.com Transl. Anim. Sci. 2018.2:290–297 doi: 10.1093/tas/txy062 strategically manage the composition of gain of INTRODUCTION fed cattle. The FDA-approved βAA utilized in the Growth-promoting technologies known fed-cattle industry include ractopamine hydro- as beta-adrenergic agonists (βAA) are used to chloride (commercially available as Optaflexx and Actogain from Elanco Animal Health and Corresponding author: firstname.lastname@example.org Zoetis LLC, respectively) and zilpaterol hydro- Received January 9, 2018. chloride (ZH; commercially available as Zilmax Accepted May 21, 2018. Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 Holstein beef production economics 291 from Merck Animal Health). Ractopamine was reported by May et al. (2016a). Carcasses were approved for use in 2003 with zilpaterol gaining graded 36 h postmortem; quality and yield out- approval in 2006 (Johnson et al., 2013). These sup- comes for United States, Canadian, and Japanese plements are added to the ration of finishing cattle grading systems were reported in May et al. (2016b). during the last 20 to 42 d of the finishing period Carcasses were separated into industry standard and are known to increase lean tissue accretion subprimals 48 h postmortem; cutout yields were (Avendano-Reyes et al., 2006; Strydom et al., 2009; reported in May et al. (2017). Scramlin et al., 2010). Elam et al. (2009), Montgomery et al. (2009), Determination of Live Cattle Costs and Rathmann et al. (2012) reported that feeding To determine total breakeven value, initial cat- ZH (fed at 8.33 mg/kg of diet DM) to cattle dur- tle cost, and medicine costs (sum of processing fees, ing the last 20 to 40 d of the finishing period fol - implant, vaccines, anthelmentics, prophylactic and/ lowed by a 3 d withdrawal increased ADG, final or metaphylactic therapy, ID costs), feed, yardage, BW, HCW, dressed yield, and LM area concomitant and ZH supplementation costs were used (Table 1). with reduced USDA-calculated yield grade. With Initial cattle cost was determined by averag- input costs rising year-over-year and cyclical feeder ing reported values for Holstein steers in 408.2– cattle supply, a retrospective look at carcass perfor- 498.9 kg weight range during the time period of 25 mance and processor margins at various finishing June 2012 through 30 April 2013 (USDAa, 2014). endpoints for calf-fed Holsteins is of interest to the For the specified date range, all values were com - industry. Through increased feeding and carcass piled and averaged to determine the fixed value performance, we theorize that increased value may of steers utilized in this investigation ($80.45 per be attributed to the utilization of ZH for all levels of 45.4 kg). production. This investigation focused on the effect Duff and Anderson (2007) summarized data of ZH on the revenue stream of beef producers and collected from the southern plains of the United processors utilizing calf-fed Holsteins across multi- States in which 11,588 lots of Holstein steers were ple marketing scenarios and endpoints. In addition, utilized. Using data reported for Holstein steers utilization of feeding performance parameters such fed in Colorado, Kansas, Oklahoma, Texas, and as ADG, DMI, BW, HCW, and ZH supplementa- Nebraska, the average medicine cost was calculated tion was evaluated for the ability to predict producer as $15.09 per animal. and processor revenue. Previously described feeding performance data (Walter et al., 2016) were utilized to deter- MATERIALS AND METHODS mine total feeding cost. Ration cost per 907.1 kg was determined using data reported by Hoelscher Live Cattle and Carcass Procedures (2013), which indicated that during the month of May 2013, average fed–cattle rations for the south- Cattle were fed at Agri-Research Center, Inc. ern plains ranged from $370 to 380 per 907.1 kg of feedyard (Canyon, TX). All experimental proce- diet DM. dures followed the guidelines described in the Guide Yardage was set at $0.40 daily per animal for the Care and Use of Agricultural Animals in using data reported by Lardy (2013). The cost of Agricultural Research and Teaching (FASS, Savoy, ZH inclusion in the diet during the last 20 d on IL). Institutional animal care and use guidelines were followed according to the West Texas A&M University cooperative research, education, and Table 1. Feedlot capital costs for determination of extension team directive. breakeven of calf-fed Holsteins fed ZH for 0 or 20 d Cattle were fed and harvested (28-d intervals) Item over a period of 280 d starting at 254 d on feed Cattle cost, $/45.4 kg 80.45 (DOF) and ending at 534 DOF. Harvest endpoints Medicine cost, $/animal 15.09 included five cattle that received ZH, the last 20 d Feed cost, $/907.1 kg 375.00 prior to harvest at a rate of 8.33 mg per kg of diet Yardage, $/d/animal 0.40 DM followed by a 3-d withdrawal period, and five ZH feeding cost, $/10kg 8,453.00 cattle that received a control (CON) diet. Live ani- ZH feeding cost, $/mg of active ingredient in a total mixed 0.017 mal growth data, diet composition, and feeding ration performance outcomes were reported previously by ZH feeding cost, $/kg of DM at label 0.142 target 8.33 mg/kg of DM Walter et al. (2016). Harvest data and yields were Translate basic science to industry innovation Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 292 McEvers et al. trial followed by a 3-d withdrawal was calculated was compiled across the study period and averaged using feeding performance data of steers receiv- (USDAd, 2014). To calculate fabrication value of ing the supplement. During the time period the carcasses, the weighed subprimals and trim from investigation occurred, the average cost of ZH was each carcass (May et al., 2017) were captured and $8,453/10 kg of which 4.8% was the active ingre- valued using mandatory price reporting values for dient (Merck Animal Health, 2013). Following the subprimals from Prime (USDA report LM_XB456; guidelines for supplementation (8.33 mg/kg diet “national weekly boxed beef cuts-prime product”; DM), the relative cost was calculated at a rate of USDAe, 2014), Choice and Select (USDA report $0.017 per mg of active ingredient contained in the LM_XB459; “national weekly boxed beef cutout total mixed finishing ration. and boxed beef cuts”; USDAf, 2014), and Standard (USDA report LM_XB462; “national weekly boxed beef cuts-ungraded product”; USDAg, 2014) Determination of Revenue USDA quality grade carcasses. Five subprimals Revenue of live cattle and carcasses was deter- (blade meat [NAMP 109B], pectoral meat [NAMP mined by compiling data from multiple reports, 115D], outside skirt [NAMP 121C], inside skirt which are representative of pricing from July 24, [NAMP 121D], and beef back ribs [NAMP 124]) 2012 to April 30, 2013, the study period. To deter- were priced using the USDA report LM_XB 459 mine pricing for sales of dairy-bred steers, the (USDAf, 2014) regardless of USDA quality grade. USDA market news report LM_CT145 “Five-area For determination of trim value, the USDA report weekly direct slaughter cattle formula, grid, and LM_XB459 was used for 81% and 90% trim lev- contract purchases” was compiled and averaged els (USDAf, 2014). In addition, three cuts (hang- across the study period (USDAb, 2014). Average ing tender [NAMP 140], heel [NAMP 171F], and pricing for live and dressed basis sales was used in shank meat [NAMP 117]) fabricated in the study this investigation. To calculate value-based formula were not listed on pricing reports by grade and pricing, the average-dressed basis price was used therefore were priced as 90% trim. For the predic- as the carcass base price, which was adjusted using tion of producer and processor margin $/45.4 kg, individual discounts and premiums for each animal reported shrunk body weight (SBW) and predicted in the study. HCW (PHCW; PHCW = −41.44 + (0.6637 × SBW) The USDA report LM_CT169 “Five-area + (12.974 × ZH)) were determined following the weekly slaughter cattle premiums and discounts” procedures developed by McEvers (2014). This was used to determine premiums and discounts method was used to highlight the ability for a pro- for HCW, quality grade, and yield grade (USDAc, ducer to weigh live cattle and estimate HCW and 2014). Total value for each marketing method as potential economic viability of marketing cattle on well as value per 45.4 kg of HCW was calculated a carcass vs. live basis. to determine adjusted value-based formula value. Carcasses were eligible to receive multiple discounts Statistical Analysis and/or premiums; no thresholds were set for pre- miums or discounts. For example, carcasses that A completely randomized experimental design exceeded 408.2 kg and graded USDA Prime, yield was utilized with a 2 × 11 factorial treatment grade 2 would receive the simple average value dis- arrangement. The MIXED procedure of SAS (SAS count from the base price for a heavy-weight carcass 9.3, SAS Institute, Cary, NC) was utilized to model and receive premiums for quality- and yield-grad- the fixed effects of ZH supplementation, DOF, and ing parameters. ZH × DOF interaction were calculated with feed- To determine revenue of calf-fed Holsteins to yard pen and harvest facility used as random effects. the production system of beef processors, the fab- When calculating means, the LSMEANS option rication value of each animal was calculated as well was utilized to calculate all comparison estimates. as the drop credit value and summed to determine Differences were determined when probability val- total value. In addition to calculation of total value, ues were less than the preset alpha of 0.05 using the carcass value was also calculated by dividing total Scheffe adjustment to control for family-wise error value by HCW for each steer and multiplied by 100 rate. Linear and quadratic relationships were con- to determine value per 45.4 kg of HCW. structed using CONTRAST statements to evaluate For determination of drop credit value, the differences across DOF for each item of interest. USDA report NW_LS441 “USDA by-product drop Moreover, using the CORR procedure, simple r value (steer) freight on buyer central United States” values were calculated between dependent and Translate basic science to industry innovation Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 Holstein beef production economics 293 predictive variables. The REG procedure was used Live, Dressed, and Value-Based Formula Pricing of Cattle to model dependent variables using the STEPWISE method of selection. No ZH × DOF interactions were detected (P ≥ 0.16) for live or carcass values (Table 3). Live value, RESULTS AND DISCUSSION HCW adjustment, yield grade adjustment, qual- ity grade adjustment, and final adjusted value per Producer Feeding Cost and Breakeven Analysis 45.4 kg did not differ between dietary treatments For the calculation of cattle costs inherent (P ≥ 0.13). However, cattle-fed ZH had 4.8% more to beef producers, no ZH × DOF interactions dressed value revenue (P < 0.01; +$82.64) and total occurred (P ≥ 0.12; Table 2). No ZH treatment dif- formula value (P < 0.01; +$75.59) than CON steers. ferences were observed for initial cattle cost, feed The increase in value of cattle-fed ZH regardless of cost, or breakeven $/45.4 kg (P ≥ 0.44). However, DOF illustrated how improvements in dressed car- cattle-fed ZH had greater total breakeven $/animal cass yield directly increased value. In previous liter- (P = 0.03; +$41.13) compared with controls, due to ature, Schroeder and Tonsor (2011) indicated that increased feed costs and ZH supplementation. The average net profits for beef producers feeding ZH average cost of feeding the supplement was $28.06 were approximately $21.08/animal and that return per steer, which accounts for 68.2% of the increase included the cost of the supplement, which during in total breakeven reported. the tenure of their investigation averaged $18.00/ Initial cattle cost differed (P = 0.02) across animal. Nevertheless, the use of growth technolo- DOF; this is directly related to differences in gies such as ZH had a positive effect on increasing placement weight of the cattle due to randomiza- value of calf-fed Holsteins sold on a dressed carcass tion. Feed cost accumulated (P < 0.01) at $4.34 or value-based formula basis. per day, whereas total breakeven $/animal accu- The effect of DOF followed expected trends in mulated (P < 0.01) at $4.90 per day. Thus, breake- that as DOF accumulated, revenue increased for live, ven value of the live animal increased (P < 0.01) at dressed, and formula values. Live value increased at a $0.12/45.4 kg per day. rate of $3.48 per day, whereas dressed value increased Table 2. Feedlot capitol cost and breakeven of calf-fed Holsteins fed ZH for 0 or 20 d Cattle Medicine Yardage, Feed ZH Feeding Breakeven, Breakeven, Item n cost, $ cost, $ $ cost, $ cost, $ $/animal $/45.4 kg Diet treatment CON 55 829.37 15.09 67.20 687.76 0.00 1599.42 105.45 ZH 55 830.79 15.09 67.20 699.41 28.06 1640.55 106.13 SEM – 4.78 – – 10.77 0.27 12.81 0.70 Harvest endpoint 254 10 859.61 15.09 11.20 90.24 22.41 987.35 88.03 282 10 820.51 15.09 22.40 198.20 24.24 1068.32 92.27 310 10 808.92 15.09 33.60 308.84 24.13 1178.52 95.47 338 10 812.22 15.09 44.80 436.57 27.46 1322.41 99.02 366 10 811.90 15.09 56.00 539.64 28.56 1436.91 102.72 394 10 833.70 15.09 67.20 711.96 30.36 1643.13 108.15 422 10 818.18 15.09 78.40 805.66 28.36 1731.51 108.81 450 10 845.69 15.09 89.60 957.37 29.71 1922.61 114.08 478 10 842.07 15.09 100.80 1085.41 30.71 2058.72 113.56 506 10 848.67 15.09 112.00 1200.21 30.80 2191.37 117.06 534 10 829.36 15.09 123.20 1235.39 31.92 2279.00 124.52 SEM – 11.20 – – 25.25 0.89 30.04 1.64 P value ZH* – 0.83 – – 0.44 – 0.03 0.50 DOF – 0.02 – – <0.01 – <0.01 <0.01 ZH × DOF – 0.81 – – 0.12 – 0.21 0.73 Linear – 0.26 – – <0.01 – <0.01 <0.01 Quadratic – 0.03 – – 0.80 – 0.31 0.55 *Zilpaterol Hydrochloride (Merck Animal Health, Summit, NJ). Translate basic science to industry innovation Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 294 McEvers et al. Table 3. Expected sales revenue of calf-fed Holstein steers fed ZH for 0 or 20 d priced at historical live, dressed, and formula sales values during the years 2012–2013 Carcass Yield grade Quality grade Adjusted Live Dressed base price, HCW adjustment, adjustment, adjustment, value, Formula Item n value, $ value, $ $/45.4 kg $/45.4 kg $/45.4 kg $/45.4 kg $/45.4 kg value, $ Diet treatment CON 55 1765.56 1726.78 191.50 (6.91) (3.81) (5.36) 175.42 1565.45 ZH 55 1796.02 1809.42 191.50 (8.28) (2.68) (5.16) 175.38 1641.04 SEM – 14.19 17.38 – 0.80 0.53 0.81 1.29 16.21 Harvest endpoint 254 10 1325.81 1249.54 191.50 0.00 2.15 (16.33) 177.32 1156.50 282 10 1368.46 1343.85 191.50 0.00 0.84 (13.49) 178.85 1255.19 310 10 1460.79 1405.80 191.50 0.00 1.27 (7.81) 184.96 1357.65 338 10 1580.79 1541.19 191.50 (0.02) 0.85 (5.33) 187.00 1506.20 366 10 1653.95 1603.24 191.50 (0.02) 1.52 (4.26) 188.73 1581.16 394 10 1795.62 1762.93 191.50 (0.44) (2.50) (4.26) 184.30 1698.51 422 10 1883.52 1990.86 191.50 (9.94) (3.62) (1.07) 176.88 1830.07 450 10 1992.41 2027.07 191.50 (10.26) (7.87) (4.26) 169.11 1781.97 478 10 2142.81 2137.51 191.50 (21.07) (8.77) (1.07) 160.60 1791.16 506 10 2213.02 2242.20 191.50 (23.05) (9.77) 0.00 158.68 1858.11 534 10 2171.50 2144.90 191.50 (18.76) (9.77) (0.01) 162.96 1819.21 SEM – 33.29 40.77 – 1.87 1.25 1.89 3.01 38.01 P value ZH* – 0.13 <0.01 – 0.23 0.14 0.87 0.98 <0.01 DOF – <0.01 <0.01 – <0.01 <0.01 <0.01 <0.01 <0.01 ZH × DOF – 0.16 0.54 – 0.77 0.57 0.79 0.82 0.21 Linear – <0.01 <0.01 – <0.01 <0.01 <0.01 <0.01 <0.01 Quadratic – 0.37 0.04 – <0.01 0.05 <0.01 <0.01 <0.01 *Zilpaterol Hydrochloride (Merck Animal Health, Summit, NJ). at a rate of $3.77 per day. Difference between live 506 DOF harvest endpoint received no adjustment. and dressed value is directly associated to increased Adjusted carcass value per 45.4 kg across DOF followed carcass transfer of nutrients as the cattle increased a quadratic function (P < 0.01) and peaked at 366 DOF. in physiological finish across DOF. It is worth not - Total formula value increased (P < 0.01) across DOF at ing that the maximization of revenue utilizing these a rate $2.54 per 45.4 kg per day, which was primarily a methods of marketing will only be hindered by size function of increased HCW. With additional DOF, dis- and weight restrictions placed on producers by beef counts related to increased HCW and calculated yield packers and the determination of marginal rates of grade may lead to reduced value per 45.4 kg. However, return based on feeding performance characteristics. due to the increase in HCW over time, total value was Comparing components of the value-based for- maximized at 506 DOF . These data suggest that produc- mula, discounts for HCW increased (P < 0.01) by $0.09 ers who sell on a value-based formula would observe the per 45.4 kg per day during the study. The increase in greatest carcass value per 45.4 kg at 366 DOF. The beef discounts concomitant with accumulating DOF was system quandary then becomes what value to maximize expected due to heavier carcasses receiving discounts in (live, dressed carcass, value-based carcass, or fabrica- an effort to improve boxed-beef uniformity . Adjustments tion) and how overall profitability on a per animal basis for calculated yield grade decreased (P < 0.01) across is affected by marketing day. We believe that the time at DOF at a rate of −$0.05 per 45.4 kg per day with the which carcass value is optimized may be a better met- greatest premiums (+$2.15/45.4 kg) awarded during ric than total formula value due to economic restraints the initial harvest (day 254) and the greatest discounts related to input costs. (−$9.77/45.4 kg) assessed during the 506 and 534 DOF harvests. In contrast to yield grade, adjustments based Beef Processor Drop Credit, Fabrication, and on quality-grading characteristics increased (P < 0.01) Revenue of Cattle across DOF at a rate $0.05 per 45.4 kg per day. The 254 DOF endpoint received the largest discount Revenue derived from carcass fabrication for beef (−$16.33/45.4 kg) due to inferior quality, whereas the processors did not reveal ZH × DOF interactions (P Translate basic science to industry innovation Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 Holstein beef production economics 295 ≥ 0.16); however, a tendency for interaction (P = 0.06) literature reported an average return for beef occurred when calculating the total value of the plate processors of $31.68 per animal (Schroeder and subprimal (Table 4). This tendency is likely due to cut- Tonsor, 2011). ting error related to separation of the primal rib from Beef processors that source calf-fed Holstein the primal plate and loin or from switching harvest steers fed ZH may realize an increase in revenue facilities during the trial. No differences (P = 0.13) compared with harvesting and fabricating cattle not were discovered among calculated drop credit between fed ZH. The increase in value to the beef-marketing the two dietary treatments. Conversely, cattle-fed ZH channel for Holstein steers fed ZH credited to the had increased (P < 0.01) value of round (+$36.23), processor is 168.1% of the value returned to beef loin (+$38.16), flank (+$8.95), rib (+$16.33), chuck producers selling on a dressed basis, and 183.8% of (+$27.49), and brisket (+5.14) primals as compared the value returned to those producers selling on a with CON steers. value-based formula. The risk:return ratio for the For cattle-fed ZH, overall fabrication revenue two segments is skewed; however, the overall contri- was $135.46 greater (P < 0.01) than that of CON bution to the beef system is positive and results in steers. Total processor revenue was $138.94 greater increased protein availability for today’s consumer. (P < 0.01) for cattle-supplemented ZH than for Value of all major fabricated primals (round, CON steers. Moreover, cattle-fed ZH exhibited loin, flank, rib, plate, chuck, and brisket) increased increased (P < 0.01) processor carcass value of as DOF accumulated. Value of the round pri- $6.45 per 45.4 kg as compared with CON steers. mal was least at day 254 and greatest at day 506, The significant increase in fabrication value cou - increasing at a rate of $0.45 per day. Value of the pled with a numeric increase in drop credit resulted loin primal was least during the beginning harvest in increased total revenue and carcass value of calf- endpoint and greatest at the last harvest endpoint, fed Holstein steers supplemented ZH. Previous increasing at a rate of $0.85 per day. The value of Table 4. Expected fabrication revenue of calf-fed Holsteins steers fed ZH for 0 or 20 d priced using drop credit, sub-primal, and grind data coupled with reported values by United States Department of Agriculture quality grade during the years 2012–2013 across DOF Diet treatment CON 55 320.52 348.36 74.67 181.87 112.00 326.62 87.92 1451.96 201.88 1653.85 184.25 ZH 55 356.75 386.52 83.62 198.20 115.14 354.11 93.06 1587.42 205.37 1792.79 190.70 SEM – 3.50 5.41 1.22 3.99 1.67 3.86 1.86 16.18 1.62 17.47 1.07 Harvest endpoint 254 10 267.17 251.12 57.54 111.20 78.44 243.90 71.69 1081.07 151.60 1232.67 189.00 282 10 283.24 262.30 57.58 130.21 89.54 259.70 79.85 1162.41 156.48 1318.89 187.94 310 10 301.71 300.97 64.15 155.36 110.5 292.21 78.08 1302.98 160.04 1470.02 200.28 338 10 320.65 321.75 68.30 172.25 110.72 308.39 83.64 1385.71 180.76 1566.47 194.53 366 10 315.45 344.35 70.95 186.12 98.68 313.43 82.14 1411.12 189.12 1600.24 190.77 394 10 348.70 367.62 81.25 198.41 111.97 338.11 88.18 1534.23 205.32 1739.55 188.67 422 10 364.98 392.78 82.90 214.48 118.62 363.75 93.65 1631.15 215.37 1846.52 178.36 450 10 359.07 410.30 82.65 201.53 125.91 374.48 95.01 1648.96 227.82 1876.78 177.72 478 10 389.37 445.80 103.63 232.32 125.05 403.36 103.67 1803.18 245.02 2048.20 183.43 506 10 398.23 472.20 105.24 247.77 140.87 438.06 115.79 1918.17 253.05 2171.22 185.31 534 10 376.43 472.66 96.42 240.74 139.00 408.63 103.73 1837.61 248.30 2085.92 186.17 SEM – 8.20 12.69 2.87 9.35 3.92 9.05 4.36 37.93 3.81 40.96 2.51 P value ZH – <0.01 <0.01 <0.01 <0.01 0.19 <0.01 0.05 <0.01 0.13 <0.01 <0.01 DOF – <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 ZH × DOF – 0.21 0.58 0.66 0.47 0.06 0.71 0.38 0.25 0.16 0.22 0.86 Linear – <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 <0.01 Quadratic – <0.01 <0.01 0.62 0.85 0.02 0.45 0.27 0.49 0.11 0.37 0.12 *Total fabrication value. Drop credit calculated from USDA voluntary reported values, July 2012 to May 2013. Processor revenue from by-product drop and fabrication value. || Processor carcass value $/45.4 kg derived from drop credit and fabrication value. Zilpaterol Hydrochloride (Merck Animal Health, Summit, NJ). Translate basic science to industry innovation Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 296 McEvers et al. the flank subprimal fit a linear function ( P < 0.01) purchases was only correlated to DMI (r = 0.26), and increased at a rate of $0.18 per day. Rib primal whereas SBW, DOF, and predicted HCW were sim- value fit a linear function ( P ≤ 0.01) and increased ilarly correlated (P < 0.05) with processor dressed at a rate of $0.47 per day. Plate subprimal value (r = −0.22 to −0.28) and formula purchases (r = 0.24 increased (P < 0.01) at a rate of $0.20 per day from to 0.32). a low of $78.44 at 254 DOF to $140.87 at 506 DOF. Although previous literature is scarce regard- Value of the chuck subprimal increased (P < 0.01) ing correlation of DMI, SBW, DOF, or carcass at a rate of $0.67 per day from $243.90 at day 254 parameters for economic analysis, one may pos- to a maximum value of $438.06 at day 506. Brisket tulate how each parameter may affect margin. As subprimal value increased (P < 0.01) at the rate SBW increases, margins for producers decrease for of $0.13 per day from $71.69 to 115.79 during the cattle sold via the historically traditional methods study period. of live sales. This result may be associated with Fabrication value of carcasses increased SBW increasing linearly across DOF coupled to (P < 0.01) at a rate of $2.94 per day, following a linear reductions in feeding performance. In addition, the function. Drop credit value is a function of live weight investment cost of feed increased linearly, there- gain and increased (P < 0.01) at a rate of $0.40 per fore increasing breakeven over time. Moreover, day. Total processor revenue reflected the sum of drop as SBW increased, HCW also increased which credit and fabrication value and increased (P < 0.01) led to greater HCW discounts for heavy-weight at a rate of $3.34 per day. Although the value of the carcasses. This may be why DOF and predicted animals included in this investigation was maximized HCW also have a similar relationship to depend- at day 506, we felt it necessary to reflect total reve - ent variables such as SBW. Alternatively, as SBW nue as a proportion of 45.4 kg of HCW. Processor increased, processor margin for cattle purchased carcass value was different (P < 0.01) across DOF; via value-based grid increased due to heavy-weight however, the maximum HCW value $/45.4 kg was discounts assessed to the producer. Contrary to realized upon day 310 on feed due to maximiza- formula margin, dressed sales margin decreased, tion of fabrication yield. These results allow for an which is likely due to producers not receiving car- in-depth analysis of processor margin compared with cass premiums and discounts when selling cattle on data reported in earlier tables of this manuscript. a dressed basis. DOF and predicted HCW followed similar trends as SBW because the three variables are highly related. DMI had negative effects on Correlation Analysis producer margins for all three sales methods with Correlation coefficients calculated among var - positive effects for processor margin when buying iables utilized in the prediction of producer and via live purchase. We postulate that the effect of processor net margins per 45.4 kg are reported in DMI on producer margins may be misleading. Table 5. Dependent variables of interest included As DMI increases, SBW and HCW should also producer and processor net margins per 45.4 kg increase. For beef processors, the influence of DMI for cattle bought and sold on a live, dressed, or on margin of live bought cattle is more than likely a formula basis. Independent variables included function of overall caloric consumption leading to DOF, DMI, predicted HCW, and SBW. DOF had increased-USDA quality-grading characteristics. the strongest (P < 0.05) relationships with pro- As the beef industry begins to meet the challenges ducer live (r = −0.79), dressed (r = −0.80), and for- of supplying protein to a growing world economy, the mula (r = −0.81) sales. Processor net value for live use of growth technologies will be a vital strategy to Table 5. Simple r values among dependent and predictive variables Dependent variables of interest Producer net value $/45.4 kg Processor net value $/45.4 kg Item Live sales Dressed sales Formula sales Live purchase Dressed purchase Formula purchase Shrunk BW, kg −0.67*** −0.69*** −0.75*** 0.12 −0.24** 0.31** DOF −0.79*** −0.80*** −0.81*** 0.10 −0.28** 0.24* DMI, kg/d −0.25** −0.51*** −0.34** 0.26** −0.04 −0.10 Predicted HCW, kg −0.66*** −0.68*** −0.73*** 0.16 −0.22* 0.32** HCW prediction from McEvers (2018) (HCW = −41.44 + [0.6637 × SBW] + [12.974 × ZH]). *P < 0.05; **P <0.01; ***P < 0.0001. Translate basic science to industry innovation Downloaded from https://academic.oup.com/tas/article-abstract/2/3/290/5006242 by Ed 'DeepDyve' Gillespie user on 31 July 2018 Holstein beef production economics 297 empty body composition, energy retention, and supply increase efficiency and maintain competitive pricing chain value of serially-harvested calf-fed Holstein steers. to the end consumer. 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Translational Animal Science – Oxford University Press
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