exceed the baseline in the plant ( for quality grade ) and you ’ re paid on the portion that exceeds that baseline .”
So , it becomes a game of diminishing returns . “ When we ’ re getting up there to 80 % or better Choice and Prime , how much room for improvement do you really have ?”
Now consider feed efficiency . “ The difference with feed conversion is it ’ s a trait that the cattle feeder constantly gets paid for on the entire population of animals each time ,” he says . “ And it ’ s connected to corn or feed grain price . So if we ’ re in a relatively high feed grain environment like we are today , a 10 percent improvement ( in feed efficiency ) is more than a 10-cent improvement in cost per pound of gain .”
Here ’ s how Jerry Wulf does the math .
“ You can neglect feed efficiency and just chase marbling and breed cattle that blow past the averages on Prime and CAB . But you need to make sure it ’ s not costing you too much to get there .” Too many YG 4s and 5s being a good metric .
For discussion purposes , assume a $ 30 per cwt premium on Prime . Then assume you moved the needle from 8 percent Prime to 18 percent on a pen of 100 steers . At a $ 30 premium , you added $ 3 per cwt to each animal in the pen . On a 1,350-pound steer , that comes out to $ 40 per head across all the steers in the pen , Wulf says .
“ I can pick up $ 40 per head by improving feed efficiency by a quarter of a point ,” he says . That ’ s not hard to do if you work at it . “ With some effort and stretch , we ’ ve improved it by upwards of 20 percent .” That ’ s a combination of genetic improvement and better feeding strategies .
For cattle feeders , the three main factors that drive margin are health , feed efficiency and carcass value . From a health perspective , that ’ s why feedyards will pay up for feeder cattle that have been weaned and preconditioned .
But , agreeing with Kee Jim , Wulf says in today ’ s feeding environment , feed efficiency is by far the most important .
Cattle health and death loss will vary from pen to pen , but let ’ s say death loss is at 2 percent . That ’ s roughly $ 20