The Cost of Low Tech Beef Systems

Science and agriculture have had a long and rewarding partnership. Prior to the advent of modern scientific research, which commenced in the early 1900's, production per acre and per animal was low. Farmers fed their families and sold their small surplus of products to city dwellers, resulting in both meagre on-farm incomes and relatively high food prices. Over time, production technologies such as scientifically formulated fertilizers and genetic selection have dramatically increased yields and efficiencies. This modern era of agriculture became known as the "green revolution", and was heralded as the key to feed an ever growing population from a finite land base.

Here are a couple of examples of how agricultural production and food costs have changed over time. Data from Indiana show that corn yields increased from 30 bu/ac in 1930 to 160 bu/ac in 2005, an increase of 800% in productivity per acre (fig. 1)1 As well, historical records show that in 1900, the daily wages of an average worker could buy 6 dozen eggs. By 1990, an average day's pay could buy 52.6 dozen eggs, an increase in relative purchasing power of 880% over this time period2. Technological advances have resulted in more efficient crop and livestock production, with corresponding benefits to society through lower food costs.

Graph showing corn yield increase in bushels per acre from 1866 to 2005.

Figure 1. Indiana corn grain yield 1866 - 2005 [adapted from Nielsen1]

Currently, most beef production systems employ many technologies which improve growth efficiency, feed conversion and animal health. Producers can choose whether or not to pay for and utilize these technologies on an individual farm basis. Many producers do use a lot these technologies because they get a return on their investment, improving profitability. At the same time, consumers benefit when these technologies are used via lower meat costs at the grocery store.

However, some of today's consumers may be influenced by philosophical considerations. They may prefer to buy meat from production systems which do not use some modern technologies or techniques. For example, they may want to buy beef from animals which have not been implanted with a hormonal product, and/or not been fed grain, or fed only organically produced feeds and/or not treated with any antibiotics. In response to these marketing opportunities, some producers have developed value chains which supply these consumers with beef from systems which meet their criteria.

A question which often comes up when producers are contemplating a switch to low tech beef production is "how much of a premium do I need to get for my product to offset the higher costs of production"? Scientists at Kansas State University set out to answer this question by reviewing published papers which examined technology use in the feedlot. After using stringent quality control criteria, they included 91 experimental comparisons from 51 papers. The production technologies were evaluated for their effect on average daily gain, dry matter intake, gain:feed ratio, morbidity and mortality.

The technologies included:

  • hormonal implants
  • tylosin
  • mass treatment on arrival with an antibiotic

The overall impacts of antibiotic treatment and implants are shown in Table 1. These interventions resulted in significant improvements in daily gain, with implants in steers also improving gain:feed ratio and increasing dry matter intake.

Table 1. Effect of technologies on feedlot cattle performance3
Technology
Average Daily Gain (lbs/day)
Improved Gain:Feed
Dry Matter Intake
(lbs/day)
Antibiotic treatment on arrival
+.24***
-----
-----
Implanted heifers
+0.18*
-----
-----
Implanted steers
+0.55***
0.02***
+1.12***

*P<.01; *** P<.001

As well, antibiotic treatment on arrival resulted in a 53% reduction in treatments for disease and 27% reduction in death loss compared with cattle which were not mass treated. Cattle not receiving tylosin in the diet were about 4 times more likely to develop liver abscesses than those who did.

The authors used an economic feedlot model to estimate the effect of using implants on cost of production (COP). They estimated that implanting reduced COP by $77 per animal compared with not implanting. In order to cover this added cost, producers would need to receive an additional $0.07/lb (live weight) when selling their finished animals. They also compared the COP for a conventionally fed, implanted steer with that of a non-implanted steer fed organic feeds, where the organic feeds were priced 50% higher than conventional feeds. In this scenario, the conventional steer had a $349 per head lower COP than the organically produced animal. They estimated the price premium required to compensate for the increased COP would be $0.28/lb (live weight)

These results indicate that beef producers contemplating natural or organic production as alternatives to conventional production should carefully evaluate their target markets to ensure they will be able to obtain a sufficient price premium to make the venture worthwhile.

1 Nielsen, R.L. Corn Grain Yield Trends: Eyes of the Beholder. Purdue University.
2 USA Diplomatic Mission to Germany. About the USA: Facts & Figures: Income and Prices 1900 - 1999.
3 B. W. Wileman, D. U. Thomson, C. D. Reinhardt and D. G. Renter. Analysis of modern technologies commonly used in beef cattle production: Conventional beef production versus nonconventional production using meta-analysis. J. Anim Sci. 2009. 87:3418-3426. doi:10.2527/jas.2009-1778.

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