THE American Beef Improvement Federation held its annual conference in Texas in June.
One of the interesting presentations I listened to was from Dr Jason Smith of Texas A&M University, who presented a session that identified the genetic and management factors that most directly shape feedlot profitability.
Dr Jason Smith, Texas A&M
His presentation, Genetic (and other) factors that influence feeding outcomes, highlighted that the economics of feeding cattle depends on three core components.
The first is the cost of cattle entering the feedlot, followed by the cost of finishing them, and finally the value they ultimately return at slaughter.
These three factors are equally relevant for Australian producers. For commercial cattle breeders, there is a key message in that both genetics and management can meaningfully alter each of these factors, and that single-trait selection or narrow management focus risks eroding value.
Procurement
The analysis showed that procurement costs dominate US feedlot economics, accounting for around three-quarters of total costs. Feed and other direct inputs make up the remaining quarter.
In conversation with several feedlot operators, their observations reflect a very similar breakdown of costs in Australian feedlots, and the formula is reflected in Beef Central’s regular feedlot trading budget calculations.
A key message from Dr Smith’s presentation was that if cattle enter feedlots with poor health status, inefficient feed conversion, or limited ability to achieve market specifications, no level of management can fully recover the lost production costs.
A major focus of the presentation was the contrast between healthy and unhealthy cattle. Morbidity in the feedyard reduces average daily gain, reduces feed conversion, increases mortalities and drives up cost of gain. Dr Smith emphasised that, “healthy cattle are consistently profitable; sick cattle usually are not.”
Herd health, pre-preparation
It is important to recognise that although genetics does contribute to producing more resilient cattle, the immediate opportunities for improvement in feedlot performance are due to herd health management.
These include proactive decisions in yard weaning and pre-conditioning, vaccination, castration, dehorning and parasite control. Australian research, starting with work done by NSW Agriculture on yard weaning and other programs, has consistently proven that cattle sold into feedlots without robust backgrounding are at greater risk of disease and stress.
That risk translates into discounts, higher feeding costs, and poorer outcomes. Pre-feedlot preparation (including BRD vaccination) should be seen as both a management decision and a strategy to underpin profitability.
Feed efficiency
Feed efficiency was another area Dr Smith emphasised. Incremental improvements in feed conversion generate major savings.
His figures suggested that a five percent improvement in feed efficiency equates to about US$50 per head, while a 30 percent improvement could deliver close to US$275 per animal fed.
There are again similarities with Australian programs. Producers who have a clear breeding objective to produce cattle for feedlot finishing need to ensure their selection decisions also focus on genetics that improve efficiency. There are EBVs that can guide producers in this area, particularly for those breeds that publish Net Feed Intake (Feedlot Finishing).
While Dr Smith highlighted the opportunities in selection, he also cautioned against over-simplification, and single trait selection. Selecting purely for lower feed intake may extend days on feed, pushing up yardage costs.
The challenge is not to chase a single number, but to balance intake, growth rate and conversion efficiency in a way that lifts overall performance.
Carcase value was presented as the final determinant of feeding outcomes. US data shows that base fed cattle values sit near the equivalent of A$4300 a head, but premiums and discounts can swing returns by hundreds of dollars either way.
USDA Prime grade carcases (equivalent of marbling scores 3+) earn premiums of more than US$160, while USDA Select and Standard cattle face discounts of US$175–300. Yield grade, carcase weight and eligibility for premium programs like “All Natural” or “Non-Hormone Treated Cattle” further shape outcomes.
While Australia does not use yield and quality grades this way, there is the parallel with most grids and branded programs reflecting many of these value signals.
Cattle that meet eating quality outcomes such as MSA as well as marbling scores, fat depth, and weight targets generate strong premiums. Cattle outside those bands attract severe discounts. Genetics that drive cattle into the preferred specifications along with management to ensure these outcomes are achieved are critical profit drivers.
Emerging issue – congestive heart failure
An emerging issue in the US was also mentioned by Dr Smith – congestive heart failure.
This condition has been recorded US feedlots, with some US reports suggesting that the incidence of Congestive Heart Failure doubling every ten years. Many in Australia only heard about the condition during a presentation at the World Angus Congress back in May.
Dr Smith noted in his presentation that it is appearing primarily in cattle populations that have been selected for relatively high genetic merit. Although this has been primarily identified in US feedlot populations, it is a reminder that selecting purely for growth and output can bring unintended consequences.
For Australian feedlots, Dr Smith’s analysis offers some messages both for cattle breeders and for feedlot operators.
The results reinforce the decisions of feedlot operators to prefer to purchase cattle with known genetics, backgrounding history, and health preparation.
For seedstock breeders, it demonstrates the value of offering bulls with balanced performance profiles across the traits of growth, efficiency, marbling, and as they released, those traits that impact resilience.
There is also a wider industry message around value, particularly around the losses that can be rapidly incurred through poor health and low compliance.
Alastair Rayner
Alastair Rayner is Principal of RaynerAg and an Extension & Engagement Consultant with the Agricultural Business Research Institute (ABRI). He has over 28 years’ experience advising beef producers and graziers across Australia. Alastair can be contacted here or through his website: www.raynerag.com.au