Intro (00:04):

Angus at Work, a podcast for the profit-minded cattleman. Brought to you by the Angus Beef Bulletin, we have news and information on health, nutrition, marketing, genetics and management. So let’s get to work, shall we?

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Host (00:56):

Welcome to this edition of Angus at Work! We're here today speaking with Troy Marshall, director of our commercial industry relations for the American Angus Association. Troy, you had a presentation at Angus Convention this last fall that was talking about the commercial Angus pathway to success with some feeder calves?

Troy Marshall (01:16):

Yeah, we're really excited about how Angus has been received in the marketplace and opportunities we have for commercial cattlemen to really capture the value of the investment that they've made in registered Angus genetics.

Host (01:30):

Now you've had a busy fall going to some of those sales that featured some special Angus sets of cattle and some others. What did you learn while you were out on the road?

Troy Marshall (01:41):

Well, this fall was a little more exciting than the summer with some ups and downs with some of the outside market influences this fall. All in all, historically high feeder cattle prices that we've never seen before. A marketplace that was dictated to by scarcity, but at the same time surprised all of us. Just how much market differentiation we continue to see and how much [of a] premium feeders and buyers of these cattle are willing to pay for known genetics.

Host (02:12):

So even with that scarcity that you mentioned and not having the cattle to maybe fill the lots, we're still finding as big differential between the Angus cattle and others?

Troy Marshall (02:25):

Yeah. In fact, surprisingly, our data would show that the difference between black-hided calves and non-black-hided calves, between AngusLink cattle and the non-AngusLink cattle or Angus Verified and the cattle with the [Genetic Merit Scorecard (GMS)] versus those without ... Our premiums actually have grown even though we had these types of price levels that we had throughout the summer and fall.

Host (02:48):

So kind of a stair-step effect on being black-hided and being registered or out of registered bulls and then with the documentation of AngusLink?

Troy Marshall (02:58):

That's a great way to say it. I think there's a lot of value just knowing the cattle are Angus or black-hided in there. And then you start to differentiate that out by knowing they're out of registered Angus bulls with AngusVerified and those sort of programs. And then the next step with the scorecard is to really describe the genetics of that pen of feeder cattle as objectively as possible. Each step we take, we see those premiums increase in the marketplace as a result.

Host (03:25):

So do you have a chance to maybe talk with those buyers on why they're paying those differentiated prices?

Troy Marshall (03:31):

The exciting thing for me is that genetics have never been more valuable than they are today. And part of that is we've got increased input prices and higher prices outside. So now an increase of half a percentage point in feed conversion equals more dollars than it did 10 or 15 years ago. An extra 20 pounds (lb.) of carcass weight when you're getting $4 a lb. is worth a whole lot more than otherwise. And so on all these things, we're just seeing the value differences expand within the industry. A few years back, we used to think it was pretty significant to see a $600 difference between the best and worst head in pen of cattle. Now, that's over $1,200.

Host (04:15):

That's really almost hard to fathom, isn't it?

Troy Marshall (04:17):

It is. And it's just one of those compounding effects as the prices have gone higher and the input prices, etc, Just the value differences that are being created are growing wider as a result too. With that, like with the National/U.S. Premium Beef grids that we saw here through this fall. For the first eight months of the year, there was about a $300 head difference in the cattle that were in AngusLink program than the cattle that went through the grid on average. And so it's just ... there's a lot of dollars and a lot of value that can be captured. Those feeders and buyers upstream, they're realizing that value and are willing to pay for it if they can be confident in making that decision.

Host (04:58):

Troy, when people are going out to look at bulls to buy a bull, we know that there's sale books that show the registered Angus and that you can have a "registered" bull that isn't registered. How do you tell the difference when you go to a sale book and start looking?

Troy Marshall (05:17):

And, thankfully, the vast majority of the bulls out there are registered and have EPDs for the American Angus Association. But, I guess, the first way to really know that those bulls are registered is to look for the registration number that's usually included there at the very front and center as you look at those sale catalogs on all those bulls. If they have a registration number with American Angus Association, you can be confident that those EPDs have been generated by the American Angus Association, the pedigrees validated and all that kind of thing.

Host (05:48):

And with those books that are created with Angus Media, I know we have those live on our sale books page. With the registration number, it automatically pulls all that data from the database and those are live online so that they get updated every Friday.

Troy Marshall (06:04):

So exciting to me to see how much, when you compare the genetic trends of Angus and some of the other breeds out there, we're kind of recognized as both the leading breed now for both maternal and terminal traits. When you look at the genetic trends, we're widening the gap between so many of these breeds just because of the size of our population, the progressive nature of our breeders, the way they utilize AI and embryo transfer and all these other technologies out there. And having the largest database, the most genomic testing of anyone in the industry, it's just exciting to see just how quickly and rapidly we're improving these Angus cattle from year to year.

Host (06:44):

Now, for someone who would have maybe done a shortcut and not registered the cattle that they're selling, so they're presenting some what we would call pedigree average EPDs. Where they might take the average of the sire and the dam's EPD and present that as a figure for bolts. How does that differ from the EPDs that are actually from a registered animal?

Troy Marshall (07:09):

Well that would be much better than nothing at all. At the same time, it's really not even comparable to the registered Angus cattle because it's not tying back to the database, all the pedigree information, and all the phenotypes and weights that are coming into the system. That is, as you mentioned, adjusting every week as we get more and more information in the system. It doesn't account for that individual's individual performance differences within contemporary groups. It doesn't account for his own genomic information or any of those other factors. So EPDs are the most accurate tool we have far and away in terms of evaluating the genetic merit of these bulls.

Host (07:49):

And how are they a better predictor of that animal's performance than say a yearling weight or birth weight?

Troy Marshall (07:58):

Well, the yearling weight and birth weights are great things. Those go into the EPDs and they're calculated in there as well, but the actual weights are kind of limiting. They have to be recorded within a contemporary group. The larger the contemporary group, the more informative it is. And with the insight from the National Genetic Evaluation? They take all the EPDs, all the pedigree information, all the genomics and all the phenotype information across the population and are able to create a EPD - or a metric - that is, in most cases, nine to 10 times more accurate than just a single weight or individual performance data on an animal.

Host (08:39):

We know a yearling weight can differ from one year to the other just on how cold it was or how muddy it was.

Troy Marshall (08:46):

And that's what the National Genetic Evaluation does. It separates the environmental effect from the genetics. And like you said, there's just so many things that contribute to an animal's actual performance on any given day or given year.

Host (08:59):

So looking at that registration paper ... I'm going to cheat and I'm going to look at the performance registration paper and maybe visit with you a little bit about what's on that and what's in the sale book. If you actually put that registration number or get the registration paper. Some of the information that is on that paper includes the original breeder that raised the animal. It has the production EPDs, maternal EPDs and carcass EPDs, and dollar values. And then it also has some information on the cow, on the bull and on that individual too. So can we maybe look at that and what advantage does it give a producer to have that pedigree? I

Troy Marshall (09:48):

Got to look at it as being a CARFAX or a title for your car. It gives you all the material information there and it gives you the opportunity to dig in deeper if you like to as well. But just like with your CARFAX reports, you know that everything that's there is accurate and has been reported and you know what you're buying. And, to me, that's just what that registration paper does. It gives you details on the pedigree, the performance of that animal, progeny, and the relationships with all the families that are involved there. And it just gives you a degree of confidence in what you're buying and what you're getting. And to me, one of the most difficult things or we don't talk about a lot is we talk about genetic improvement all the time, I guess, or making improvement, whether it's marbling, growth or calving ease. Those kinds of things.

But uniformity, consistency and predictability are really, really important in our industry. Avoiding the risk. To me, as much as anything, not only does it enable you to predict the genetics of those cattle much more accurately, it eliminates a lot of that risk and potential problems that can come. That's where I see a lot of value in that registration paper.

Host (11:02):

It's kind of nice to go on there and be able to see. And the one that I pulled up is online. People can go on Angus.org and actually look for that performance registration certificate example. It's the old Scotchcap bull that was born back in 1982, I believe. So he's kind of our example we use. You can look at how many daughters are back behind his pedigree and his information and how many actual calves he's had that have actual carcass data and things like that. So, there's really a wealth of information if you start digging into it.

Troy Marshall (11:40):

Each one of these animals or EPD sets that you get or your pedigree when you look at it? It's hard for me to fathom, but there's hundreds of millions of data points now that are represented there and distilled down to give you the most accurate numbers. So it's just kind of a testament to what we've been able to do as an industry. As we've collected this information and data over time, just how powerful it really has become.

Host (12:05):

Looking at the range of the EPDs that are available, and when you look at a sale book, not everybody puts every EPD in there. I think they try and do a good job of presenting what their customers are interested in. But could you maybe talk about some of the differences in the EPDs that are available?

Troy Marshall (12:26):

I do think everyone kind of has to understand what the priorities are for their own program in terms of what their main objectives are, what their marketing scheme is and what type of environment they're running in. I look at traits a little bit differently sometimes. I usually pick my three or four that I think are major priorities for my program, whether that be calving ease, fertility, growth, quality grade, that sort of thing. I usually have some threshold traits, goals or targets that I'm shooting for with those four or five traits. And then from there, I really just try to avoid some of the problems. Whether that be on teat and utter, feet, legs or anything else there to avoid. Anything that's going to get me into trouble. I think a lot of the breeders then just focuses on the indexes. When you look at all those EPDs that we do have, it can be information overload sometimes.

That's why I love the dollar indexes with maternal value, with $B, $G, etc. We can really just look at two or three indexes and know we're moving in the right direction and moving our program forward. It simplifies the process. Ultimately, once you've sorted the cattle based on data and you've made sure they align with your breeding objectives, your targets for your operation and your marketing goals, I think always visual appraisal. Some of those things come into effect as well. And, unfortunately, most of us then also have to manage the cost scenario a little bit too. So we'll adjust there based on our budgets of what we're willing to forego or willing to pay for.

Host (14:11):

When prices of Angus bulls are out there ahead of maybe some other breeds and when they're looking at that choice, what would you tell people to make them feel better about paying a premium for an Angus bull?

Troy Marshall (14:24):

That's a great question, Shauna. I don't really think you pay a premium price for an Angus bull. I think you pay for the benefits of an Angus bull. When you look at that, it'd be matching the cattle environment or the calves to the marketplace and all those things we talk about. It's really easy to quantify. When you look at AngusLink last year, the average premium was nearly $21 per cwt. for those cattle. That's nearly $100 per head premium on those calves. If you sire a hundred calves over the lifetime of a bull, that's nearly a $10,000 advantage on what those genetics returned over others. That's not accounting for increased weaning weight, increased quality grade, increased live calves per cwt., improved replacement females in the herd ... Those investments return over time. I really think the best investment you can make in the cattle industry is in your genetics.

We're in a unique situation in this industry where even though we're differentiating seedstock cattle, feeder cattle and stuff more and more based on their genetic merit, what we see is that that investment in genetics is one of your highest returns that we're receiving. So we always say invest in health, nutrition and genetics, but I think your highest return on investment today is still on the genetic side of things. It's easy to make the case that you can pay more money for the right genetics. That's kind of the neat thing when you mentioned the commercial pathway earlier. At one time, we were maybe not all using the same metrics within the industry. And now we're using the same EPDs. The dollar indexes - $B, $F and $G - and maternal are what are driving the GMS and our scores for feedlot grid and maternal as well.

So while not directly comparative, they're highly linked. As you improve $B with your bull selection, you're going to be improving the $B value on your scorecard as well. And with GeneMax Advantage and the revamping that they've done with the GeneMax Advantage in the last year and a half, it's really exciting that those commercial producers are getting a $G, $M, etc., on their commercial females that are directly comparative to the registered Angus Bulls and the sires they're using. So now that we can integrate our marketing and our selection tools all based basically off of the same values, I think we can make more progress than we've ever been able to before as a result.

Host (17:16):

Excellent. So now we've talked a little bit about the value of buying a registered bull over maybe a bull that was purebred Angus, but not registered or a commercial animal. Another step that we would consider part of the process is transferring that bull into the buyer's name and what opportunities that opens up to the buyer. Can we visit a little bit about that?

Troy Marshall (17:45):

With Angus Verified and the GMS, one of the criteria is that those bulls need to be registered and transferred to that producer. It is essentially just our way of validating that those genetics are really in that system or in the cattle. It's like a bill of sale. That's how I look at registering and transferring those bulls. And if you are making the investment in a registered Angus bull, you should just make sure that [bull] is transferred in your name so that you can take advantage of all these marketing programs and opportunities with the American Angus Association.

Host (18:22):

So that winds up providing you a historical record of the bulls and the EPDs that sired some of those momma cows?

Troy Marshall (18:33):

Exactly. As we build that out over time, we're actually creating what is essentially an EPD for your cow herd as well. What those average genetics of those cows are. If we have 10 years of historical bull sire information on that cow herd, we can actually do a pretty good job of describing what those average genetics are. We're seeing more and more of these commercial cattlemen over time that are utilizing this data and their historic information in conjunction with their bull selection and the GeneMax Advantage programs. When they're making their heifer selection decisions to really fine tune their breeding objectives, know what level of milk production they need in their environment, what level of mature size works best for them, understanding just what is the ideal for their environment and for their overall marketing strategy.

Host (19:25):

So now what is Angus Verified?

Troy Marshall (19:28):

Angus Verified is just a way with the AngusLink program to differentiate your cattle in that sea of black-hided cattle that are out there. So to be Angus Verified, they have to be 100% sired by registered Angus bulls. As we mentioned earlier, those bulls have to be transferred into your name as well. So it lets those buyers know that these cattle are truly sired by Angus bulls that do have documented pedigrees and genomic information on them.

Host (19:55):

When those calves are Angus Verified and they go into a sale listing, do they get to have that logo with them or how does that work?

Troy Marshall (20:08):

They do. So all those cattle - if you pull up some of the video catalogs or at your sale barn - they will have the Angus Verified logo listed with them. On the certificate that goes with those cattle that actually lists those sires of those calves that are being sold. It just gives those buyers confidence that they truly are buying cattle that were sired by registered Angus bulls.

Host (20:35):

So now how does that differ from AngusLink or what we call AngusLink?

Troy Marshall (20:40):

Yeah. Angus Verified is actually one of the two main programs of AngusLink. And so Angus Verified was meant to differentiate those cattle and reward those producers who are using 100% registered Angus bulls. Then the GMS - which is the second part of Angus Link - is actually designed to take that to another level yet again and further differentiate those cattle. We actually look at the genetics of those bulls and provide a scorecard or scores for beef feedlot and grid for those pen and feeder cattle. So it just gives those buyers some little additional information on how those cattle will perform in the feedyard and on the rail.

Host (21:29):

Now we've had that system kind of in place now for two years. Two or three years? How has that grown invisibility in front of some of those buyers? We probably see it highlighted more in the auction market and the video market.

Troy Marshall (21:49):

The AngusLink program is designed as a marketing tool. Earlier we were talking about EPDs and GeneMax Advantage. Those are more selection tools whereas AngusLink is really designed to help producers capture and leverage the value of those genetics that they've been investing in. The AngusLink program has experienced tremendous growth. I think it's actually changing the way we're selling feeder cattle. We have seen the program grow from 50,000, as you said, to well over 300,000 head at this point. Approaching a million head that have been through the program. This year we will see over $100 million in premiums returned to those people who have enrolled in the AngusLink program. So it's really exciting in the way it's transforming the business. My hope is that in five to 10 years that - just like almost every bull is sold with EPDs and pedigree information today - most feeder cattle will sell with the GMS.

Host (22:54):

As we look to the future of the cattle cycle, maybe we're starting to note a little bit of heifer retention starting albeit slowly. There's a lot of people who are still pretty cautious about saying that it's going to happen this year. Right now, we're in a calf market where you could maybe say the cow-calf producer has the most leverage out there with a short supply. As we go into maybe growing that national cow herd, and as the cycle traditionally goes, you get to the point where the feeder might have a little bit more leverage in the buy ... How important is it going to be to have this documentation and maybe a history of documentation to get the premiums in the future?

Troy Marshall (23:39):

That's a great question, Shauna. I agree with you that we're still looking at the next year or two where the cow-calf producer is going to have a lot of leverage as we look out here. As we start to expand, that's even going to tighten numbers up a little bit more for the cow-calf producers. As you said, the cattle cycle is inevitable and that shifts as we go. We will see numbers increase eventually here. There's enough economic incentive to do so. When Mother Nature cooperates here, we will see numbers increase gradually going forward. As we do that it's going to put more and more emphasis on those cattle that are documented. It's going to give those feeders and buyers more opportunity to continue to differentiate these cattle in the marketplace. I think we will see price spreads that we've never seen before.

It's just amazing to me ... 25 years ago, we talked about annual price swings in fed cattle of $12 per cwt. from the highs to the low. We see that on a daily basis today in the way we're differentiating cattle. We've seen on any given day at a sale barn where there might be $.30 to $.40 difference between the highs and lows on similar weight cattle and similar conditions. So we really are starting to differentiate these cattle. I think we'll just continue to see that increase as the leverage shifts back to the other segments of the industry as we go through the different phases of the cattle cycle.

Host (25:08):

Well, thank you for joining us today and visiting here a little bit about the differences with a registered bull versus a non-registered bull. Some of the advantages and opportunities that are available to the calves and in progeny from those documented out of a registered Angus bull. We always like to finish out on a positive note with something that's good going on either personally or professionally. So do you have something to share with us today?

Troy Marshall (25:41):

Yeah, a couple things. One: I'll just say that as a commercial producer of Angus genetics, you're able to capitalize on the most powerful brand in the livestock industry. Buying a registered Angus bull just really gives you that opportunity to capture that brand value. And from a personal standpoint, my middle son is getting engaged so we will be adding to our family.

Host (26:09):

Wonderful.

Troy Marshall (26:10):

Really good news there.

Host (26:12):

Congratulations!

Troy Marshall (26:13):

Thank you.

Host (26:15):

Well, I appreciate you joining us today and we'll visit with you again soon, I'm sure.

Troy Marshall (26:19):

That sounds good. Thanks, Shauna.

Outro (26:27):

Listeners, for more information on making Angus work for you, check out the Angus Beef Bulletin and the Angus Beef Bulletin EXTRA. You can subscribe to both publications in the show notes. If you have questions or comments, let us know at abbeditorial@angus.org and we would appreciate it if you would leave us a review on Apple Podcasts and share this episode with any other profit-minded cattlemen. Thanks for listening. This has been Angus at Work!