May 1, 2012
Many have asked us over the past several years, "Why so much emphasis on $B index at Three Trees Ranch?" Let's begin to answer that question by being sure that we understand what $B index is and why it excels as a multi-trait selection tool. The Beef Improvement Federation Guidelines defines selection indexes in this manner:
Selection index - A formula that combines performance records from several traits or different measurements of the same trait into a single value for each animal. Selection indexes assign relative emphasis to different traits according to their relative net economic importance, their heritability, and genetic associations among the traits.
Expected Progeny Differences (EPDs) currently available through the American Angus Association, along with numerous individual performance measures, can be overwhelming.
The selection indexes developed by the American Angus Association are called $Value indexes and they are bio-economic multi-trait selection indexes, expressed in dollars per head, to assist beef producers by adding simplicity to genetic selection decisions. The $Value is an estimate of how future progeny of each sire are expected to perform, on average, compared to progeny of other sires in the database if the sires were randomly mated to cows and if calves were exposed to the same environment. $Values encompass the revenue generated from genetically derived outputs and associated costs (expenses) from required inputs.
$Values only have meaning when used in comparing the relative merit or ranking of two individuals.
As with EPDs, variation in $Values between animals indicates expected differences in the relative value of progeny if random mating is assumed. Averages and percentile breakdowns are provided for $Values as reference points for the Angus database. A $Value of 0 does not correlate to the lowest ranking or to an average animal. At Three Trees Ranch, we believe that the $W and $B indexes are the most significant and offer the greatest utility to both our commercial and seedstock customers.
Weaned Calf Value ($W), an index value expressed in dollars per head, is the expected average difference in future progeny performance for pre-weaning merit. $W includes both revenue and cost adjustments associated with differences in birth weight, weaning direct growth, maternal milk, and mature cow size.
Weaned Calf $Value ($W) quantifies these four primary economic impact areas. Birth Weight - birth weight influences on calf death losses related to dystocia, weaned calf crop percentage, and resulting revenue per cow. Weaning Weight - direct growth impact on weaning weight revenue (pre-weaning growth and pounds of calf sold) and energy requirements and related costs to necessary to support pre-weaning calf growth. Maternal Milk - revenue from calf pre-weaning growth and pounds of calf sold as influenced by varying cow milk levels, and costs related to lactation energy requirements. Mature Cow Size - expense adjustments are made for maintenance energy as related to differing mature cow size, including mathematical linkages between mature weight and yearling weight. These four impact areas are combined into a bio-economic value expressed in dollars per head assigned to Angus genetics from birth through weaning.
Resources used to form the Wean Calf Value ($W) include National Research Council (NRC), US Meat and Animal Research Center (USMARC), Cattle-Fax, SPA and university cow-calf budgets, and the American Angus Association performance database. The $W index is calculated using assumptions from these sources that are updated twice each year to reflect real-world and real-time changes in the marketplace. At the present time, the base price for a weaned calf is calculated at $130 per cwt, with an assumption that the average commercial cow herd is 80% mature cows and 20% first calf heifers with an average cow weight of 1,300 pounds.
$W provides the expected dollar-per-head difference in future progeny pre-weaning performance in a multi-trait fashion, within a typical U.S. beef cow herd. If Bull A has a $W of +25.00 and Bull B has a $W of +15.00, and these sires were randomly mated to a comparable set of females and the calves were exposed to the same environment, and a normal number of replacement females were saved from both sires, on average you could expect Bull A's progeny to have a +10.00 per head advantage in pre-weaning value over Bull B's progeny (25.00 - 15.00 = +10.00 per head).
Producers that sell their calves at weaning may choose to make their bull selections on the basis of $W index since the costs and inputs included in its calculation are the only ones that directly impact them. It is our opinion at Three Trees Ranch, that as the national cow herd rebuilds over the next several years as it has always done, the added availability of feeder cattle and the reduced feedlot and packing capacity that current feeder cattle shortages and subsequent high prices will create will force all serious industry participants to focus on feedlot performance and end product value
Beef Value ($B), an index value expressed in dollars per head, is the expected average difference in future progeny performance for post-weaning and carcass value compared to progeny of other sires. Beef Value ($B) facilitates what almost every beef breeder is already seeking - simultaneous multi-trait genetic selection for feedlot and carcass merit, based on dollars and cents. $B represents the expected average dollar-per-head difference in the progeny post-weaning performance and carcass value compared to progeny of other sires.
Projected carcass weight and its value are calculated and incorporated into the calculations of $B, along with production cost differences and $B takes into consideration any discount for heavyweight carcasses. Final adjustments to the $B index are made to prevent double-counting weight between feedlot and carcass segments. The resulting $B value is not designed to be driven by one factor, such as quality, red meat yield or weight. Instead, it is a dynamic result of the application of commercial market values to Angus genetics for both feedlot and carcass merit.
As with the calculation of $W index, the base component assumptions for calculating $B are updated twice each year from the previously mentioned industry resources to accurately reflect real-world and real-time changes. At the present time, the assumptions being used for feedlot cost and performance are 160 days on feed, $290 per ton of feed cost on a dry matter basis and the sale of fed cattle at $100 per cwt of live weight. For the quality grade grid component of $B calculation, current assumptions are a $10 per cwt carcass premium for USDA Prime over USDA Choice, a $4 per cwt premium for CAB above USDA Choice, a $10 spread between USDA Choice and USDA Select and an $18 per cwt discount for USDA Standard grade. For the yield grade grid component of $B calculation, the current assumptions are a $3.00 per cwt premium for Yield Grade 1, a $1.75 per cwt premium for Yield Grade 2 and a $25.00 per cwt discount for Yield Grades 4 and 5. For purposes of the current calculations, an average carcass weight of 816 pounds is used with a discount of $20.00 per cwt for carcasses that exceed 1,000 pounds.
With those basics facts on the table, the most important reason that we emphasize $B index at Three Trees Ranch is that we know it works! Over the course of the past three years, we have collected carcass data from 1,877 head of purebred Angus cattle. We are very proud that 33% of those cattle were graded USDA Prime and 88% of those cattle had the levels of marbling to be graded Certified Angus Beef or USDA Prime. On April 30, 2012, the USDA Market News Service reported a weighted average premium for USDA Prime over USDA Choice of $24.92 per cwt which means that the American Angus Association's 816 pound average weight USDA Prime carcass is worth $203.35 more than that same carcass if it is graded USDA Choice! The attached chart shows that over the past three years, the percent of cattle graded USDA Prime has hovered between 3% and 4% while the percentage of Three Trees Angus cattle graded USDA Prime has been 33%. Using the expectation that a bull can sire 100 calves in his lifetime, those extra 30 head that have the potential to grade USDA Prime give a Three Trees bull customer an opportunity to earn $6,100 more with the progeny of a Three Trees Angus bull designed and selected for $B index.
If you would like assistance with bull selections, please feel free to call any of these team members:
Dick Beck - (770) 846-0046
Rob Singleton - (770) 862-0983
Clay Chapman - (706) 594-3813
Ryan Johnson - (770) 550-7548
Craig Smith - (770) 550-7546
John Painter - (770) 550-8031