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Rural System? Just Dreaming …
A For-Profit Conglomerate for
Meaningful Jobs
Healthful Communities
and Improved Natural Resource Management
by Robert H. Giles, Jr., Ph.D.
Professor Emeritus
Virginia Tech, Blacksburg, Virginia
2007
Chapter 20. A Beef Cattle System
Dreaming: Cattle are sounds, giant rumbling low-range sounds. So much change since the grandfather of the grandfather cow. I wonder about the original sounds of the cow at night…when defending calf… when speaking to herd mates. There was message in the loudness … it had survival value … it had meaning … even as silence has meaning to cattle and people … perhaps "tend us especially well… for we are symbol of the past and new hope." Just Dreaming …
| Not producing meat but producing profits over the long-run from a beef cattle system |
Everyone cannot succeed at raising beef cattle for profit. Some people have lost farms attempting to do so. Others have shifted to other agricultural production. There must be reasons for these events …or a lack of them. As always in complex systems, there are many possible reasons for failure. The others include obscurity of the objective, a failure to draw the context properly, and inadequate management. Farmers often fail to maximize profits from raising cattle because of their small scale of operation. Scale is only one aspect of systems failure. A failure in any part can result in total system failure. Failure, or a shift to an on-going profitable set of results, the end state, is approached from many directions.
This chapter is about such an approach to a beef-cattle system developed and operated by the Cattle Group (with evident relations with other livestock expertise of the system within the Goat System Group, The Rabbits Group, and The Goose Flock ). Imagine a country or a region as the place where a beef cattle system might be created. An example might be the multi-county coal region of southwestern Virginia or Native American reservations in Arizona. In western Virginia, land is mountainous; grass is scattered over lands that have been strip-mined and re-planted. The area has potential for cattle. How shall a functional profitable system be designed? We follow the main parts of a systems approach (advocated lately for range management research by Vavra and Brown, 2006).
Context
One typical region is that of the coal counties of Virginia. A manager works for stockholders in a cattle system. Land is rented from willing owners or owners are contracted for production of a certain number of cattle raised under prescribed conditions with assistance from the Cattle Group.
Objectives
The objectives are (1) to maximize profits to the system owner or stockholders, and (2) to maximize employment (at or greater than) at minimum wage and (3) to stabilize related communities by means of the economic benefits to families and village governments. The hidden objective is improved natural resource management (soil, water, wildlife, viewscapes, etc.) The specific formulation is given later.
Subsystems
The subsystems of the cattle system are shown in Fig. 1. The diagram suggests only the major components of the system. Each subsystem may need staff but where many such systems are developed, the expertise needed to analyze and prescribe for one system would be identical for others… and at almost no additional cost.
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| Figure 1. Components and flow of the proposed cattle system. |
Market Analysis
Experts analyze the markets for cattle system products. These include the items in Table 1 but also include distributing and receiving centers, warehouse and refrigeration centers, transportation (including probability of interruption), and employment (including probability of interruptions), stability of markets, and alternative expansion markets in the region and world. The market analysis would explore all 22 topics (Table 1 and others within the realm of Q Works).
The objective is to maximize the sum of all products (K) per dollar of total system cost(s) over a period of 150 years (with the analysis and adjustments made annually).
| Table 1. Potential products and services of the Cattle Group: |
| 1. Semen 2. Sales of a unique breed 3. Meat and fat 4. Hides 5. Hair/fur products 6. Organic fertilizers (Feces, Dried blood, Bone meal) 7. Horn-hoof glue 8. Horn products 9. Bone products 10. Gland products 11. Managerial service 12. Range and pastureland service 13. Feedlot service 14. Special feed sales 15. Fencing services (The Fence Group) 16. Security service (The Land Force and Safety and Security Group) 17. Slaughter and butchering service 18. Packaging and freezing service 19. Storage service 20. Marketing and educational programs 21. Delivery service |
The optimization is done to achieve Qmax where
Qmax = (
all years from 1 to the planning horizon (e.g., 30 and 150)
P from i=1 to 21
a t b K i)
/ C t
where at is the proportion of the gross income in each year t, b is the average per unit value, and K is the number of units of the i th product sold per year. There are many constraints in such a system such as available funds, and (implied within Ct |X|), available pasture area and quality, available staff, computers, and storage. The costs are incurred over all units and not separable by product and service categories.
Cattle
The beef cattle system may be, and probably should be for optimum profits, a subsystem of a more comprehensive livestock system, one that optimizes profits from the year-around system operation of beef cattle, dairy goats, pigs, horses, dogs, rabbits, pigeons, chicken, and turkey systems. There are major similarities in these topics. They are very isomorphic. The same computer software will serve each of them well with minor adjustments.
All will not be discussed, partially because it is boring; partially because the point can be made of what a fully-developed, practical, profit-oriented system might be. Just any old cows will not do! What is needed is a cow of optimum color (solar energy reflectivity or albedo) for a specific latitude so that it has minimum night time radiation and optimum day time energy absorption given the seasonal average day length, cloud cover, and ambient temperatures. Also there must be an optimum size (one that minimizes the surface area per unit volume). Of course it takes money to produce volume so growing muscle per unit volume for the lowest cost over time becomes the limited objective. The type of muscle currently desirable and bring a high price (2007) is that of grass-fed cattle.
Animals are metabolic entities that respond not as volume or weight but as weight in kilograms to the 0.75 power. The consequence of this is that, as in other animals, the large animals are most energy efficient but of course they eat more. The manager will take the animal in the second it crosses the optimum size point, for after that it will grow slowly or not at all while costs continue to accumulate. Part of the optimization can be handled by management and feed but when designing systems there is no reason for going second class! A million cattle over a hundred years can produce a lot of beef and incur a lot of costs! The need is to ignore the statistician's 5 percent criterion because even 0.1 percent difference (a gain) of a big animal represents a few dollars. The need is to utilize the knowledge of animal genetics (see Ralph 1983 and Davidson 1983) and "create" the perfect animal for each particular site.
In addition to the production economies (a) the animal (or genetic service) can be sold to people with other needs or sites; and (b) the meat (and other listed products and services can be specially marketed for their name and alleged or actual special characteristics.
Cooperative Cattle
A small linear program can be created to determine the optimum number of acres for grazing that (a) should be purchased and (b) that should be rented. Similarly it seems that cattle may be owned or held under contract with landowners who rent pasture and operate under the management services of the system. Owners receive a contract price for animals. The advantages are that the system does not have to make large land purchases, pride of ownership of the cattle and land by local people is allowed and encouraged, and land is brought under sophisticated management. The viewscape is enhanced by well managed pastures and handsome animals. The Land Force provides most of the labor and related management services.
Pasture
The grassland ecosystem is well studied but it will take detailed analyses to determine the exact mix of seed, fertilizer, lime, and grazing pressure to harvest the exact amount of grass by grazing animals so as to achieve needed animal growth, long term fertility, minimum nutrient loss from the surface and root zone, and minimum total cost. Fig. 2 shows the potential area in which grass may be grown in one county of the region. Fig. 3 shows the actual areas in a 70,000 acre ownership. Kroll (1982) has already taken the first steps toward such a system. He secured the U.S. Forest Service computer programs RangeRam and CoPlan. These are western range management systems based on linear programming. In his thesis he developed a range optimization system. It specifies exactly what practices, cattle, feeds, etc. are needed to minimize costs and maximize profits. The abandoned surface mines in the Virginia region (10,759 acres or 4,350 ha.) are like semi-arid western ranges.
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| Fig. 2. A suitability index is displayed for annual forages based on July temperatures for Wise County Virginia. The index ranges from 3 to 5 with the darker cells indicating better values. Color maps are now readily produced. Results are from Anderson's (1981) M.S. thesis research. |
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| Figure 3. The GIS computer-determined grazing potential of land within an ownership (about 10,700 out of 69,000 acres). |
The rainfall is high but runoff is also very high, thus net available moisture is low. These eastern rangelands are a new concept. Even though precipitation is about 35-40 inches per year, much runs off of compacted soils or percolates through rocky soils. In either case, the amount of available or retained moisture for constant use by plants is low, i.e., 12-15 inches (30-38 cm), thus semi-arid. Unlike pastures that can be mowed, limed, and fertilized and that have non-linear shapes, these areas present real problems. They have not been solved readily after 40 years of local experimentation. Kroll demonstrated that a large optimum-size herd was needed and also there was a need for high protein feeds during the winter as sensitive factors. All areas are not equally productive and some will not be profitable. Even the low-quality sites, with proper management, will produce more than poorly managed superior sites. It is not appropriate to deny the cattle system because prime land is not available. Related land has many other potential uses, an underlying message within Rural System work. Alone, however, a cattle system may not be profitable. As part of a livestock system or Rural System it may play a vital role.
The market, the weather, labor, disease, and range quality may be too variable to allow a viable enterprise. Hart (1978) has shown that the effect of stocking rates (number of animals per unit area) on animal gain is not well known and that there are several conflicting theories. These theories seem to conflict because they have been based on observations of a dynamic system changing in forage growth rate, availability, quality, all with changing nutritional requirements of a herd that itself changes annually. These have produced different shapes of response curves relating gain per head to head per area. Rural System staff will continue site- and animal-specific studies typically with data analyzed using automated multiple regression procedures. The best current shape is a linear (constantly flat) gain below the critical stocking rate and a linear decrease thereafter.
Integrated Damage Management
Often gains may not be possible in production but losses can be reduced to achieve high net returns. Computer aids are essential to integrate preventive techniques and active control of insect and vertebrate pests and predators, parasites and disease, and trauma for the lowest tolerable losses for the lowest advisory and management costs. Often the needs are not to control the pest or organism but only the damage. The costs of general animal health development and maintenance (e.g., restricting access to poisonous plants) must all be well accounted and balanced in a harsh and uncertain economic and ecologic environment.
Feed
There are well-known programs to achieve optimum forage mixes based on feed components, costs, animal needs, and season. These should be used and then services provided for some animals in some herds (those that are not following the "grass-fed beef label"). In some areas, such service is provided for free by agencies. This is a subsidy by the public, now probably unnecessary because the techniques are widely available and the free service is competitive with a complex enterprise that would seek to provide such service. Hay and grain feed supplements are needed investments that provide energy and protein to allow the full resources of energy of the area to be utilized. Contractual relations with other farms or even land purchase may be needed to supply food for the animals. Fig. 2 shows a computer map of pasture areas, where, over time, pasture and hay grasses of specific types and cultural practices may be grown successfully…and cost effectively.
Fencing
Associated with feed in pasture is the need for fence. The proposed total cattle system operates to (a) design optimum field sizes to achieve ease of handling animals; (b) designs, constructs, and sells fences, gates, chutes, cattle and shelters, and loading facilities; (c) designs optimum rotation schedules for cattle among pastures and feeding; (d) operates a skillful, mechanized high-tensile wire and electric fence emplacement crew; (e) maintains fence surveillance; and (f) otherwise provides security. Fences are built and are a recognized cost of business. A Fence Group within Rural System benefits from such sales. Services of Q Works, The GIS Group, and the Safety and Security Group are required costs.
Feedlot
A feedlot operation (where appropriate) is recommended because it uses critical space that needs careful location, provides employment, uses feed (much of which that is produced elsewhere), and provides the central system for optimizing cattle flesh production to meet changing tastes, markets, costs, and prices.
Wastes are collected and processed and sold from the feedlot. Wood chips from a forestry system can be mixed and used along with it for Alpha Earth production. Computer inventories and feedlot research are conducted. An optimal location is shown in Fig. 4, a map of an ownership within the county shown in the previous figure, demonstrating the feasible use of a geographic information system to locate optimum feedlot sites. In 69,000 acres only the 3 sites shown met the requirements such as distance away from population centers, higher elevations, near roads, distant from streams, flat areas, no endangered species, suitable soil, not urban, and out of major viewscapes. This work and the resulting map is equivalent to a preliminary impact analysis - a planning art.
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| Optimum feedlot sites can be selected based on mapped data for many factors. In this area, only three sites met the decided criteria. |
Site inspections allow easy choice among the three sites for there can be seen the things that will never be openly included in a data base (e.g., the Senator's house, a very large specimen tree, a proposed shopping center).
Increasing light intensity (114 to 207 lux) over steers from mid November to early March (16 weeks) will increase body weight of steers by 10 to 15 percent with no additional feed (Peters et al. 1978). The tradeoff between meat profits from lighting and its associated structures over time and no extra light can be easily made for local conditions. (The effect is similar to injecting cows with diethylstilbestrol, a practice now believed unhealthy to humans (Last 1980, Lunha 1979).) The staff evaluates such reports and determines the optimum lighting scheme. Ely and Allison (1976, 1976b, 1977, 1979) have developed a beef feedlot computer model in order to synthesize for the decision maker the rapidly changing feed prices, cattle prices, availability of food, and rising labor and operating costs. Of course these must be related to the size and composition of the herd to be fed, nutrition knowledge, and environmental conditions. "Maximum rate of gain" which has intuitive appeal as a feedlot objective will not likely produce most profits (any more than "sustained yield" assures forest profitability). Among other reasons, the cost of protein and energy in food and feed efficiency increase at a decreasing rate.
A program within the system being described would use standard linear programming (the process), require herd size and weight, lot capacity, days for feeding, feed prices, cattle prices, labor costs, labor requirements, interest rate, overhead costs, labor loss, veterinary cost, amount of local forage available (Nix 1975), and cattle weights. The results (output) are maximum profits from beef gain; which animals to buy; to feed; to sell; and a diet formulated for each of 5 weight groups. Few small farmers can afford such systems or the time to collect, process, and analyze the results of such studies. The probability of an individual guessing or roughly calculating the computer-optimized solution is very small. In my personal experience, even the best guesses are usually more than 5-10 percent off from the best solution. A gain of 5% in production or profit… even in the current system is the landowner's quest. Achieving greater than this amount of increase seems highly likely with the available knowledge base, the present computer systems, and with their "centered" use and distribution of results.
An operational program has been demonstrated in optimizing a beef and hog farm and is suggested as a service for feed companies to offer in order to attract business (Ely and Allison 1979).
Slaughter House
A slaughter house is operated. This provides employment, uses available low-cost space (e.g., on a reclaimed strip mine or brown field), and allows wastes to be collected and sold or cycled back to pastures. Modern humane methods are used.
Butchering
Computer programs have been developed to maximize profits from how a carcass is butchered. Given current prices of various cuts and labor costs, it may be more economical, for example, to grind most of the carcass than to process it into conventional cuts such as steaks, roasts, etc. These programs can be regularly run, producing significant extra financial returns at little ecological costs.
Storage
Expected gross income is a primary criterion for decision making. Based on knowledge of markets, supply of products elsewhere, demand, advertising, and taxes, it may be more cost-effective, i.e., objective-achieving, to freeze, dry, or otherwise process (canning, etc.) or store meat and other cattle products than to attempt to sell it fresh. In most cases, using low-value land, e.g., quarries and mines, for such processing and storage may be worth considering. In coal fields, low-yield natural gas wells may supply sufficient energy for such storage systems.
In other areas, low quality hardwood stands having suffered past fires and high grading may be harvested for biomass energy and charcoal and forests brought back to sustained quality timber production. One role of the Cattle Group's storage function is to supply a market for the present wood (and future thinning).
Marketing and Advertising
To raise beef in an area and ship it to another region for slaughter and processing is to ignore the potentials for advertising, packaging (e.g., a special microwave "cut"), and adding value locally. Substantial economies are achieved by conglomerate marketing services of Q Works (Chapter 11) and "centering."
Products for special markets (e.g., hospitals), to meet certain needs (e.g., "tested free of pesticides"), with specified fat levels, and in combination with other products or ready-to cook or ready-to-eat (e.g., "jerky") need not be ignored. The beef of "the Rural System Cattle Group" might just become known around the world … if this subsystem achieves some of its potential.
One product, semen, related to the cattle unit described above, is of importance. Using current technology, artificial insemination can reduce the costs and risks of carrying bulls on pasture and can provide the specific genetic material for animals designed to be optimum for the environment of the system.
If each components of the cattle system increases system profit merely by 1 percent over conventional or average returns on beef, the system is likely to be highly profitable. The secondary consequences should not be overlooked. They might even be integrated into the objective function. They include:
Feedforward
What of the future? Cunha (1979) saw larger, more sophisticated cattle units, closer confinement of animals, faster growing animals, decreased feed per unit of product, increased product output per animal, increased young per animal, improved product quality, decreased trim fat, and more use of byproduct feeds and crop residues. Surely land use will intensify as human populations increase.
Land taxes alone force some people into intense (and in some cases over-intensive or exploitative) use. Many lands once used for crops cannot economically produce them or their topsoil has been lost. Only pasture or forest is the appropriate use and the question will become more pointed: Are these uses profitable when all costs and risks are computed? Cunha (1979) noted that greater beef efficiencies can be achieved in land use, by food additives, and by how the feed itself is used. He said that just because there will be less grain and oil seed meal protein, animal production need not be cut back. Instead, he suggested potentials for increases for exports. As in the past, there have been increases in the U.S. in meat consumption and changes in taste, i.e., there have been shifts in the proportions of meat types used.
Consumer response to knowledge about the positive relation of red meat to heart disease remains unanswered. The uncertainties are great, especially about world monetary policy and thus land mortgages and equipment purchases for beef cattle operations. The environment is such that individual enterprises must be highly effective or fail (as many have done in the same years and areas where others have made high profits). Another strategy is (1) to diversify land use creating lakes and forests on sub marginal pasture and (2) to diversify types of activities, i.e., an entirely non-beef related activity.
Herein, a system is proposed to maximize the financial returns at the end of the system, augment those with returns from surplus capacity, combine the cattle economy with others within Rural System, and benefit from inter-system energy exchanges at every step. It includes concepts of reducing costs by using decision aids, using wastes (reducing loss and gaining new products (e.g., nitrogenous waste products for garden and fruit crops)), diversifying products within high-profit areas, and manipulating final sale price-by storage, processing, as well as packaging.
This section was begun with comments about scale of operation. For some people, the concept presented is too grandiose, for others too small. They see the potentials of well-distributed systems of this type, probably profit bound by transportation costs of all varieties -- workers, feeds, to slaughter, to storage, to markets, etc. The so-called "transportation" model of linear programming (for which it was first developed in the early 1940's to provide optimum military equipment parts storage) can assist in locating centers. The components of a beef cattle system are real and now available but unassembled. There are no genuine conceptual breakthroughs needed, no hardware advances. Each component can be optimized and the consequences flow to the next unit. Feedback is provided by the systems management. Incentives are provided based on agreed-upon (a) annual production objectives for each system unit or component, and (b) salary increases based on a ratio of successful, agreed-upon within-unit changes in profit-sensitive factors e.g., (60 percent) and total system profits (e.g., 40 percent).
The system, even before implemented, may be useful for it may suggest a standard against which current practice may be compared. It may suggest an objective and stages through which people might evolve in a cooperative venture. It may suggest a strategy to be promoted by groups dependent upon stable supplies of beef. It may not produce any profit but if it achieved the secondary benefits--employment, regional stability, family farming, reduced erosion, improved headwater streams, desirable land use for real estate beauty and value enhancement, and the needed interspace between other viable enterprises (e.g., recreation, tourism, forestry, mining) it may not be such a bad idea.
Missing references
(Peters et al. 1978) (Last 1980, Lunha 1979).) Ely and Allison (1976, 1976b, 1977, 1979) optimization
Cunha (1979) (Nix 1975) local forage
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