Overlooked Value: Adding financial supplements to maximize grid marketing

Grid marketing allows the fine-tuning of each sector to maximize profit in every link of the supply chain. It is vital, however, to remember that grids are a designed economic benefit of the packer, whose interests may not be shared by his supply partners. Capitalism dictates that each supply point must understand his own production and profitability requirements to best implement them.

It is important to note, grids calculate value exclusively on carcass value; there is no consideration for maternal worth, which at its root is arguably the most important trait in the supply chain. Regardless of the sector, every calf that is marketed relies on a strong maternal base. This is where genetics lay the groundwork for premium-earning, value-based marketing opportunities upstream partners survive on. Anchoring your cow herd on maternal heterosis certainly will give a boost to those low and moderately heritable traits on which we all rely.

When considered in aggregate, health and feed conversion are primary drivers for the holy grail of cattle feeding: cost of gain. Obviously, dead cattle cannot be sold on grids. Illness can make your closeouts suffer not just from treatment cost but also from performance losses. Animal health is an often-overlooked cost of gain driver. Outside of strategic vaccination protocols, heterosis from your planned terminal crossbreeding program is your best insurance policy.

How do we overlook vital terminal attributes and leave money on the table? Simply put, grid formulas do not account for valuable revenue drivers for the entirety of the supply chain. Healthier, more feed-efficient cattle who post higher hot carcass yields make a strong argument that the pathway to adding value lies not in exclusive carcass grid drivers, but in specific terminal traits such as growth and feed efficiency. Only the cow-calf and feeding sectors realize this value and maximize these categories by tweaking genetic inputs and yard management.

In closing, cow-calf operations can add tremendous value by utilizing high-performing genetics when retaining ownership or partnering on their feeder calves, subsequently capturing value which upstream partners do not always recognize. While a strong maternal base is the foundation of the industry, planned terminal crossbreeding is the key to creating value beyond the grid. After all, we may be selling on a grid, but we are still selling pounds.