People are starting to realize that the old market for purebred cattle, if not dead, is definitely endangered. Why is this once “healthiest” of marketplaces facing the current flat line?
The basic assumption has always been that there is a premium for purebreds that is paid back on sale day. Ever since there have been purebred cattle there has been a movement to convince commercial operators of the value of owning purebreds and registering their cattle. For about the past 20 years the focus has gone from educating the commercial producer on the increased value of purebred cattle to making the process and the system a better fit for the commercial producer. While the intentions were great, this change in philosophy has ultimately led to the demise of the premium received for purebred cattle.
Industry vs. Breeders – Whose Fault Is It?
For years I have heard both sides of this discussion. Seed stock cattle breeders complain that industry executives in organizations like milk recording and A.I., as well as geneticists, would not know a good cow if one kicked them in the head. I have also heard the other side of this argument where these geneticists and officials complain that purebred seed stock breeders don’t know how to see the bigger picture and the two sides have batted heads at the board level all along the way.
The part that many people don’t understand is that these industry officials did not set out to harm seed stock breeders. Neither were they looking to discriminate against them. Rather they saw this group as a niche segment of the market place and thought they needed to serve the bigger picture instead of catering to this small, but vocal group.
For many years the only organizations that seemed to hear the cry of the seed stock breeders were the breed associations. Initially, the breed associations were great about trying to build new marketplaces, as well as trying to help educate commercial producers on why they should pay a premium for these purebred cattle. They also educated commercial producers that by registering their cattle they too would receive a premium when they went to sell these cattle. Ironically, all that changed when breed associations started to try to become a greater service provider to commercial producers, instead of building the marketplace for purebreds. This shift in emphasis from worldwide market potential to bottom line domestic cattle and membership numbers, as much as anything, killed the premium paid for purebreds.
It Started Slowly, but Got Rolling Quickly
In the beginning the changes were small. They simply made it easier for commercial operations to register their cattle. Then came subtle (and necessary) changes to the classification systems to target a more commercial friendly cow. Followed by significant changes where breed associations stopped being a marketplace developer and focused on being a service organization to the commercial producer.
While this helped increase registrations and showed that the breed as a whole was growing, the objective set out by our breeder boards, it started to have a small but significant side effect. As the system changed to be more commercial friendly, the premiums commercial producers were expecting to receive for selling purebred animals disappeared. Take a look at many of the sale barns today and compare the price of a grade fresh heifer to that of a registered one. There is not as much difference as there once was. There is certainly not enough for many commercial producers to justify the cost and effort of registration and type classification. Add to that the fact that in many regions and with certain high end sires, there are no longer semen incentives for young sire usage, semen cost for young sires is almost as expensive as proven, and commercial producers ask, “If it doesn’t make financial sense, why do it?”
Without that premium selling price, many producers will stop registering their cattle. With less herds registering, that means that costs for the programs will fall on the niche group of seed stock breeders. Breeders who already have less income from fresh animal sales, and like all milk producers are battling the increased cost of production and the decreased milk sale price. It certainly isn’t a time to take back additional expenses.
Yes, your top 0.1% index seed stock breeder is seeing greater prices than ever. In addition, there is certainly still value in consistent generation after generation breeding families that provide a stable investment (more on that to come next week) but we are talking your average every day purebred breeder. They have certainly seen the prices for fresh heifers go down. Many have attributed that to the introduction of sexed semen and genomics. I would contend it was more accurately due to the fact that the cost of milk production went up, milk prices worldwide went down, and commercial producers, the buyers of these animals, no longer see the need for the extra investment in the purebred pedigree they once did.
The Bullvine Bottom Line
By making that small shift from building the marketplace for purebred cattle, to trying to woo the commercial producers into registering their cattle, the industry as a whole has, in a sense, contributed to its own demise. Now all sides need to find a way to work together, before it’s too late.
Has the heart of the industry stopped? Is there time for resuscitation? Who knows marketplace CPR?