Golden explains how beef producers can improve their sales through situational indexes..
“We need to talk to commercial bull buyers as if they’re making an investment, not an expense,” said Dr. Bruce Golden, Partner at Theta Solutions, LLC. Golden gave his presentation titled “Examining the Impact of Situational Indexes on Selection Decisions” during the Beef Improvement Federation (BIF) Symposium June 24 in Des Moines, Iowa.
Through his presentation, Golden described the iGENDEC software and defined a situational selection index, the situation variables available through iGENDEC and future feature enhancements.
Situational selection indexes
A situational selection index is created for a specific commercial cattle enterprise where the variables that impact the phenotypes, costs and revenues are set to values which are experienced by that commercial cattle operation. The index reflects the enterprise’s investment goals and considers both profit and risk aversion decisions. Producers are encouraged to think of situational selection indexes as a “precision farming” tool.
“I believe that more decisions in cow-calf operations are based on risk aversion than on profit maximization,” Golden explained. “We’re identifying the characteristics of the enterprise to try and better match the investment decision to the goals of a specific enterprise.”
Situation variables in iGENDEC
iGENDEC offers numerous situation variables that include, but are not limited to: sale endpoint for calves, marketing plan, investment planning horizon, breeding season length, conception rate, calving loss rate, cow age distribution, cow, calf, backgrounding and feedlot feed costs, and current phenotypes. The situation variables of sale endpoint for calves, marketing plan and investment planning horizon are not about profit maximization. Choosing a sale endpoint is often based on risk aversion and not on profit maximization.
This choice is influenced by the producer’s need for cash and capital. Every investment should be viewed with a planning horizon. Situational variables do vary between commercial operations substantially enough that no two operations will necessarily achieve their investment goals with the same set of bulls. Bulls can be valued differently in different situations.
“Current breed association provided indexes do not allow for the flexibility of situational variables,” Golden said. “These variables allow more precision in the decision process for evaluating planning horizons.”
iGENDEC future enhancements
iGENDEC plans to offer future feature enhancements of accounting for a producer’s willingness to increase capital investment, easier accounting for participating in slaughter cattle value when selling at weaning and beef on dairy. Accounting for willingness to increase capital investment will allow the commercial bull buyer to determine if they are completely constrained by capital or if they are willing to put more capital into the system. Easier accounting for participating in slaughter cattle value will allow producers who are selling at weaning and use bulls with better carcass characteristics to get a premium.
To watch the full presentation, visit https://youtu.be/gpehp-b7oXg. For more information about this year’s symposium, including additional presentations and award winners, visit BIFSymposium.com.