< Digest Paper - Sustainability and profitability in a volatile market place

It is impossible to go to a conference these days without it being pointed out that the world population is going to grow to 9 billion by 2030 and that this is the most promising time to be in agriculture in a generation, if not two. We are constantly being urged to embrace innovation, see the big picture, and be entrepreneurial. We need to feed this growing population. From a beef perspective, we are told that the middle class will grow in the Far East and in Africa and, with that, will come an increased demand for our product. The world is our oyster!! So why is it, when I look around at the industry in this country and the rest of the world, do I see so many gloomy faces? Why so much uncertainty? Why is it that every survey I see tells me that farmers have not got the confidence to invest and embrace this brave, exciting new world that is just around the corner.

It is in fact due largely to the other main topic of conversation at every conference you go to. Volatility. Prices are up and down like a yo-yo and it does not matter what line you are in, the vagaries in the market cause problems and uncertainty.

In the last 12 months, we have seen the beef market go through a crisis but recover, cereal prices fall dramatically and are now showing signs of recovery and, at the time of writing this, the Dairy sector has now been plunged into crisis. Small shifts in supply and demand are having a dramatic effect.

Reducing the impact of volatility

Trying to reduce the impact of this volatility is one of the reasons why, in recent years, EBLEX has put a large chunk of resource into expanding export markets. The more markets we have available to us, the greater the chance that, somewhere in the world, the price will be holding up either because of demand or due to exchange rates. We are now seeing huge volatility in the oil market, a product we all have a huge interest in, and ups and downs in the oil market have huge consequences for us all.

Of course, in times gone past, some of this volatility would have been levelled out by government intervention of some type, but with most economies in the world struggling, there is neither the finance nor the will to try and intervene. The likelihood going forward is that markets will be left to their own devices – and that will mean volatile markets.

So every business in the land needs to think hard about how it can cope with these vagaries. They will have to learn to live with margins at times being tight for prolonged periods. To be fair, banks are already starting to recognise this and are increasingly taking a view over a three-year period, rather than annually, about the viability of a business. It does mean that business managers will have to have a much greater handle on costs of production going forward. I make no apology whatsoever for pointing out that the business with lower overheads and a lower cost base will stand a much greater chance of surviving – and even thriving – in the topsyturvey world we now have, much more so than the business with high overheads.

The role of genetic improvement

This is where breeding can play such an important part in our industry going forward. Good breeding is the bedrock of efficient production. It does not matter how good a grass producer you are, how switched on you are to using alternative feeds or how good your facilities are. They are all a waste of time if the genetic material you are working with is not up to scratch.

Breeders today are well versed in the use of Estimated Breeding Values to improve their livestock, but as an industry, if we really want to move forward a pace, we are missing the opportunity to use data on a wider scale. To use the buzz terminology, we need to start looking at the opportunities that big data may give us.

I think it is worth looking at some projects EBLEX is involved with to highlight some of the work and the potential in this arena.

Carcase trait evaluation

In 2013 Tracey Pritchard reported on the Pilot project on carcase trait evaluation.

Existing industry (abattoir) and government data were used to produce a consolidated dataset of carcase traits for beef and dairy cattle. The overall aim of this feasibility study was to assimilate, cleanse, salvage, validate and characterise abattoir and British Cattle Movement Service (BCMS) data, followed by descriptive statistics for the resultant dataset. The subsequent use of this data is expected to be for genetic evaluations, and so analyses undertaken in this study were designed to reveal information on the suitability of the data for genetic evaluations. Initially, three million individual carcase abattoir records (from three abattoirs) and approximately 48 million BCMS animal records were made available for this project. Using intelligent string matching, 82% of the individual carcase records could be matched to a BCMS individual animal record, resulting in a dataset of 2,435,875 for further investigation. The three traits available from abattoir records were net carcase weight, conformation and fat class. Matching to BCMS data provided information on animal movements, breed, dates of birth and death, in addition to dam and sire identities. Sire, which is not compulsory to record, was recorded for approximately 23% of animal records and the level of recording was generally higher in more recent years (11% in 2001 and 23% in 2011).

Dates on animal birth and death in BCMS enabled us to determine age at slaughter, and the average daily gain for net carcase weight. Across all breeds, the averages for the slaughter population aged from three to 36 months for net carcase weight, days to slaughter, average net carcase weight daily gain, conformation and fat class, were 323.7kg, 743 days, 0.45 kg, -R, and +3 respectively.

A refreshed BCMS database was obtained which included movement records. The herd identity was encrypted, which meant that no information was available on the holdings themselves although animals could be grouped by holding by time, and contemporary groups formed. This was a significant improvement on the data expected to be available to the project, particularly compared to a previous extract, which only included holding of birth and death and the number of movements. The average number of locations for an animal to be reared (for a period of at least two months) was 1.7.

Beef farming in the UK is extremely diverse, with many breeds and crosses that are used to suit the many environments, systems, and markets. The major breeds present in the carcase population (with over 100,000 animals) were described as Limousin, Aberdeen Angus, Holstein Friesian, Charolais, Hereford, Simmental, and Belgian Blue, and these accounted for 92% of the animals present in the matched abattoir/BCMS dataset. A major proportion of animals described as beef breeds were cross-breds and generally take the name of the sire breed. Dam breed records emphasise that dairy cows are a major component of beef production, with Holstein Friesian being the most common dam breed, accounting for 46% of the slaughter population.

A pedigree file was created for BCMS records by matching to other national data sources and to itself. This resulted in a (super) pedigree file of over 50 million animals going back a maximum of 13 generations, and sire was available for 25% of the slaughter population (an increase of 2.3%). The super pedigree tended to lead to greatest improvement in sire records for dairy breeds, which were generally low in BCMS. The across beef and dairy super pedigree can be used to explore additive and non-additive (heterosis, recombination losses) genetic effects for traits relevant across both breeds (where data exists), such as carcase and product quality and safety traits, but also cattle health/disease traits.

Genetic analyses were performed on a subset of the data for animals with a Charolais sire, which consisted of 17,125 records after editing. Heritability estimates for net carcase weight, conformation and fat class were 0.31, 0.24, and 0.14. Similar results were seen in a within-Limousin breed parameter estimation analysis. These results provide strong indication of the existence of genetic variation in the studied traits. This, in turn, suggests that improving carcase quality traits through genetic selection is entirely possible, thereby warranting more detailed investigation of their genetic background, particularly their relationship with other traits of importance and within, between and across breeds.

The results of this feasibility study indicate that genetic analysis for carcase traits is realistic, particularly for breeds which make up a major part of the carcase population and have sufficient information on the sire. Encouraging the recording of sire identity by farmers in BCMS would further improve the usefulness of future data.

EBLEX with HCC and DairyCo are funding a project to lead to implementation of EBV’s for carcase traits from abattoir data.

Feed efficiency project

We have just been granted funding from Defra to embark on a further project on feed efficiency evaluation. A Defra-funded scoping study (IF0207) showed that continued selection of purebred beef cattle using the currently available tools will deliver a substantial positive impact on the economic and environmental sustainability of beef cattle production in the UK. At the current rate of uptake, ten years of selection considered over a twenty-year time horizon is expected to result in a cumulative increase in profit at the commercial farm level of around £31 million, whilst also reducing greenhouse gas emissions by around 726,000 tonnes.

Recording feed intake to enable feed efficiency to be included in selection indices is expected to increase the realised benefits in farm level profit by around 39% and in GHG reduction by around 22%. The study recommended the establishment of agreed industry standards for recording of feed intake and for the measure of feed efficiency to be included in selection indices, as an important step in minimising confusion and simplifying knowledge transfer.

Genetic improvement will play a pivotal role in developing sustainable beef production systems. It is particularly cost-effective, producing permanent and cumulative changes in performance. In addition, livestock breeding is recognised in the UK Low Carbon Transition Plan as a key, cost effective, tool to help UK farmers achieve target reductions in greenhouse gas emissions of 6% by 2020. Improving adoption, and continued development, of genetic improvement tools will help farmers be more efficient and profitable, while reducing the impact of beef production on the environment.

This project, led by AHDB and SRUC (Scotland’s Rural College) will bring together an industry-wide consortium to deliver a lasting infrastructure for the measurement of feed efficiency in beef cattle and its incorporation into breed improvement programmes.

The project will hopefully leave a legacy of the tools required for the whole UK beef industry to adopt breeding for feed efficiency. This will initially be by a continued flow of animals through the facilities installed during the project, but the business models will explore means of enabling new facilities to be installed on a financially viable basis, accelerating the improvement in feed efficiency of beef cattle across the UK industry.

Data hub

Thirdly, we have currently submitted a bid under Agri Tech. The ability to conduct real-time, risk-based trading for important endemic diseases of cattle would be a major advancement in the livestock supply chain. Currently, there is no comprehensive system in place which brings government and industry data sources together to give this level of insight on herd and/or individual health status. The objective of this project is to develop a data exchange hub, to an industry-agreed specification, accessible at key transaction points in the food supply chain. If successful, the system developed would be taken forward to full implementation by industry collaborators. This would be the first time that such capability was created for use across GB, enabling data to be shared securely by commercial data providers and end-users. The benefits will be increased efficiency in data handling, new infrastructure to support national disease control programmes, and stimulus to further innovation based on a fully functioning data exchange hub.

This application is made by a consortium, which is fully reflective of the UK livestock supply chain, in order to make a significant step change towards better, broad-based sharing and exploitation of livestock food chain information.

I firmly believe that if we are to improve the genetic potential of the British herd we must leave no stone unturned in exploiting all the information we have available to us. This will require unprecedented cooperation, but the technology is there for us to do this, while most of the barriers are political ones.

Nick Allen
Director, EBLEX, AHDB, Stoneleigh Park, Kenilworth, Warwickshire, CV8 2TL