021 Do Beef Cattle Producers Understand the Economics of Natural Production?

Abstract Consumer demand for “natural” beef has increased over the past decade driven by the erroneous perception of improved health benefits. This has led many beef producers to modify their production systems to manage their calf-crop to meet requirements for certification as natural. Natural certification programs typically require that calves have never received growth promoting hormones, antibiotics, or animal by-products. For such programs, there is not a set premium that the producers receives, rather the perceived “premium” is the potential increase in price solely based on the willingness of a buyer(s) to pay more for a group of natural cattle. Therefore, in order for a producer to increase profitability through a natural program, one must understand the cost of lost animal performance from adopting the practices. Essentially, they need to quantify the lost production (kg of calf BW), in order to determine the minimum additional revenue needed to add value to the system. Technologies, such as utilizing growth-promoting hormone implants that are known to increase gains of beef calves prior to weaning, have been abandoned by many producers in order to meet a natural market. A 2016 study showed that calves implanted 100 d and 30 d prior to weaning with a progesterone and estradiol benzoate gained more (P < 0.05) at weaning compared to non-implanted calves (19.6 kg). A 2-yr study conducted in NW GA compared calves raised naturally (no hormone and no antibiotics) and conventionally (receiving implant and treated with antibiotics when needed). Over the 2 yr, natural calves gained less (P < 0.05) than conventional calves (15 kg). Respectively, this results in a loss, or premium needed, of $65/calf and $49/calf, for not adopting this technology. The profit/loss of these systems are dependent on market fluctuations, however. This information can be useful to extension educators and industry representatives when helping producers decide what type of production system to utilizing in their operations.