The Modern Simmental
By Chip Kemp
The Harvard Business Review (HBR) recently published its “Top 20 Business Transformations of the Last Decade”. The article highlights those organizations that have adapted and flourished in the last ten years to become dominant players in their respective fields, and in many cases, these businesses have changed our lives. Netflix and Amazon were both in the top three. If we know anything about recent months, we know both groups have flourished. But there are lesser-known names on the list like Ecolab (16th). You might know them for their wide array of cleaning products which built a long-established and successful business. But what placed them on this list was their awareness of a need to branch out. And branch out they did — into providing water efficiency solutions globally, tripling the value of an already multibillion-dollar company in just nine years.
Three qualifications of “Top 20 Business Transformations of the Last Decade” according to Harvard Business Review. Reposition the core: How effectively has the company.
Reposition the core: How effectively has the company adapted its traditional core business to changes in its markets, giving its legacy business new life?
New growth: How successful has the company been at creating new products, services, and new business models?
Financials: Has the company posted strong financial performance?
So, how would the “business of Simmental” fare relative to its competitors if HBR were to dig into transformations within the ag sector? It seems a worthwhile thing to consider. We often hear folks give opinions and thoughts about many businesses. Some perspectives are well-founded in intimate knowledge and facts. All too frequently, some perspectives lack the details necessary to make an accurate judgment. ASA is no different. So, let’s dig into details using HBR’s own three-pronged approach.
What is ASA’s core? The ASA mission statement should suffice. “The success of the American Simmental Association is dependent on our members’ cattle making a significant genetic contribution to the beef industry. By utilizing the most advanced science, the highest priority is to maintain services and products which bring value to ASA members’ customers.”
Fair enough. That means we must provide tools that allow members to generate cattle that work in the marketplace and that are in demand. To see if we’ve continued to position the business of Simmental to meet that directive, we will tackle this in two parts. First, we’ll look at genetic indicators of whether SimGenetics are working in today’s beef business. Secondly, we will look at how they fare relative to customer demand.
From a genetic standpoint, a very complicated and dynamic business can be boiled down to two areas of focus that directly impact the profitability of a commercial beef enterprise (our “members’ customers” from the mission statement): maternal traits and terminal calf value.
Maternal traits: The plight of the short-lived cow has become all too recognized in the modern ranching community. It has been repeatedly highlighted over the last couple of decades as commercial operators have bought too heavily into straightbred cow herds. Let’s just look at SimGenetic trends to see if cow longevity (stayability) and other relevant maternal traits are working for or against today’s cow-calf operator.
Clearly, over the same period that you’ve heard neighbors and pundits lament the concern with cows that can’t last, members and their customers have experience and proof that SimGenetics are clearly a solution to that problem and more. Calving ease, maintenance costs (mature size and milk production), and weaning weights all favor balancing those straightbred British females with Simmental genetics. Simmental breeders continue to moderate mature cow size and milk production with no loss in performance, resulting in lower maintenance costs. What is more, it is recognized that the largest mature-size beef breed is now a prominent British breed, a fact acknowledged by their own association.
Of the two profit centers for a commercial outfit — cow herd value and terminal calf value — the SimGenetic influence on cow longevity is evident and proven. What about the other profit center — terminal calf value?
Terminal calf value: As more data is shared and utilized, it becomes abundantly clear what determines the demand for a terminal beef calf: health and the ability to minimize/avoid the need for prophylactic health aides; efficient gain, marbling and in some cases, access to certain branded programs based on visual traits. If you can do those things, you have the potential for significant returns. If you can’t, you are relegated to the edges.
Health and calf management continue to be a primary driver in the feedlot sector. Market sector data and scientific literature leave no room for doubt. Dr. Ken Odde’s (Kansas State University) work with the Superior Livestock Auction dataset highlights these facts. Simultaneously, the recognition that responsible crossbreeding and heterosis provide positive benefits in health is gaining more steam. A ten-year dairy industry crossbreeding study conducted by the University of Minnesota highlighted similar health benefits in the crossbred dairy female. Other animal agriculture sectors have known this for quite some time. The “business of Simmental’’ has consistently touted the appropriateness of responsible crossbreeding to solve a myriad of problems. That approach is more vital now than ever given feedlot health concerns associated with BRD and late-term congestive heart failure issues. While much is to be learned in the arena of heart health, research and anecdotal benefits of Continental-derived breeds suggest a great deal of promise in this area for SimGenetics.
The cattle feeder demands animals that can gain and gain efficiently. This is the core of the premise of a feedlot. Slow-growing or poor-doing cattle make it essentially impossible for profit in that sector. Simmental breeders have always acknowledged this and have continued to select for growth performance while still ratcheting down mature size and inefficiencies.
The packer has one essential duty: to deliver to the beef purchaser the caliber, consistency, and quality of product their customers demand. Period. It is no more complicated than that. And fortunately, Simmental-influenced cattle are flawlessly positioned (this comes from decades of work and sweat) to compete in the beef business of 2020 and well beyond. SimGenetics allow for efficient and responsible gain and flexibility in carcass weights, which gives marketing latitude, and high cutability carcasses with superior marbling ability. As a strong bonus, most Simmental-influenced calves come with a strong punch of hybrid vigor. The terminal trend chart proves the responsible selection for each of these important traits.
The genetic merit is proven. What does the market think of what we are doing together? Fortunately, this is easy to demonstrate. Two items to consider — 1) how has the demand changed for Simmental-influenced terminal calves? and 2) how has the demand changed for SimGenetic sires? Simmental-influenced terminal calves? and 2) how has the demand changed for SimGenetic sires?
We could look at internal ASA info to get a glimpse, but it’s likely more impactful if we look outside of our business to see what others think. Let’s consider number 1. We will use information from the largest marketer of feeder cattle in the United States. Their data will do nicely. Early in 2020, Dr. Bob Hough wrote an article for the Western Livestock Journal that dug into the large Superior Livestock Auction dataset to analyze breed types represented in the data. The numbers showed a seven-fold increase (yes, seven times as many!) in the number of SimAngus™ calves highlighted in 2018 when compared to 2010. During that same time period, Angus-identified calves dropped 11% and Hereford-sired calves went up 0.6%.
When it comes to the demand for SimGenetic sires, we could look at the increase of Simmental and SimAngus bulls in any semen company catalog over the last decade. The pages allotted to SimGenetics have grown greatly. Just one example — Select Sires carries twice as many SimGenetics bulls today as it did in 2010. Or, we could view the open-access information provided by the National Association of Animal Breeders (NAAB). NAAB numbers show a combined look at semen sales and custom semen collection to indicate an increase in Simmental semen usage between 2013 and 2018 of 179%. Yes, 179%. Over the same time frame, Angus increased 56% and Hereford had no change.
Or, we can consider the bull sale reports posted on the websites of those three breeds from October 2019 to present. Using those results, Simmental and SimAngus bulls out-averaged the other two breeds by roughly $200 per head.
Popular press is another manner to evaluate our success in highlighting SimGenetics to the commercial producer. In both 2014 and 2020, BEEF magazine conducted a large survey of producers regarding the breed composition of the bulls they owned or intended to purchase. The rate of increase for SimGenetic demand outpaced every other breed highlighted in the top seven responses, positioning SimGenetic sires in a very desirable spot of high customer demand and trending in an ever more positive direction.
Maybe we look at a different angle of SimGenetic demand. What about the demand for high-type females as evidenced by the desire for junior exhibitors to own and display at the AJSA National Classic? Any single year in the last decade might underestimate or inflate this demand. If we average the number of head for years 2012 and 2013, years 2015 and 2016, and years 2018 and 2019, we get a less biased view of the changes across the decade. Steady increase in demand is evidenced by increased average attendance numbers of 389 head, 535 head, and 655 head, respectively. Even the youngsters get it!
Have we positioned and repositioned the core of our business for success? Clearly, SimGenetics are on an arc never before seen in the history of the Simmental business. So far, the HBR would be impressed.
Creativity and ingenuity are crucial if we are to have new growth opportunities. But cool ideas without the ability to truly have a positive impact on the long-term success of the commercial beef business are hollow and destined to fail. The core of any breed association is credible genetic evaluation. It would make sense then, that novel approaches and new business endeavors would align with the skillset necessary to deliver elite-level genetic awareness.
Massive genotyping research projects have been implemented on two fronts in recent years. It’s no coincidence that those efforts align with earlier-discussed issues of enhancing predictors of cow longevity and gaining more insight into the genetics of carcass parameters.
The Cow Herd DNA Roundup (CHR) was implemented to encourage submission of unique maternal metrics that are all too frequently lacking in a genetic evaluation. To label CHR as a success to this point would be an understatement. Between the inception of the program in 2017 through mid-2019, there have been over 40,000 female genotypes, over 40,000 mature cow weights, and over 30,000 body condition scores incorporated into the genetic evaluation because of CHR. This trend has continued since that time and has greatly improved the accuracy of prediction for all members, large and small, CHR users or not. This manifests itself every time you or I use a genomic panel. Even if I wasn’t a CHR participant the knowledge gained by the project makes my selection and breeding decisions more valid and more impactful.
In a similar fashion, the Carcass Expansion Program (CXP) looks to glean more power from genomics by linking actual carcass data with pedigree knowledge and DNA. Much like the CHR, this multi-year research project benefits all members and has a tremendous advantage for members who are unable to directly participate by retaining ownership on their terminal calves. The genomic insight makes its way to the daily DNA tests we run on our own farm or ranch. We get more carcass awareness by the work of our peers in the Simmental business who are positioned to own their steers and heifers through the feedyard. The first year of this five-year effort brought in more than 4,000 carcass records with genomic information and pedigrees. That more than doubles the number of carcasses normally entered in a given year! The second year of the program has 4,600 head committed, and staff is presently communicating with producers regarding year three. Bold steps that only enhance the next chapter of the modern Simmental story.
By definition, new growth means bringing new folks to the party. As a result, ASA has provided a platform through Total Herd Enrollment (THE) that allows for seedstock producers of any breed composition or breed affiliation to receive EPDs and Indexes. They benefit from the services and multi-breed approach the organization provides. This broadens the reach of our business philosophy — specifically allowing breeders who are looking for new association attitudes and capabilities, or for those who’ve never found a genetic evaluation home — to get the breeding, selection, and marketing information they need. Their data makes for a more robust and accurate genetic evaluation for all parties involved. This novel approach provides for serious growth opportunities while generating superior knowledge for the more traditional ASA audience.
In the same vein, a subset of commercial operations is prepared to capture the genetic insight that comes with data collection. While this is a fairly small percentage of the commercial landscape, it is a crucial group that often has direct access to carcass records and long-term female metrics that are tied to pedigrees — and more and more frequently, to genomics. The inclusion of that information into the genetic evaluation makes all of our EPDs more meaningful, relevant, and accurate. As such, there is even a mechanism for those folks to work within the Total Herd Enrollment system. They receive female-only EPDs and Indexes — something never before available in the commercial space, and the rest of us benefit from the inclusion of hard-to-capture data. New growth is a win-win for both the core of the business and unique situations present outside the traditional association framework.
Welcome collaboration. Welcome International Genetic Solutions. Our friends at the HBR would undoubtedly see International Genetic Solutions (IGS) as one of the turning points and game-changers in the long-established beef business. For far too long, we’ve isolated our different breed types into silos, making it difficult and uncomfortable for commercial beef operators who were trying to make wise decisions for their family’s future. Many other individuals and entities have tried through the years to piece together multi-breed genetic evaluation. Despite serious commitment and remarkable efforts, essentially all those failed, until the humble, thoughtful, collaborative effort that morphed into IGS. IGS presently has 16 different breed association partners, and the 17th partner of the group is Neogen Genomics, Inc. IGS leverages the strength of the science team at ASA to provide the most credible and trusted EPDs in the business to breed associations across the globe. IGS is the largest beef genetic evaluation on the planet with 20,000,000 animal records and nearly 400,000 added annually. Yes, ASA data is the largest group within IGS, but it isn’t about the size of any group. It is about the connectedness across the various populations that make the genetic predictions more accurate and more thorough.
The Power of Collaboration
The volume of records by year of birth from each individual
breed association compared to the pooled IGS Data
The IGS Feeder Profit Calculator™ (FPC) is a perfect example of what happens when we work together. The FPC gives commercial producers and feedlot buyers the ability to communicate about the profit potential within a set of calves. All while using a common language readily understandable by both sides — dollars and cents! This tool works across breed types and allows you to provide your customer with an awareness and marketing tool never before seen in the industry. And, by the way, at no cost to its users!
Understanding the financials of a business is crucial to having a thorough understanding of where it’s been and where it’s going. In times of uncertainty, it is affirming to know that those businesses we rely upon are not only steady, but still thriving and striving ahead. That provides the stability to keep services flowing, while allowing the potential for new growth and new opportunities.
But more importantly, ASA financials reflect SimGenetic influence in the marketplace. Our numbers are a reaction to members’ ability to sell seedstock. If the commercial producer demands SimGenetics, then our members benefit and grow and then, ultimately, grow their business relationship with us. At the same time, ASA works aggressively to keep costs in check. Our services are amongst the most inexpensive in the breed association space. Our goal isn’t to grow our resources while exhausting yours. Our purpose, our “why”, is to give you cost-effective tools that make your operation more profitable, so that you have more discretionary dollars for your family
If you grow, we grow. And vice versa. Your success is our success. Forever linked.
The financial indicators highlight the responsible nature in which ASA uses your resources. And that prudent approach allows us to leverage any excess through programs like CHR, CXP, etc. to benefit the entire community and business of Simmental.
The Bottom Line
By any measure — in this instance, the measure of the HBR — the business of Simmental has never been stronger or more influential in the beef industry than today. Ever. ASA has never had a more impactful decade. Ever.
How did we get here? Well, first and foremost, this success is attributed to the wide swath of focused Simmental enthusiasts who have toiled and worked for generations to build, evolve, adjust, then rebuild and evolve again. Success comes one small, detail-oriented step at a time. More than 50 years ago, the Simmental forefathers took a step. And serious Simmental breeders have been methodically stepping ever since. This is no accident or luck, but rather the result of a persistent commitment to adaptability and industry relevance. Excellence creeps up slowly over time, seeking close proximity to the humble-hearted and determined.
It is also no accident that the last decade has seen numerous ASA trustees that donate mightily of their time and personal treasures to give guidance and wise counsel on a wide array of topics and decisions. The entire beef business owes a debt of gratitude to those genuine, honest, transparent individuals who step up to carry the burden of leadership.
The HBR would clearly remind us that no organization is worthy for consideration in the Top 20 without an efficient and effective organizational structure and a powerful staff. The senior leadership at ASA has taken a similar approach to that of those serious breeders — seeking success one small, detail-oriented step at a time. Often without hype, credit, or recognition, those individuals do their part to position the “business of Simmental” in a place most never allowed themselves to dream about: clearly positioned at the forefront of the beef business. In an era of unprecedented chaos, successful businesses look to tested leadership to navigate the path forward. Fortunately, there is a track record that gives us calm in the uncertainty of 2020.
This has been the defining decade of Simmental’s place in the beef business. And the starting point of many successful Simmental stories to come.
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