The Economics of Genetic Testing for Beef Cattle: Past, Present, & Future

Commercial genetic testing services targeted at the beef industry have become quite common in recent years, with many in the beef industry promoting the benefits they provide. However, economic considerations of financial feasibility are limited. What little work that has been done has focused on the use of genetic information to improve feedlot management decisions for commercial cattle. Generally, this work was unable to substantiate positive economic returns. Despite the lack of current economic rationale, the potential for this technology remains strong. In this article, we provide a brief overview of the work that has been done with respect to economics of genetic testing in the beef industry as well as a discussion of future opportunities and challenges. Mainly, this revolves around what is needed to achieve a scenario of cost-effective genetic testing – either increasing the value of genetic information or decreasing the cost of the test. While animal scientists are working to provide more accurate tests that have the potential to increase the value of genetic information, producers seeking to use this technology have no control over the rate at which these new variations are released. Therefore, at present, increasing the value of genetic information will require additional vertical coordination or cooperation among different sectors of the beef industry as well as more efficient price signaling. On the other hand, reducing the cost of the test could also help in achieving cost-effective implementation of genetic testing. Two specific scenarios are discussed: (i) offering reduced profiles of genetic information relevant to a specific decision at a reduced cost and (ii) randomly sampling a subset of a group of cattle for genetic testing to measure the genetic potential of the group.