Dec. 30, 2019
Take stock and look forward
By Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
This final newsletter for 2019 is a good time to encourage cattle producers to reflect on the past year as you think ahead to the coming year. No matter how you judge the past year; good, just okay or disappointing, there is value in taking some time to analyze the reasons for the outcome. What factors contributed to profitability or to the lack of profitability? Inevitably weather and markets have a big impact on the returns to cattle production. Producers do not control either of them and both were important factors in 2019, as they are most years in one way or another. However, you do control how you were prepared for those impacts; how you anticipated those conditions and how you reacted as situations unfolded. What went right and what could have been handled differently? Let’s focus on cow-calf operations and consider a few of the questions in three broad categories: production; inputs; and marketing. Each of these deserves separate consideration while recognizing that they are ultimately interrelated.
How many calves were weaned relative to the number of cows and heifers exposed to bulls last year? How does that weaning percentage break down between pregnancy percentage, calving percentage and calf mortality? Are there reproductive problems that suggest changes in herd health management or nutrition? Does calf morbidity and mortality imply that calf health management should be reevaluated? Were weaning weights as expected and if not, why not? It is important to determine appropriate benchmarks to evaluate all aspects of the business. For example, a one hundred percent weaning rate is probably not achievable and certainly would not be economical, but what is the economically optimal level? Is the goal to maximize weaning weights or optimize them by balancing the value of extra pounds against the cost of producing those pounds and what is that optimal level?
Input management is mostly cost management. What is the annual cost per cow? A Kansas State University publication shows that annual cow costs vary by $260 from high profit to low profit operations^. Across individual operations, cow costs likely vary by $300-$400/head or more. Feed and pasture costs typically account for 65-70 percent of total variable costs. Grazed forage is a far cheaper source of nutrition for cows compared to harvested forage and purchased supplemental feed. Are there ways to improve grazing management to reduce the need for expensive hay and supplement? It starts with pasture management to improve the quantity and quality of grazeable forage followed by grazing management to best utilize it. Is it possible to reduce cow cost by $25, $50 or $100 per cow per year without impacting production?
Marketing is capturing the revenue offered by the market. There may be more strategic, long-term marketing questions: Are you producing the type of cattle demanded by the market and are you marketing them to their highest value? Are you leaving money on the table by not adding value, such as preconditioning, and marketing calves to capture that value? Is there a need for a more proactive marketing program to manage risk and better capture market value?
Management is an active process to control and direct resource use; to produce a valuable product; and capture the market value of that production. Decisions should be based on a purposeful objective and not habit or tradition. Answers to the questions above and many others depend on having information and that means keeping records and using those records to drive decisions.
A football analogy may be appropriate given that it is college bowl season. Success in the cattle business is a matter of being on offense as much as possible. Weather and markets may force you into defense at times but management can minimize the amount time you spend on defense and help you get back on offense quickly and effectively. I wish everyone in the cattle business a Happy New Year and a prosperous and successful 2020.
^“Differences between High-, Medium-, and Low-Profit Cow-Calf Producers”
Timely marketing of cull cows can add value and help the beef industry
By Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Cull cows represent approximately 20% of the gross income of any commercial cow operation. Cull beef cows represent 10% of the beef that is consumed in the United States. Therefore, ranchers need to make certain that cow culling is done properly and profitably. Selling cull cows when they will return the most income to the rancher requires knowledge about cull cow health and body condition. Proper cow culling will reduce the chance that a cow carcass is condemned at the packing plant and becomes a money drain for the entire beef industry.
Sell cows when they are in moderate body condition. Send older cows to market before they become too thin. Generally, severely emaciated cattle have lightly muscled carcasses with extremely small ribeyes and poor red-meat yield. This greatly lessens the salvage value of such animals. Just as importantly, emaciated cattle are most often those which “go down” in transit, as they lack sufficient energy to remain standing for long periods of time.
Cow slaughter facilities are often located many miles from Southern Plains ranches. Therefore, the cows are hauled long distances and for long periods of time before being harvested. Severe bruising, excessive carcass trim, increased condemnations, and even death are the net results of emaciation. Very thin cows have a low dressing percentage (weight of the carcass divided by the live weight). Because of these factors, cow buyers will pay less per pound for very thin, shelly, cull cows. In addition, thin cows will weigh less. As you combine these two factors (weight and price per pound), thin cull cows return many fewer dollars at sale time than if the cow was sold when in moderate body condition.
If they are already too thin, a short (45 to 60 days) time in a drylot with a high quality feed will put condition back on the cows very efficiently. There is no need to put excess flesh or fat on cows. They become less efficient at converting feed to bodyweight after about 60 days and the market will not pay for excessive fatness on cows.
Best wishes for 2020!
Cow-Calf Corner is a weekly newsletter by the Oklahoma Cooperative Extension Agency.