Recent feeder calf sales have shown the returns to the cow-calf enterprise are at an all-time high. The typical 500-pound steer calf has sold for $125 to $145 per hundredweight many times recently, and for the cow-calf operation that translates into a return of $550 to $650 per cow for each calf for a typical weaning rate. There are two ways to view this result. First, if you sold calves at these prices and did not make any money in your enterprise, you probably never will. Secondly, if you made some money selling calves at these prices, what is wrong with making even more money in the enterprise?
Three pillars of profit
Long-term records in the cow - calf enterprise reveals there are three major reasons for profit:
- Pasture management
Genetics plays a wide-ranging role in profitability. The first step in most herds is the selection of bulls, because of the long-term impact that selection makes on the weight that gets across the scales when selling their calves, and the heifers that are retained make up the continuing generations in the herd. Table 1 shows the impact of sire selection in the genetic composition in a typical closed herd.
This genetic composition must accomplish two things. First, it is simply not enough to just increase weaning weight from sire selection. The report from Doye (1998) summarizing data from Oklahoma and Texas herds shows returns to the enterprise is a combination of weaning rate, weaning weight and price. The summary is the weaning weight must be accompanied by weaning more calves for each cow exposed to breeding - dead calves and open cows do not add to the returns. What has sire selection got to do with this result? Genetic prediction data available today, such as expected progeny differences (EPDs), also includes data for birth weight and calving ease, and these factors are critical issues in getting more live calves to weaning.
The Doye (1998) summary also reports that the cost of maintaining and feeding the cow herd is directly related to greater returns. That is, if more feed for the cow is purchased - either a direct purchase or as an opportunity cost for feed harvested and fed on the farm - the returns to the enterprise will be lower. The way to reduce purchased feed cost is to have cows graze their feed. When grazed, there is no harvesting cost, storage losses, feeding losses or nutrient losses (Table 2).
There is no doubt that effective pasture management can increase the amount of forage available to cows and calves, particularly from rotational grazing. The intake of grass from grazing animals is the result of the forage density in the sward, the biting rate and the tensile strength of the grass. Having sufficient available forage of reasonable quality on a daily basis is the key to using grass effectively. The Table 3 data from Gerrish and Roberts (1999) highlights this result in one trial.
These results are significant because they show more cows can be managed on a given acreage and they will be more productive on those acres when pastures are effectively managed. Another feature is extending the grazing season. When cows graze longer each year, they require less purchased feed. There are two basic methods to extend the grazing season: providing sufficient forage in midsummer, and stockpiling grass to graze after forage growth ceases. In the mid-Atlantic region, a study from Penn State (Comerford et al, 2005) indicated this can best be accomplished with perennial grasses and legumes (specifically alfalfa/grass pastures). Annual grasses may also be used, but the cost to the beef enterprise may be excessive compared to perennial grasses and legumes.
Stockpiling implies there will be parts of the grazing system that may not be available from late summer until late fall. Careful planning of rotational patterns and animal stocking density must be considered. The study from Hitz and Russell (1998) indicated cows grazing stockpiled fescue pastures for 83 days required about 1 ton less hay per cow for the winter.
Like all other parts of herd management, marketing has a cost. Those costs will vary based on the sale points to be accessed. For example, marketing calves in a preconditioned calf pool, such as the ones in Pennsylvania and West Virginia, will result in higher prices received, but the cost will include vaccinations, boosters, weaning rations and labor for weaning calves. The opposite result can be shown by simply transporting calves to an auction directly from the dam. This will not include costs other than transportation and sale commissions, but the expectation should be lower returns for unweaned, unvaccinated calves. Additionally, results show a bull calf is worth about $60 less than a castrated calf. The Table 4 data indicate the returns that may be realized for several other factors of marketing feeder cattle.
The first feature of marketing is gaining access to higher-valued markets. This may be accomplished through management practices such as vaccination and weaning. The second step is determining the cost and feasibility of the practices. Finally, an assessment should be made of the potential returns.
It is a great time to be in the cow-calf business. Markets for cattle will change - both up and down - and improving genetic, pasture management and marketing skills will make good markets even better.
The author is associate professor of dairy and animal science at the Pennsylvania State University.