Farming Magazine - September, 2013

COLUMNS

Beef: Free Money in the Beef Business

By Dr. John Comerford

Even though the price of feeder cattle recently reached record high values, it is important to find ways to reduce costs and increase returns for the herd. Any seasoned producer knows profitability and high prices can be fleeting in the beef business, so every dollar counts now more than ever. The Iowa IRM-SPA data from 2005 (Table 1) indicate what the actual costs were to maintain a cow, and those costs have certainly increased since these data were collected. There are at least 10 places most producers can find some "free money" in the herd.

1. Use of growth-promoting implants

Implants can be administered preweaning and can be continued through the entire growth and fattening process. Of course, it is not recommended to use implants in any bulls or heifers intended for breeding. While natural and organic marketing programs do not allow the use of implants, it is important to consider the cost of not using them and make sure you are paid a premium price that covers that loss in value. The following data summarize the costs and returns from implant use.

Implant economics: One implant costs $2.74

Feedlot: Average difference in weight gain = 56 pounds

Advantage: 56 pounds x $1.15 = $64.40

Return per implant = $61.66

Weaning weight: Average difference in weaning weight = 17 pounds

17 pounds x $1.25/pound = $21.25

Return per implant = $18.51

Of course, implants do not solve poor management and poor genetics in the cattle. Care should be taken to follow label directions for administration and timing of implants.

2. Protecting hay

The highest costs for beef producers come from hay and other purchased feeds. In many cases, producers assume they will have plenty of hay and may not manage hay like they do other parts of the enterprise. Consider the following costs and returns for hay storage:

Price of a hay storage barn to store 100 round bales = $12,000

Annual cost with a 30-year life = $400

Average edible portion saved:

  • Hay stored in a barn (800 pounds x 4 percent loss x $25/bale) = $1/bale loss
  • Hay stored outside (800 pounds x 30 percent loss x $25/bale) = $7.50/bale loss

Net savings = $6.50/bale

The net savings shown here can represent more hay available to the cattle, the ability to feed more cows, or the ability to sell hay because of the savings.

3. Controlling feeding waste of hay

We conducted a demonstration study at Penn State a few years ago to compare hay feeding equipment. We used the inverted cone feeders, the typical bale feeding rings and no feeders. Cattle were allowed free-choice access to the hay, and students collected and weighed the hay that was wasted on a regular basis. We found that the inverted cone feeder resulted in an average loss of 2.5 percent of the hay; the ring feeder had an average loss of 8 percent; and no feeder resulted in a 45 percent loss of the hay. If one considers these losses for 100 bales of hay worth $25 per bale, the savings from the inverted cone feeder compared to the ring is $137, and it is over $1,000 compared to no feeder at all.

4. Controlled calving seasons

Leaving the bull in the pasture all year may be convenient, but it undermines production and economic advantages. Typically, the calving season should not last more than 60 days, and good management can reduce that length to 45 days. A good benchmark is to have 75 percent of the calves born in the first 30 days of the calving season. When calving gets strung out, this indicates that there is a management problem that should be corrected.

Why reduce the calving season? There are a number of advantages:

a. Management time can be concentrated in a shorter period of time to save more calves at birth.

b. There is a more uniform group of calves to sell.

c. Nutrition is more precise, because most of the cows have the same level of nutritional needs at any given time.

d. More effective genetic and production comparisons can be made, since all the calves are a similar age.

e. Better pasture utilization.

f. A more effective health program can be used, since all the cows and calves can be handled at one time.

5. Castration of male calves

The beef marketing system in the U.S. requires that male calves be castrated to be graded in the typical retail grades (Prime, Choice, etc.) While bull calves will usually gain weight faster than steers, the impact on the health and well-being of the calf dictates that castration should be done at an early age. Hicks (2009) summarized an Arkansas study of castration methods comparing banding and surgical castration in calves averaging 462 pounds, and the results indicated that calves previously castrated gained weight faster after arrival at the feedlot than calves castrated with bands or a knife at zero or 14 days after arrival. In both cases, banding resulted in lower weight gains.

Castration of young calves can actually be accomplished soon after birth, and this results in easier handling, faster recovery, less bleeding and less stress on the animal. Knife castration is almost always recommended compared to banding because of the possibility of bands breaking and welfare issues for the calf. A recent price comparison showed steer calves at weaning were worth $70 more per calf, and with an experienced manager able to castrate a calf in less than 2 minutes, the result is worth your time - about $2,100 per hour!

6. Making sure there are enough bulls available during the breeding season

In general, the recommendation is to have no more than 15 to 20 cows for each yearling bull, 25 to 35 cows for a 2-year-old bull, and 40 to 60 cows for a mature bull. On average, there will be one cow in heat every 20 days, and younger bulls may not be able to successfully breed more than one cow per day. The number of successful matings on one day increases with age. There is a significant loss in income when the cow is not bred because there were not enough bulls. If a cow has to wait 21 days to get pregnant, her calf is 21 days younger at weaning; assuming a preweaning gain of 1.8 pounds per day and calves worth $1.25 per pound, the loss in value is $47.25. Obviously, it does not take many lost breedings to pay for the second bull.

7. Buying good bulls

Bulls are one of the cheapest investments made in the cow herd. Bulls provide half the genetics for the calf crop each year; their genetic contribution has a lingering effect from replacement heifers; and use of effective selection tools, such as birth weight and calving ease EPDs (expected progeny differences), can result in more calves being sold. If one compares a superior bull for just a 12-pound added weaning weight genetic potential, consider the added economic value compared to an inferior bull: 28 calves/year x 12 pounds per calf x $1.20/pound sale value x 4 years = $1,613 in added value for the superior bull. Therefore, one makes money paying $2,500 for the superior bull compared to $1,500 for the lesser bull.

8. Pregnancy detection in the cow herd

The only way a cow makes money in a beef enterprise is when she sells a weaned calf. All of her costs must be accounted for in selling a calf. If she gets through a breeding season and ends up open, all of her costs go with her and there is no return. Therefore, her costs are reduced and eliminated when she is found to be open early and she is sold to pay her "bill." If we give her another try, at current costs for maintaining a cow, she will have to sell a calf next year worth about $1,300, and she will have to wean a calf for six consecutive years to make up for the one she did not wean. Neither of these things is likely to happen.

9. Put a black hide on them

The success of Angus-based beef marketing programs has made cattle with a black hide more valuable to feed. Recognize that this has to do with hide color and not breed. Certified Angus Beef does not have to come from Angus cattle; they must have a black coat color and meet the grade and other specifications to qualify. In a four-year summary of feeder calf marketing pools in Pennsylvania and West Virginia, it was shown that calves described as "black" compared to all other color descriptions were worth $56 more per calf.

10. Crossbreeding

The purpose of crossbreeding cattle is to take advantage of heterosis, which is defined as the advantage of the crossbreed compared to the average value for the two parental breeds for some trait. It is most valuable for the more lowly heritable traits, such as milk production, reproduction and survivability, and it has little effect on most carcass traits. The value of heterosis can be shown in the following example:

Value of heterosis for weaning weight in a two-breed calf = 8.5 percent

Additional weight from crossbred calf for 500-pound average of parents = 42.5 pounds

Additional value of the crossbred calf at $1.25/pound = $53.12

It should be recognized that crossbreeding is a planned process that uses superior genetics for both sires and dams. Crossbreeding will not cure poor management or poor selection of sires and dams. In addition, the results of crossbreeding are not "inherited." That is, continuing to breed crossbred cattle to additional breeds will dilute heterosis and make the calf crop less uniform.

Dr. John Comerford is an associate professor and extension beef specialist at Pennsylvania State University.