In July, corn prices dipped below $4 per bushel for the first time since 2010. Fed cattle reached $158 in July, increasing feedlot margins to over $320 per head; the beef cutout value keeps hitting record levels, and consumers are still buying. According to CME’s Daily Livestock Report, after accounting for inflation and retail price, the 2014 year-to-date real per capita expenditures for beef increased 9.1 percent over 2013. It’s a good time to be in the beef business.
However, with the cattle inventory at its lowest level since World War II, where will the feeder cattle come from? High prices are encouraging herd rebuilding, which will keep heifers out of the slaughter mix, further exacerbating the low supply of feeder cattle.
The answer could lie with the dairy industry. While the region from Pennsylvania to Maine holds just 1 percent of the nation’s beef cows, it contains 15 percent of the dairy cows. These 1.3 million dairy cows produce over 540,000 bull calves, which are mostly sold into the veal market, oftentimes at a low rate of return. The dairy bulls that are steered and finished are discounted due to carcass composition that does not meet consumer demand.
Dr. Dave Wilson, a retired veterinarian in Middlesex, New York, has been raising Angus calves out of Holstein cows for several years. When he started, his plan was to raise them to 500 pounds and sell them as feeder cattle. Now he’s interested in developing a beef cow herd and prefers heifers, though he also raises the steers. Wilson sources semen from the ABS Dairy InFocus program (http://www.absglobal.com/infocus), which has specific sires recommended to breed to dairy cows.
The program uses hard-to-breed cows that are being serviced for the last time. There appears to be some value of hybrid vigor in using beef semen, as these cows usually become pregnant. Wilson’s experience has been that one in four of these cows conceive. After that, he assumes the pregnancy risk. Therefore, at $25 for service and semen, he has $100 invested in the live calf. Crossbred calves are treated the same as the Holstein heifers, receiving high-quality colostrum. The herd of origin must be tested for bovine viral diarrhea. Wilson then picks up the calves and raises them to weaning using the same protocol as a high-producing dairy.
The benefit to the dairy is that these hard-to-breed, last-service cows generally conceive and remain in the milking string for an additional year. The dairy farm also receives a premium over the sale barn price for a straightbred Holstein calf.
The benefit to Wilson is that he receives a heifer calf with known origins and specific genetics to complement the Holstein. An additional benefit is that the crossbred cows he has calved out have an excellent disposition.
“The biggest challenge is finding enough cattle to market efficiently,” Wilson noted. “Dairies need to get on board to produce a higher-value product, and beef producers need to take advantage of this local resource to graze our excess acres of idled grassland.”
Brian Robbins, North Harbor Dairy, Sackets Harbor, New York, also raises crossbred dairy calves, but with a different objective. Several years ago the dairy was at capacity, so they didn’t need to retain extra heifers. Their artificial insemination (AI) representative suggested that they use DairyComp records to identify the lower-end cows and breed them to Charolais bulls.
The crossbred calves were raised with the dairy replacements to weaning and they’re housed in an abandoned facility with a pasture lot. To maximize intake for their herd, which currently has a 100-pound milk average, they feed so that 3 to 4 percent of the delivered feed is left in the bunk. The feed refusals are not balanced to support optimal growth of their replacements, so they go to the crossbred calves. According to Robbins, the growth has been phenomenal, finishing in 15 to 18 months with an 800-pound carcass. Initially, the finished cattle were direct-marketed; however, with the strength of the commodity market, some are being sold directly to a packing plant in Pennsylvania.
The advantage for North Harbor Dairy is that the feed refusals are not fed back, producing a better dairy replacement. By feeding the refusals to crossbreds instead, they get a high-value product.
The North Harbor Dairy herdsman also believes that hard breeders conceive more easily with beef bulls. “The hardiness of these calves is absolutely amazing,” Robbins said. “After being more selective on using calving-ease sires, dystocia is not a problem,” he added. Even though they are back in the expansion mode, breeding low-producing cows to beef bulls still provides a financial return. “I don’t understand why any dairy would not take advantage of this opportunity,” Robbins said.
Many AI companies have programs designed for crossing dairy breeds with beef breeds. Select Sires has Angus, Simmental and SimAngus sires that it recommends. Using its Select Mating Service, dairy producers can select the most likely candidates to breed to beef. Jerry Emerich, Select Sire Power dairy and beef coordinator for the Northeast, is seeing more interest in the program and expects it to grow. Select Sires has entered into an agreement with Wulf Cattle (http://www.breedingtofeeding.com) in Minnesota to purchase some of their Limousin genetics to breed to dairy. Originally, Wulf Cattle provided Limousin semen to a neighboring Jersey dairy. Limousin complements dairy breeds by adding muscle and growth.
ABS has an extensive database of sires for its Dairy InFocus program. Analysis of this data shows a reduction in dystocia and stillbirths at the same days of gestation compared to Holstein sires.
The company’s approach in developing InFocus was to start at the end. They worked with packers to evaluate crossbred calves for carcass traits that met their market requirements. Based on these results, they developed a list of sires that meet the packers’ requirements. Their goal is to produce a superior calf that performs in the feedlot and on the rail.
While there are many success stories, there are some hurdles. First, Tim Timmons, ABS Dairy InFocus manager, said, “Dairy producers need to be convinced that raising every heifer as a replacement is just too expensive; using sexed semen on high-ranking cows is the best place to spend resources on heifer replacement inventories.” Second, some dairies have the facilities to raise the crossbreds with their replacements, but in many situations there is a need for a separate calf raiser. Finally, infrastructure needs to be developed to get the calves from the dairy to the calf raiser, and then, once weaned, into groups that can be marketed efficiently.
Granted, the biggest hurdle for this program is marketing. Calves are produced year-round, which is an advantage to the market, but creates a challenge in collecting, managing and feeding cattle at different stages of growth. However, when you look at the available resources in the Northeast – 1.3 million dairy cows, over 3 million acres of idle grassland, thousands of abandoned dairy facilities and supportive AI companies – this seems like a no-brainer for both dairy and beef producers.
With any new venture, there will be some bumps in the road, but with high prices for milk and beef, now is the time to experiment. When prices go down and the farm needs every dollar of income, mistakes have greater consequences.
For more information, contact your local Select Sires/Sire Power representative or call 570-836-3168, or contact Timmons at email@example.com or 260-227-0768.