What type of change is right for your cattle operation now? That was the question posed during a livestock production panel at Dakotafest on Aug. 23, in Mitchell, SD. As a drought plagues the U.S., cattlemen need to become better managers of their herd. Good managers plan ahead, save for the future and make tough decisions regarding cattle numbers and feed resources.
Offering advice on this topic was Darrell Mark, South Dakota State University (SDSU) adjunct professor of economics, Matt Diersen, SDSU Extension economist, Warren Rusche, SDSU Extension cow-calf specialist, and Matt Grussing, First Dakota Bank, Kimball, SD.
Three months before Dakotafest, members of the panel planned to discuss expanding the cowherd, but the group had to switch gears as more ranchers are selling pairs because pasture ground is drying up.
Here’s a roundup of what the group advised:
“Feed security is a worry for producers,” Rusche said. “How are we going to make sure we have enough cost-effective feedstuffs to feed our livestock every year?”
Rusche said liquid protein could be making a comeback as more producers use marginal hay and feed this winter.
“People with excess silage could winter extra cows for profit and utilize extra feed before it spoils,” he added.
“There is a shift of feeding cattle closer to home in the Upper Plains,” Mark said. “We are adding infrastructure in South Dakota such as the packing plant in Aberdeen and more feedlots, which will help to make feeding cattle here more profitable and plausible.”
Getting through the winter could be a challenge for many producers with the rising cost of feed.
“Feeding alfalfa hay could raise costs to $4 per head per day this winter,” Mark said. “Light calves could be undervalued at the sale barn this fall. If you have to feed them more to get through the winter and spring months, yearlings could be more profitable.”
The region’s livestock producers will be successful, despite the challenges a drought brings, Diersen said.
“Our diversity is an asset because in dry years, we have a way to use poor crops as forage for cattle in the form of silage,” Diersen explained. “We need to use available feedstuffs – corn stover, silage distillers and soybean hulls. “We need to be creative. Inventory management is critical. We need to extend the grazing season and ration available feedstuffs. Free choice hay is wasteful; figure out the nutrient requirements for your cows and feed to that.”
Additionally, knowing where you stand financially is just as important as keeping an inventory of available feedstuffs.
“Producers need to keep a budget 18 months in advance, so they can see upcoming cash flow problems and adjust the line of credit accordingly,” Diersen advised.
“Lines of credit could be a slippery slope,” Grussing added. “Producers need to keep a good cushion for a rainy day and remain liquid.”
As an industry, livestock has become a secondary income as crop production takes center stage. Today, there is 30 million acres in cropland and 15-20 million acres in rangeland. Ranchers can take advantage of the crop residues to be used as cattle feed, and they still need to have a working plan to manage both animals and crops.
“Inventory management is key,” advised Grussing. “So many people sold off excess feed last year when prices were high, but now they are having a hard time. Keep a year and a half of feed on hand at all times is a good rule of thumb. It’s a good idea to keep 50 percent of equity in the operation.”
So, what type of change is good for your cattle operation right now? The panel agreed that preparing for the future, stockpiling available forage and feed resources, taking inventory of the cowherd, utilizing pasture ground for as long as possible and making appropriate decisions for best time to sell weaned calves will be critical for producers as they navigate through the drought.
“There is a shift of feeding cattle closer to home in the Upper Plains. We are adding infrastructure in South Dakota such as the packing plant in Aberdeen and more feedlots, which will help to make feeding cattle here more profitable and plausible.”
-Darrell Mark, SDSU adjunct professor of economics