Is creep feeding beef calves profitable?
Successful beef calf producers continually search for ways to improve their operation and bottom-line. Creep feeding calves to increase their market weight is one strategy. To be profitable, the costs of the added weight gain must be less than the value of that gain. Many factors contribute to a calf’s weaning weight, i.e. nutrition, genetics, age at weaning, environmental conditions and so forth. A three-year study by the University of Nebraska-Lincoln at the Gudmundsen Sandhills Laboratory (GSL) using spring calving cows tested the effects of creep feeding on calf weaning weight and productivity. This report uses biological information in an economic analysis to determine profitability during the time of the study.
Conceptually, creep feeding provides increased nutrition to growing calves, which increases their weight at weaning. More pounds of calf to sell at weaning increases revenue, but does it increase profit? Past research has shown that supplementation (creep feeding) directly to growing calves significantly effects their weaning weight. Creep feeding may potentially address other concerns such as decreased calf productivity due to undernutrition to dam during gestation. In this work, it was also found that creep fed calves retained added weight from weaning through slaughter. The supplemental feed used in these experiments was a commercially available mix and used an additive designed to control intake. This is a commonly applied method of creep feeding, since it is thought to reduce labor costs associated with daily feeding and feed handling.
The economic analysis is simple and based on the difference between the costs of the feed verses its benefit. It is possible that creep feeding may be economically viable while overall profitability is negative. The question addressed here is whether or not creep feeding paid for the added costs.
Calf body weight was on average increased by 44 lbs, verses non-creep fed calves, at the time of weaning. Average conversion rate was about 8.44 lbs of feed to one pound of gain. On average, 3.85 lbs of feed per calf per day disappeared from the feeders for a total of 385 lbs per calf. At slaughter, creep fed animals were not found to statistically vary from non-creep fed calves in marbling. However, the added weight gain due to creep feed did carry over to live weight, increased hot carcass weight (HCW) and back fat.
The top portion of Table 1, “Feed Intake Summary” breaks down creep feed consumption by year on a per head basis. The total amount of feed used over the course of the study was approximately 56,050 lbs with a total cost of $9,306.58, making the average cost per pound just under $0.17/lb. With the added costs listed towards the bottom of the table in the “Creep Feeding Costs” portion, feed costs averaged $63.49 per head per year. Equipment expenses averaged $10.46 per head per year. Labor and management costs were estimated to average $16.48 per head annually for the period. Added transportation to feed was estimated to be $1.44 per head per year making the averaged total expense for feeding creep per head per year $91.87. Table 1 also shows the costs for each year which notably varies from about $69 to $110 per head per year. Before getting to the final results, it should be noted that the methodology used to calculate the true economic outcome for this decision is deceptive and requires special attention. For instance, it is often tempting to simply compare the value of the feed consumed verses the average expected value per pound of gain. While this simplifies the calculations, it hides several potential pitfalls. For instance, the price slide effect due to differences in calf weight. Looking at the revenue summary in Table 1, it is clear that the price slide is real and varies by year. The 2014 year showed that the creep fed calves were valued $0.26 less per pound than the lighter calves, making the lighter calves more valuable on a per head basis, without considering added difference in the cost invested in creep feed. The price slide had a more significant impact on profitability than expected. Over the three years, there was an average price slide loss of $83.26/calf. This is a loss in overall value due to a decrease in the change in size of the animal. On the other hand, the average increase in calf value purely due to weight gain was $97.89/calf. The difference between these two averages is the average net effect due to creep feeding, which was $14.63/calf. This value represents the available money to pay for creep feeding, which was far less than the estimated average total costs of $91.87/calf. These average values do hide some of the important differences between each year. Therefore, we suggest that the price slide would play a key role in making the decision to creep feed or not.
A second factor to consider is related to the cost of creep feeding. Using the per pound costs of feed instead of the actual total costs does not account for the other factors related to it. Our example indicates that feed purchase costs account for about 65% to 70% of the actual total costs. Using only feed costs and average calf price for calves fed creep, our results found erroneously that creep feeding would have been profitable two of the three years. Furthermore, if the price slide were used without considering cost, the 2015 year would falsely be considered a profitable year for creep feeding, since the added value of feeding amounted to $81.84 and cost of feed was $68.87, indicating a positive difference of $12.97. However, once all the other factors are included in the analysis, in no year is there any positive return to feeding creep feed to nursing calves. In the last line of Table 1, the final net returns to creep fed calves at GSL were -$102.10, -$15.21, – $95.76 and -$41.61 for the periods of 2014, 2015, 2016 and the three-year average, respectively.
Creep Feeding “Cow-Q-Lator” (CFC)
Making the choice to creep feed seems like a pretty simple and straight forward decision. Conceptually, it is simple. But since the markets recognize value based on the weight of the calf and costs other than feed are involved, using a rule of thumb such as the costs of feed needed to create an additional pound of calf may result in an improper decision. Recognizing that this choice requires some additional work and thought, the economics team at UNL’s West Central Research and Extension Center created an easy to use excel tool known as the “Creep Feeding cow-q-lator” or CFC. The CFC is based on the inputs found in Table 1 of this article. This tool is easily accessed at the University of Nebraska webpage: https://farmcents.unl.edu and then clicking on the tab “Ag Manager Tools” where it is listed among other useful decision aids.