Several ways to increase herd size
As I look at the calendar I can see spring is officially here. That means we are well into the 2014 calving season. We had problems early with mold in the feed stuffs terminating pregnancies, but once we got started things have gone well. This year has been great for marketing of calves, feeders, fats and cows. The most common question I hear asked is, “how long will this last?” Obviously none of us know for sure, but we must all take advantage of these prices.
Cow-calf producers are generally very cautious. The premise we must adapt is that we have elevated the cattle price baseline. What could go wrong? We all remember the ‘cow that stole Christmas” several years ago. Also production problems with meat processing and contamination could greatly alter consumer confidence. We all realize that this market depends totally on consumer demand. The export market has greatly increased over the last ten years, but we all remember how fickle this can be. Monitory problems, invasions, tariffs, and changing leadership can greatly affect these markets. I always tend to be conservative, bordering on cynical, about these big picture financial scenarios.
If we buy the baseline elevation we are believing we can expect calves to be worth $1,000 plus and cull cows will also be worth $1,000 plus for the next five years. The market has been working its way up for the last three years. This is a result of economic recovery here in the U.S. as well as an increase in world wealth. As these market values have increased so has the cost of replacement, but with this cost there is also tremendous opportunity. If this window of opportunity is five years, now is the time to act rather than two to three years down the road.
The primary opportunity for the cow-calf man involves herd expansion. The national cow herd is at all time lows. The last Cattle Inventory report from later January calculated 29 million beef cows. We have been losing cow numbers since 2004 and with expansion, it will take at least five years to increase the cow herd 3.5 million head to return to 2004 levels.
We have seen some heifer retention in our area. The January report showed heifer retention up by 2 percent. This would appear to barely cover normal losses to culling in the cow herd. If your cow herd has been profitable in the past years, now might be a good time to reinvest some of your profits into additional herd replacements. There are several ways to accomplish this scenario:
· Retain additional heifers
Many of our producers are developing twice as many heifers as other years. They will either be marketed or kept in the herd.
· Purchase and develop heifers
Some producers are purchasing groups of heifers and sending them to feedyards to be developed. We are seeing pot loads of heifers moving into neighboring states from the salebarn.
· Purchase bred cows or heifers.
These animals will be added to your herd for the future. Hopefully they will generate enough income throughout their time in the herd to generate profit.
· Purchase short term cows
In our area in southeast South Dakota we see a lot of these ‘flip cows.’ Older cows are purchased, calved, and sold when the calves are weaned. This is a rapid turn and has worked well the last several years.
· Purchasing open cows and heiferettes
State law in South Dakota prohibits the purchase of these animals to be returned to the ranch and bred. This is in response to the increasing problems we are encountering with Trichomaniasis.
The future looks bright and the opportunities appear great. Visit with your veterinarian, banker, nutritionalist and extension specialist to decide what scenario works for your operation. Use care when purchasing animals to add to your breeding herd to prevent allowing disease to enter. Opportunity exists in the cattle sector at this time, but with opportunity comes risk. Carefully calculate production models and nutritional needs to assure future profit in your operation.
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