Vet’s voice by Dr. Dave Barz: Backgrounding could pay this year
November 4, 2015
This fall has been great for the harvest. Many producers have harvested the row crops and are now baling husks and stover for winter feed and bedding. The calf runs have begun and the feedlots are beginning to fill. The prices are not as strong as last year, but they appear to be improving. I remember auctioneers joking four to five years ago, that they needed to work on their dollar chant. The dollar went to two and soon to three for lighter calves. Now we are back to the two dollar plus level. I saw some sale reports from our local market for 2009. The steers were around $1 and the heifers were eighty-five to ninety cents per pound. That $600 steer calf in 2009 is now worth $12-1,300. I've never heard a client complain that their calves brought too much, but we can't continue to receive a record price year after year. The feedlots are a bit leery of overpaying for calves this fall. This summer and fall when the markets feel the feedlots lost $300 – $400 per head. That is about the amount they are subtracting from this year's replacements.
Harlan Hughes, an ag economist, has kept data on Northern Plains beef cow herds for years. His last data set is presented in Beef magazine's September issue. The dollars are clearly summarized, but I'm not a numbers guy, I look at the big picture.
Feed cost is not a determining factor in the amount of profitability. The top 20 percent have a higher feed cost per animal than both the average and low 20 percent of herds. If we cut corners on feed we lose potential of the herd. It affects reproductions, milking and calf weight. Pounds are still the economic driver of our industry.
Replacement costs were low in the high 20 percent. This could be the result of lower culling rates and the need for less replacements. It could also be the ability of the cow to maintain her position in the herd for more years (longevity and reproductive efficiency). This cost is very high in the low 20 percent.
This year you should be able to increase your calves' value. This fall it appears that calves which have been preconditioned are again worth an additional $5 per hundred. Calves which are weaned generally bring $10 per hundred more. If you are going to precondition and wean, you may as well add some pounds. Calves are very efficient in feed conversion. Those pounds you add should generate an extra dollar per pound in value after you subtract the cost of feed and yardage. Many producers are talking of holding calves and feeding them hoping the market will recover. It does appear there are more buyers on the seats wanting to purchase calves now that the harvest is nearly complete. If the market remains constant you will gain $100 per calf. If it goes up your returns will increase. The way the market has moved, as much as $8 – $10 per week, if you are lucky and pick and good day, you will increase your returns.
The only way you can measure your herd against other herds is through bench marks. These bench mark values are a powerful tool allowing owners to capitalize on their herds strengths while addressing and correcting weaknesses. Where do you rate? Consult with your veterinarian, nutritionalist and extension specialist. They will help you maximize the economic returns of your herd. This will assure the longevity of your operation and increase the efficiency of your operation.