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CATTLE TODAY

PRECONDITIONED CALVES RECEIVE PREMIUM AT MARKET

by: Heather Smith Thomas

Preconditioned calves (vaccinated prior to weaning) and weaned calves generally bring a $3 to $5 premium (or higher) at market time compared to unvaccinated or unweaned calves. Many backgrounders (grazers) and feedlots have less interest in buying calves whose health status carries more risk.

Justin and Sally Angell raise Charolais cattle and he also runs a livestock auction market (Eastern Missouri Commission Co.) in Bowling Green, Missouri. "We have about 110 registered cows, and we also background cattle retaining ownership, sending them west to feed. Thirty to 40 years ago there were many small, local markets. Calves would often be purchased by someone locally to be grown and fed out for slaughter. Back then, being shipped a long way usually meant only 200 to 300 miles. Today, it's a lot different. Cattle routinely travel 500 to 1000 miles, and the stress is greater. The environmental stress--new feed, new water, different weather, etc. -- may actually be greater," says Angell.

"We're weaning calves bigger and younger than we ever have. Many calves now weigh 600 to 700 pounds at weaning, whereas 20 or 30 years ago a yearling would weigh 600 to 700 pounds. The cattle industry has changed, and part of that change includes a greater need for vaccinating and weaning the calves, especially in the fall. The way the feeding industry is set up, most feedyards today can't handle unweaned, bawling calves or unvaccinated calves. High risk calves placed in a feedyard are potentially a wreck," he says.

"Ten years ago I left the farm and took a job at MFA Inc. (a Missouri based regional co-op). At the time, I was hired to help develop and implement a new preconditioning program centered around a new concept called VAC 45 (value added calf, weaned 45 days). That program evolved into MFA Health Track, a comprehensive weaning and vaccination program," says Angell.

"Just 10 years ago preconditioning was a new concept, in a lot of places. I did producer meetings all over Missouri and into Arkansas, Iowa and Oklahoma, and there were several meetings in which I had to start by explaining what a vaccination program was. Because of the Texas Ranch to Rail program and other initiatives like MFA Health Track, there's been a concensus reached about what a preconditioning program is, for these calves. That VAC 45 program (a protocol in which the calf has been weaned 45 days, with two rounds of shots) is now the industry-wide standard," he says.

"When preconditioning, we also need to keep in mind that there is a difference between just injecting your cattle with vaccine and having an effective vaccination program. The goal is not to vaccinate, but to immunize." If a calf is stressed at the time of vaccinating, for instance, he won't build immunity.

"As the marketing has changed, and calf value has become higher; the difference between the better calves that are properly weaned and vaccinated and the cattle that aren't has gotten wider. It used to be $2 to $3 a hundred, but now I'd say it's at least $10, especially in the fall of the year," says Angell.

Source and age verification is also important. "If a rancher is going to go through the steps to sort, wean and vaccinate, then I recommend adding $2 to $4 a head to source and verify (if the producers have the records). Anything a producer can do to open up new market options will help. Sometimes only one extra bidder can make a big differenc on the price you get for those calves," he explains.

"If we want to look into the future a little more, I think there will eventually be a place for hormone free (NHTC - non hormone treated calves) and natural cattle -- whatever the definition for natural might be." This entails a little more management on the farm, and planning ahead. Regardless of program, all these value added specialty market cattle will be required to be preconditioned, he says.

The producer who puts forth the extra management hopes to get paid a premium for his efforts. "I am a big proponent of livestock markets and the marketing system of selling cattle at auction. But just like any profession, some people in the auction business are better at it or more motivated than others. If a producer is going to strive for excellence, using good bulls and the best management techniques (including preconditioning) he has to have a market outlet to work with that understands what he's doing. The market agent should know the value of his calves, to help him actually benefit from his efforts. I encourage everyone who sells cattle to develop a relationship with his agent. Remember, he is on your team. If you feel like he isn't, then it's time to change teams. Competition (amongst those who would sell your cattle) is good for producer!" says Angell.

"Adding value is one thing, whereas actually realizing that value is something else. Some markets just do a better job of retrieving that added value for their sellers. Where the cattle bring the most is where the market's owners and managers understand that the people selling cattle are their customers and that's who they work for. When that competitive marketing system is in place and it's healthy, there's no better way to sell cattle. The cattle bring top of the market for what they are, and may even bring more than what they should. That's one thing about an auction ring; cattle have the opportunity to bring more than what they're worth, if there is enough competition for them," he points out.

"Looking down the road, there are fads and there are trends -- whether you are talking about clothes or cattle. A fad will go away, but trends are long term. The trend toward better management of cattle and source, age and process verification is one that I don't think will go away. I am not saying that it will be here tomorrow and mandatory; I hope that will never happen. If the extra work remains voluntary and market driven, however, there is opportunity for people to get paid extra. When you can sell calves for $700 to $800 a head, this makes the cattle business viable and competitive with other uses for our land resources," says Angell.

"I think that as we look at the cattle business, and if we assume that the energy policy of the country is going to change -- and that ethanol will become an energy source that the country relies on -- the by-products that come out of those ethanol plants will be used by cattle. Hogs and chickens can't use these, but cattle can. This fundamental shift in resource allocation may be the harbinger of a revolutionary revival for the feeding industry in the corn belt, and for rural life nationally. I think the future is bright for the cattle business, and I encourage cattlemen of all industry segments to be optimistic rather than pessimistic. There are many people talking about cattle cycles and that cattle can't stay this high, etc. I would be the first to agree that there is a time to run and a time to walk, but barring any events outside the cattle business, I think now is a time to be stay positive," says Angell.

He has spent a lot of time traveling in Nebraska and Kansas visiting with feed yard owners and managers. "There are premium programs that reward cattle that have choice carcasses or the assumption of choice because the animal's black hide. Choice carcasses are fine, but as high as feeder cattle are today, an 1,100 pound animal with choice carcass won't make you money. The premiums will not be great enough to make money on that size animal. I would rather have a pen of high performing steers that grade Select, and finish at 1,350 to 1,450 pounds," he says. If those cattle gain well, with good feed efficiency, they make you more total dollars over your costs.

"We need to continue to select and breed cattle that will grade choice, but in the feed yard an extra 200 pounds on the live cattle will make you more money -- you can figure that back to a 600 pound steer (what he weighed when he came in) and that extra 200 pounds is worth about $15 a hundred. I would encourage Charolais people to keep selecting and culling. Charolais cattle in the feeding industry are respected and desired, and in demand." High performance cattle that get big efficiently in a feed yard are more profitable than the cattle that finish choice at 1,100 pounds. The smaller finishing animal just can't gain enough weight to be profitable, he says.

"The way the industry has evolved, it's a function of size. There are a lot of people who are deceived into believing that all they have to do is make the cattle choice, and that is absolutely not true. Cattle have to get big, they have to perform in the feed yard and gain well. Mostly, they have to get big, and do it efficiently," he says.

Red meat yield is the base of all carcass value, and except when the choice-select spread is very wide, the cattle feeder makes the most money on pens of efficient, high performing cattle that produce a larger carcass, he explains. If a 600 pound steer is going to gain 750 pounds in the feedlot and bring $,215 with a $.90 live weight price at harvest, with 50 cents cost of gain, he makes you more money than a 600 pound calf that will only weigh 1,150 at harvest, bringing a total of $1,035 (at 90 cents) with 50 cents cost of gain. The break even purchase price for an English steer that finishes at 1,150 pounds is about $1.26 per head; the feedlot can't afford to pay any more for him than that. By contrast, the break even purchase price for a 600 continental cross calf that finishes at 1,350 pounds is about $1.40 per pound.

Genetics and good management are what enable a calf to reach the best growth potential. Part of that management includes a good pre-conditioning program for building strong immunity ahead of weaning and shipping -- so that these young calves are never set back by illness. They keep right on growing and never look back.

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