RETAINING THE CALF CROP ADDS VALUE TO INDUSTRY

by: Clifford Mitchell

Cattlemen wage their own chess game with the industry every day. Planning strategies to counteract what's happening with the weather, market demand or increasing costs. No year is the same and cattlemen must constantly be adjusting to keep profit margins.

Market conditions will place different meanings on retained ownership. Traditional thinkers will think this concept means right through harvest. Others will retain calves for a short period of time. The concept of adding pounds with low cost forage or cheap commodities has been profitable for cow/calf operators.

“Right now cow/calf producers have the opportunity to add cheap gain to the calf crop and add a lot of value through retained ownership,” says Dr. Robert Wells, consultant, Samuel Roberts Noble Foundation, Ardmore, Oklahoma.

“Retained ownership offers economic advantages for cow/calf producers because they can add weight and build in premiums for their calves, if they are successful for the next owner,” says Dr. Shane Gadberry, Extension Beef Specialist, University of Arkansas.

Adding weight to calves is paying dividends in today's market. High corn prices have placed a lot of value in forage based gains. Retaining calves also builds in the health component. How long producers need to retain the calf crop may be the tough question to answer.

“If buyers know those calves have been pre-conditioned for 45 days they usually demand between a five and eight dollar premium compared with commodity cattle. These cattle are bunk broke and ready,” Gadberry says. “A controlled breeding and calving season might be the first step to retaining the calf crop post weaning. A pre-conditioning program is often, at best, a break-even proposition certain times of the year. Producers will often get paid for their vaccines and extra management, but not extra feed costs. Retaining them for longer periods, if you can put that gain on economically, usually pays off with more market weight.”

“As a general rule, carrying those calves to 800 or 850 pounds has been very profitable over the last year or so. Anytime you can add value through a backgrounded calf you create heavier weight cattle that will be healthy through the feeding process,” Wells says. “This also creates a better calf for the next segment of the industry. Carrying calves to a heavier weight is usually beneficial to the bottom line. Producers need to be concerned about fleshy calves because they have spent too much money on feed and they are going to get discounted when the calves are sold.”

Cow herd numbers may also be at levels where this could be a beneficial part of the program. Getting adequate returns for land, labor and management is what it's all about. Different classes of cattle can also help cow/calf operators manage stocking rates more effectively. This will also add flexibility to the management program and build in an easily liquidated product in case of dry weather.

“Stocking rates come to the forefront as guys try to re-stock cow herds. If you don't have enough forage retained ownership might not be the best option because it's going to cost more money,” Wells says. “This also gives you a cushion in case of drought and allows producers the flexibility to wean calves early or just graze them for a short period of time.”

“Most cow herds have been depopulated and there are fewer cows on the farm to spread out high input costs. Retaining that calf crop provides opportunity to spread out costs and add revenue,” Gadberry says. “You have to look at your forage base. If you're not harvesting excess forage for hay then you can use that to add weight to the calf crop. It's a good plan in case it gets dry again, but we live in a high moisture area and pastures can recover quickly if we have good conditions. Cows are expensive and you don't know what next year will bring. Retained ownership is an option to consider if it gets dry, just move the calf crop and use the excess forage for the cows.”

Retained ownership starts with a weaning period that will ultimately adjust that calf to grazing and maybe eating out of a bunk. The weaning process could affect health and how calves gain.

“Whether it's fence line weaning or an abrupt move and haul off, calves need proper nutrition at weaning. Stockpiled forages like fescue, bermuda and even native grass work well,” Wells says. “Provide them with high quality forage that is similar to what they have been on.”

Managing the cow herd so that calf will fit forage resources will help control expenses of retaining the calf crop. High feed prices make it very difficult to feed at certain times. Match feed resources with the right forage, and gains could well surpass inputs.

“The past couple years, high corn prices have driven up the price for commodity feeds causing input costs to rise dramatically. With spring calving herds that wean in the fall, retained ownership is going to get expensive if a high percentage of the feed is from off farm or in the form of harvested hay. Wheat and rye grass are options for some producers, but this may not be the best scenario for small producers,” Gadberry says. “Calves weaned in the spring, grazing warm season grasses respond very well to a very low level of supplementation and have a dramatic increase in gain. We have to look at feed costs vs. cost of gain. Cattle need to gain well. Whether you retain or don't retain ownership may decide what time of year you want to calve your cows to match the forage base and nutritional requirements.”

“Even though corn prices have been high and it's the standard for all feed prices; there are opportunities to use commodity feeds in the right situation. Whether it's to help get calves straightened out or add pounds to meet your contract weight,” Well says. “Most grasses also have that summer slump when forage quality starts to decline and gains stagnate. If we can give those calves a little protein it will help them harvest that tougher grass. Providing a small amount of feed can cause an incremental increase in gain. We have to look at cost of gain vs. value of gain and as long as that ration is on the plus side we're in good shape.”

Market conditions have always had an impact on when producers market calves. Recent high calf prices make it difficult for some operators to withstand the “opportunity costs” of retained ownership. Unless pre-conditioning and calf retention has been a part of the business model.

“Sometimes pre-conditioning and retaining calves is a tough sell because the market is so good right now,” Wells says. “The best management practice allows us to make more money in the process and we're setting that next guy in line up for success.”

“Management ability will help determine whether producers retain ownership or not. There are opportunities to get premiums or add profit,” Gadberry says. “There is less variation to the calf crop after they have been backgrounded. Retaining calves and selling them at different times may also help producers become better money managers.”

Good management always adds value to the operation and promotes accountability to our enemies. Retained ownership and documentation of management may also help the end consumer feel better about the beef they are eating. In the end, retaining the calf crop may be the best thing. From cow/calf producers through the consumer, it could help every segment.

“Better management allows us to pass along a better product through the production chain. We have to look at what the consumer wants and the perception of our industry,” Gadberry says. “The cattle producer needs to be proactive and document those management practices.”

“Documenting management is really becoming a priority. We have to tell our story and show we are implementing the best management practices while being good stewards of the land,” Wells says. “Best management will help us limit antibiotic use and good genetics help eliminate implants. It's the right thing to do for the industry and I think the industry has transitioned to a more yearling type animal rather than a lot of calf-feds.”







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