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Seven Questions To Ask Concerning Your Production

published: September 9th 2009
by: Boyd Kidwell
source: Progressive Farmers

Cooper Hurst and his wife, Katie, run 400 commercial cows at Hunt Hill Cattle Company in southwestern Mississippi near Woodville. "We're emphasizing decisions on how to control input costs this year," says Cooper. "I'm trying to get the most beef production out of each acre of pasture with the least amount of commercial fertilizer. To accomplish this, I'm planting legumes and stockpiling forage produced with a minimum of purchased fertilizer."

Every cattle operation today is looking to squeeze that little extra amount from every practice. Here are seven questions to ask yourself this year. In some cases the answer could mean the difference between making a profit and sliding under the red line.

1. How can I maximize my use of forages?

It's no surprise that controlling input costs tops the Hursts' list of key decisions for 2009. Steep grain and protein supplement prices, along with sharp increases in forage production costs, have caused a spike in total feed costs to over $400 per cow.

These increases add up to a 40% surge over just two years, explains Kansas State economist James Mintert. He's seeing operators look for ways to provide more of their own feed.

The Hursts are holding down fuel costs by making their animals harvest most of their own feed. As a cost-effective alternative to baling hay, Cooper lightly fertilizes summer grass and stockpiles forage from August to October. Lab tests on the stockpiled bahiagrass and common bermudagrass come back 10 to 11% for protein and 50 to 52% for Total Digestible Nutrients (TDN).

"Stockpiled grass in this range of nutrition will carry a dry cow with no supplement whatsoever. The key to stockpiling is to apply a little nitrogen fertilizer [30 to 35 units of nitrogen valued at $33 to $35 per acre]. Without nitrogen you won't have adequate nutritional quality," says Cooper.

The Hursts add to their stockpiling plan with legumes. They say their success with growing legumes (crimson clover) depends on the site and soil conditions. On well-drained soil they plant a mix of crimson clover and ryegrass for a high-quality winter grazing mix that provides extra nutrition for cows after calving.

By using an electric fence for strip grazing, cows are limited to a couple of hours on the high-quality forage and moved to low-quality forage for the rest of the day. In addition to supplying nutrition for the cows, clover produces nitrogen to grow summer grasses.

Better use of forages has reduced the need for hay at Hunt Hill to the month of January. As a result of forage management, the Hursts are able to run 400 cows on 600 acres of pasture for an average of 11/2 acres per cow/calf unit. Cooper is now deciding if it's wise to reduce his stocking rate so the cows have additional acres of grazing per head.

2. Should I cut cow numbers?

Millersville, Mo., rancher Mike Kasten says he believes "we still have too many cows in the United States. That's why feeder calf prices have fallen, and increased costs of production have hit us hard and fast.

"Our production costs have gone up 40 to 50% over the past two years and I'm afraid some cattle operations won't survive this situation," says the cattleman.

In response to high costs, Kasten has cut his cow numbers by 25%. He depends on 30 years of production records to cull lower-producing cows. On a brighter note, Kasten says slaughter cow prices remained relatively high during 2008.

The veteran cattleman also has reduced the number of heifers he produces for Missouri's Show-Me-Select Replacement Heifer Program.

"Show-Me-Select replacement heifers still bring premiums at the sales, but my costs to raise them have gone out of sight," says Kasten. "I sent a load of beautiful heifers to the feedlot in 2008. That's how adamant I am about reducing cow numbers."

3. Is this a good time to hold calves to heavier weights?

Despite high feed costs, Kasten believes this is a good time to creep feed and hold calves to heavier weights after weaning.

"Strange as it seems with high feed prices, this is a good time to creep feed," he says. "The feedlots want heavier cattle, so a 700-pound calf sells for only a few cents less per pound than a 500-pound calf. With high costs of production, I don't think a rancher can make it selling 500-pound calves."

Brett Stratton of Appomattox, Va., agrees. In August 2008 this cattleman sold a 50,000-pound load of steers (weaned and preconditioned) averaging 851 pounds each for $1.17 per pound.

"Some of my friends sold 500-pound steers for $1.23 per pound [$615 per head], and I averaged $996 per head on the 800-pound steers. Sure, I spent some money on feed and vaccinations during preconditioning, but an extra $381 per head adds up if you sell a load of steers," he says.

4. Should I use source and age verification?

With the arrival of Country of Origin Labeling (COOL), buyers are already looking seriously for source-verified calves. At the same time, U.S. beef exports have recovered to their highest levels in five years, and some countries have set age limits on animals from the United States that are the source of their imported beef products. With these factors in mind, producers marketing animals that can be traced back to their date and place of birth definitely hold the upper hand.

"For the first time, in 2008 we saw great buyer interest in our cattle being age- and source-verified," says Jim Myers, who manages the annual feeder calf sale for the Buckingham Cattlemen's Association (BCA) of Buckingham County, Va. "The BCA had its best feeder calf sale ever in 2008, and the market was down in the rest of our state."

According to a study of 68,665 calves marketed in 2007 by members of the Montana Beef Network, age- and source-verified animals sold for a premium of $12.83 per head compared to regular calves. But there's no guarantee of a premium, and the ID tags and verification process cost members $3 per head. Sellers can better their odds of receiving a premium by marketing in a sale with large numbers of other age- and source-verified cattle.

5. Should I use Artificial Insemination?

At Hunt Hill Cattle Company in southwestern Mississippi, the Hursts say they are increasing the use of Artificial Insemination (AI) in their commercial beef operation.

Not long ago, AI was a technology primarily used by purebred breeders and dairy producers. But breakthroughs in estrous synchronization and AI technology have made it possible for commercial cattlemen to use the best genetics to produce beef cattle.

"An AI pregnancy costs us $25 more than a natural service pregnancy. But our AI-sired calves made us $75 per head more in the feedlot last year," says Cooper Hurst. "AI can be expensive and time-consuming, but we're seeing even greater genetic benefits in the calves out of our AI-sired replacement heifers."

6. Can I stretch my feed dollars?

High corn prices have caused a spike in cattle feed prices across the board. In 2007, Kent Hubbert of Nebraska paid $17.50 per ton for wet distillers grain (WDG) delivered to his farm. WDG is his primary feed ingredient for backgrounding calves and provides winter feed for his cows.

By 2008, WDG cost $67.50 per ton delivered to Hubbert's farm. "All of the feedlots are using WDG, and some of the ethanol plants cut production by 40 to 50% when corn prices were high last summer," says Hubbert. "I should be able to get by with a load per week through the winter, but it's costing a lot more."

To stretch his WDG supply, Hubbert is on a waiting list to buy corn shucklage (a byproduct of seed processing) from a nearby processor.

As a way of stretching his feed supply, Briggs Cunningham of Lancaster, Ky., weans calves early. This is a practice of which researchers from USDA and Montana State University have confirmed the effectiveness.

In a study of 357 cows, pregnancy rates favored cows with calves weaned at 80 days compared to a traditional weaning age of 215 days. Following a 50-day breeding season, pregnancy rates were 94% for cows with calves weaned early versus 89% for cows with calves weaned at the traditional time.

Early-weaned cows gained an average of 79 pounds more during the grazing season; their conception dates averaged seven days earlier. Research has shown there is no weight penalty when calves weaned as early as 8 weeks of age are fed a nutritious ration.

Cunningham weans his calves at 120 days and gives them access to creep feed before weaning. He hand-feeds the calves after weaning. "Weaning early helps my cows rebreed, and I saw very little difference in weight gain for their calves," says the Angus breeder.

7. Do I need to visit with my banker?

Even if you aren't having financial problems, be sure to visit your lender to discuss finances, as well as the outlook for this year's cattle market.

"We spend some time with our lenders and make sure they're in sync with us and we're in sync with them," says Tom Field, director of producer education for the National Cattlemen's Beef Association. Field and his brother are partners in a Colorado beef operation.

"We don't want any surprises or misunderstandings

Count the costs

"Knowing your cost of production should be the top priority for a beef operation, though it may not be fun to sit down and crunch your numbers," says Tom Field.

To help producers rank their priorities, Field has written "Priorities First," a 28-page booklet based on a survey of commercial cattle operations and the responses of 130 producers.

To view "Priorities First," visit www.angus.org/pub/prioritiesfirstfinal.pdf.