Let's do the math. In today's environment of volatile input costs and cattle prices, a profit is a profit. Period. So even an extra $25/cow, while maybe not a windfall, is certainly something to carefully consider. Knowing how to balance those inputs without hurting cow performance can help capture that extra revenue, says Clay Mathis, New Mexico State University (NMSU) Extension livestock specialist.
Let's do the math. In today's environment of volatile input costs and cattle prices, a profit is a profit. Period. So even an extra $25/cow, while maybe not a windfall, is certainly something to carefully consider.
Knowing how to balance those inputs without hurting cow performance can help capture that extra revenue, says Clay Mathis, New Mexico State University (NMSU) Extension livestock specialist. He outlines several input and herd management techniques that can enhance profits, using Standard Performance Analysis (SPA) data for New Mexico, Texas and Oklahoma as a benchmark for financial and herd performance.
He says cost-cutting measures like reducing feeding frequency and reducing supplemental mineral costs, along with improving reproductive performance and using a solid calf implant program, are examples of items that should be on a producer's list of ways to increase overall profitability.
Improve reproductive performance
What is it costing you if your weaning rate is 1% less than it could be? What will adding a day or week to your weaning age yield in added income?
SPA data from 2000-2007 show the average price for 500-lb. calves was about $99/cwt. The average weaning weight was 521 lbs. So in a typical Southwest herd, the value of a single percentage unit change in weaning rate is about $5.15/exposed cow (521 lbs. × 1% × $99/cwt).
If your weaning rate is 1% lower, that's $5.15/cow less net return. Add $5.15 if your weaning rate is 1% above the 81.5% average.
Added value can also be gained by selling calves at a higher weaning weight. “Using the same 521-lb. steer, if we assume a $6.50/cwt. price slide and the calves gain 2 lbs. each day just before weaning, changing average weaning age by a single day makes a net income difference of $1.06/cow exposed,” Mathis says. “Increasing average weaning age by one week increases net income by about $9/cow exposed.”
Not much can be as cost-effective as a good calfhood implant program. The cost of implanting one calf is about $1. But implanted calves regularly gain an additional 17 lbs. over non-implanted calves, according to NMSU research.
Using a 200-cow scenario, what if the rancher decides to implant his steer calves and lighter half of the heifers at branding? Using the $1/head cost of implanting and a marginal value of calf weight gain of 65¢/cwt., Mathis says the implant program should be worth $6.14/exposed cow.
It pencils out like this: the 17 extra pounds gained x 65¢ per extra pound equals an added $11.05/implanted calf sold. Deduct the $1 cost and that drops to $10.05. If 75% of the calves are implanted (all of the steers and half the heifers), the added value is $7.54/calf weaned.
If the weaning rate is at the 81.5% level, then the added net value of each exposed cow is $6.14 when calves follow a conventional marketing channel. Mathis notes that implants would not be used in a natural program, where producers would have access to premiums.
A different feeding approach
Mathis says adding energy to the diets of all exposed cows may not be cost efficient. However, getting more nutrients to cows with the highest risk of being “open” or calving late can pay.
“Spending up to $150 or more to make sure first-calf heifers or other high-risk cows get pregnant can be cost-effective, and in certain situations focusing inputs on the high-risk females may add more than $13/exposed cow,” Mathis says.
“High-protein supplements (30% crude protein) can be fed as infrequently as once or twice a week with cow performance maintained at a level comparable to feeding the same weekly amount on a daily delivery basis,” Mathis says. “So performance can often be maintained with less frequent feeding.”
Mathis uses as an example a producer of a 200-cow herd who makes a 30-mile round-trip to deliver supplement. He feeds three times a week during the dormant season. What if he cut the feeding from three to two times a week?
If the overall vehicle cost is 50¢/mile, then each trip costs $15. Add to that about 2 hours of driving and feeding at a labor charge of $9/hour, and the cost is $33/trip.
Three trips cost $99 and two trips run $66. Cow performance shouldn't be hurt. So the $33/week savings amounts to about $400 if the reduction occurs for 12 weeks of the supplementation period. That pencils out to about $2/head. “It's not much, but it's still an example of how costs can be cut without hurting performance,” Mathis says.
He points out that in certain situations reducing supplemental mineral costs can boost the bottom line, especially with the rise in mineral costs the past two years. The price was impacted mostly by the use of phosphorus (P), says Mathis, adding that lowering the amount of P in a supplement by 1 percentage unit can lower the overall cost by about $50/ton.
Continue on Page 2
Reducing the percentage of P from 8% to 5% would save $150/ton. As with many decisions on the ranch, the weather and cow condition may impact whether or not such a reduction is feasible. If cows had access to sufficient green grass over the summer and P reserves in the cow's bones are full, then the reduction shouldn't hurt cow performance.
In fact, if a cow eats 3 oz. of mineral a day and P makes up about 1% of the mineral, the cutback in total supplemental P could save more than $5/exposed cow without losing performance. “But it would not be logical to reduce P when cows have had limited opportunity to graze green forage because a cow's stored P may be too low,” Mathis says.
Combining various cattle performance enhancements with efficient cost cuts may add $25 to the overall return per exposed cow. Tighter margins will likely require better management decisions ahead.
While changes in input costs must be considered against potential changes in cowherd performance, Mathis says, “The future sustainability of most cow-calf enterprises will likely depend on the ability of individual managers to make multiple small decisions that collectively keep costs low relative to the value of the weaned calves they produce.”
For more on SPA and how it can benefit your operation, go to http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-1979/AGEC-231web.pdf.
Larry Stalcup is a freelance writer based in Amarillo, TX.