With stress-limited preconditioning (PC) and value-added calf (VAC) programs, value-added returns approached $130/head this year for an Oklahoma operation that grows calves to near 900 lbs.

While most preconditioning and VAC programs yield results in the $50/head range, brothers Rick and Mark Holder of Gould, OK, say their operation’s added value comes from taking their calves to the hefty weight instead of marketing them as 600-lb. calves at the local auction or video sale.

Such a large return for PC and VAC programs isn’t that common. But premiums in the $2 to $5/cwt. level are widely seen for producers who take the time and expense to follow university-proven PC and VAC strategies for success, says Bob Weaber, University of Missouri Extension assistant professor of beef cattle genetics.

“We’re seeing premiums for these calves in the $2-$4/cwt. range,” adds Ron Schooley, manager of the Bloomfield (IA) Livestock Market, commenting on calves entering the auction after being on a PC/VAC plan. “People who buy them like the cattle. They like the way they perform.”

The Holders, who also run a regional agriculture-oriented bank, are proof preconditioning pays. They used to run mainly stocker cattle on wheat and grass in their southwestern Oklahoma operation, either marketing the cattle as feeders or feeding them out. That changed eight years ago when they began expanding their commercial cow-calf operation.

“We decided to lean toward registered Angus bulls with high carcass-quality and feed-efficiency ratings,” Rick says. “We started with good PC programs in the beginning.”

The Holders usually begin calving in January and continue to April. In mid-summer, calves receive a killed vaccine with blackleg prevention. “We wean in October with an across-the-fence approach,” Rick says. “Calves then receive a modified-live vaccine, a treatment for BVD 1 and 2 prevention, another blackleg vaccination and they’re dewormed.

“Prior to gathering, we start the calves on corn silage and dried distillers grains, similar to what they’ll receive in our grow yard. They’re then ear-tagged and go to the grow yard and placed in two- to five-acre pens.”

If any treatment is needed for illness, “we use an air gun to doctor them,” Mark adds. “But out of 600 calves, we only had to doctor three last winter (despite record snowfall and blizzard conditions over the region).”

The Holders credit the VAC and PC programs for keeping the cattle healthy and facing little stress through the feeding period that continues until the following March.

“That killed vaccine really helps get them going,” says Rick, noting the programs pay off when the cattle are marketed.

“If we sold the calves at the sale barn (at 600 lbs.), they would have brought $102/cwt. But we placed them in our grow yard and marketed them on a video sale in January for March delivery,” he adds.

The cattle averaged 887 lbs. and sold for about $98. That upped their sale price from $612 for 6-weights to $869 for the heavier cattle. That’s a $257 higher price, less the 48¢ cost of gain total of $137.

“That gave us an extra $130/head we probably wouldn’t have had without the PC and VAC program,” Rick says. “And age and source verification also adds 5-$10/cwt.”

Depending on prices, the Holders sometimes feed out their calves. “We leave our options open,” he says. “We feed some and sell some. But the PC and VAC programs are a no-brainer for us.

“We averaged an $80/head profit in the feedyard in 2009 when most others were losing money. We’re either making a premium or others are getting discounted.”

In feed-out programs conducted by the Texas Cattle Feeders Association and Texas AgriLife Extension, PC calves outperformed non-PC calves in every phase. The biggest economic plus was that PC calves had a “sick” rate of 9.2%, compared with 36.4% from non-PC calves.

Death loss in PC calves was 1.5%, compared with 4.3% for non-PC calves. And, average daily gain was 2.9 lbs., compared with 2.6 for non-PC calves. PC calves converted at 6.3:1 vs. 6.9 for non-PC, and Choice carcasses were seen in 50.4% of PC animals and 35.8% of the non-PC animals.

Missouri’s Weaber likes the results from a Kansas State University case study entitled “Preconditioning Beef Calves: Are Expected Premiums Sufficient to Justify the Practice?” The study, which shows a nice premium for PC calves, involves data collected on cattle marketed through a Kansas livestock auction for a five-year period.

“The PC concept has been around for a long time, yet adoption has been slow,” Weaber says. “Current industry trends are consistent with management requirements and benefits of PC, which likely will increase interest in the practice.”

The research estimated premiums received for PC calves and the expected returns from a PC program. Based on a 45-day, postweaning PC program, Weaber says cow-calf producers can increase returns about $14/head when compared with the sale of calves at weaning with no PC program.

Returns associated with PC calves in the feedlot are in the $40-$60/head range, he adds, indicating that PC premiums will likely increase as the quality and integrity of the PC programs can be documented.

“Producers may also want to consider retaining ownership on their calves if they feel they’re not capturing a large enough portion of the value of PC,” he says.

Various regional auction, video and Internet sales show that value is added to PC calves. Schooley and his Bloomfield Livestock Market help coordinate the Iowa Missouri Beef Improvement Organization (IMBIO), which handles about 8,000 calves annually. Schooley says calves must meet various genetic and health requirements, but aren’t limited to any specific breed.

All vaccinations, castration and dehorning must be certified by a licensed vet, and producers and vets must use Beef Quality Assurance (BQA) guidelines. Calves must be traceable to the producer and vet responsible for health procedures.

IMBIO members must use bulls that meet or exceed these specs: frame score 5.0-7.5, and weaning weight and yearling weight EPDs in the top 60% of the breed. “Bulls must be scanned as yearlings and have minimum ribeye areas and maximum fat thickness allowances,” Schooley says. “Feedlots will eliminate most outlier cattle by purchasing calves with these qualifications.”

He says the calves are delivered to the sale yard, sorted for color, size, flesh and quality, then placed into three grades, weighed and grouped into part load and pot load lots.

The results show premiums in the $2-$4/cwt. range. “It’s a program that shows the value of a good PC and VAC program,” Schooley says.

Similar results are seen at other auctions and video sales. The Superior Livestock Auction website offers a video example of how calves can see an immediate increase in value with a VAC program. The difference on 600-lb. calves sold in April was $11/cwt. higher for the VAC cattle, which sold for about $117/cwt., compared with stalled bids at $106 before the VAC was guaranteed.

Numerous VAC programs are offered by animal health companies and supported by university beef cattle specialists. The Holders look at many of them and hope to take their PC and VAC program to the ultimate level.

“We hope to develop a pasture-to-plate program and take our cattle to the retail level,” says Rick. “We believe the PC and VAC programs will provide the value we’ll need to make our cattle work.”
-- Larry Stalcup, August BEEF