DULUTH, GA — June 15, 2009 — With fickle fall feeder calf markets in the forecast, producers looking to expand profit margins should evaluate their calf preconditioning program now.
“Cow/calf producers are facing projected stagnant to lower markets this fall2 and, therefore, potentially slimmer profit margins,” says Dr. Frank Hurtig, director, Merial Veterinary Services. “That means they need to start exploring every possible avenue for adding value to their calves and bottom line.”
According to USDA forecasts, a struggling world economy will result in weak beef demand that will keep cattle placements level with 2008 numbers — despite the late 2008 drop in feed crop prices.2 Since feedyards will likely be feeding fewer cattle than most years, buyers are more likely to be picky on sale day, potentially giving producers who follow a preconditioning program an edge, Dr. Hurtig says.
“Cattle feeders got burned by record-high feed costs in 2008. And with the ongoing uncertainty of the market, they are likely to seek out heavier calves with reduced health risks to protect profits in 2009,” he says. “One way cow/calf producers can cater to that need — and pad their own profit margin — is to use a nationwide, veterinarian-certified calf preconditioning program.”
Preconditioning programs, such as the MERIAL® SUREHEALTH® Calf Preconditioning Program, are a great way for cattle producers and feeders to extract more profit from a calf crop, Dr. Hurtig says. Preconditioning programs are designed to help reduce stress for calves at weaning and improve their immune systems, which helps them to perform better postweaning.3 Plus, the SUREHEALTH Limited Health Warranty takes away some of the potential risk for feeders.
“There is a huge profit spread on animals that get sick versus those that stay healthy,” says Dr. Jeremy Powell, professor, University of Arkansas Department of Animal Science. “If buyers can spend about $20 more per head and as a result save $75 in medical expenses and performance losses because calves stay healthy, you bet they’ll do it.”
In addition to potential premiums, another plus for cow/calf producers is that feedyards may not be able to find enough preconditioned calves — resulting in stronger demand. According to an Oklahoma State University survey of Oklahoma livestock markets, only 11.9 percent of the calves sold through surveyed markets in 2007 were considered preconditioned, or value-added.
Beyond premiums, cattle producers also stand to earn extra profits by holding cattle longer than normal. The 45-day weaning period required by the SUREHEALTH program means calves are sold in November or December, instead of at weaning in October.
“Feeder calf markets often spike during later months, which means producers have the potential to earn even more profit by selling at the top of the seasonal market,”3 Dr. Hurtig says.
By calculating in that market difference, extra gain and the costs of preconditioning, including labor, feed, health expenses and more, one survey determined the true profit earned from following a preconditioning program was $21 per head.
Program Selection Matters
Program Selection Matters
There are many preconditioning programs available, but they won’t all provide top returns, Dr. Hurtig says. Calves marketed with third-party-certified preconditioning claims earned $6.15 per hundredweight over calves marketed with no preconditioning claims and earned $2.75 per hundredweight more than calves with uncertified claims, according to an Iowa State University analysis.
Veterinarian certification gets calves even more attention at market, Dr. Hurtig says. Research has shown that nine out of 10 feedyard managers see a signed veterinary certificate as having an advantage over noncertified programs.
“Veterinarian certification adds credibility for the buyer,” Dr. Powell says. “The buyer is reassured that the cattle he’s buying have been handled properly, meet all program requirements and will have the extra value he’s paying for.”
The MERIAL SUREHEALTH Calf Preconditioning Program is the only nationwide, veterinarian-certified preconditioning program.
“The great thing about the SUREHEALTH Program is that many producers likely already meet most of the protocols for certification,” Dr. Hurtig says. “By making a few adjustments and taking advantage of the program, they can improve the marketability of their calves and their profit margins.”
SUREHEALTH protocols include parasite control with an IVOMEC® Brand Product; two rounds of vaccinations; a Pasteurella vaccination with RESPISHIELD® HM; a 45-day weaning period; and other best management practices, such as castration and dehorning.
As profit margins tighten, producers may be tempted to cut back on costs. But Dr. Powell warns producers should be careful that they don’t inadvertently trim profits at the same time.
“Your preconditioning program should be the last place you look to cut,” Dr. Powell says. “Data shows that preconditioning makes you money. If you want to maximize profits, stick with preconditioning and cut costs in other areas, such as by extending the grazing season.”
For more information, contact your veterinarian or local Merial territiry manager, visit www.SUREHEALTH.com or call 1-888-MERIAL-1.
Merial is a world-leading, innovation-driven animal health company, providing a comprehensive range of products to enhance the health, well-being and performance of a wide range of animals. Merial employs approximately 5,400 people and operates in more than 150 countries worldwide. Its 2008 sales were over $2.6 billion. Merial Limited is a joint venture between Merck & Co., Inc. and sanofi-aventis. For more information, please see www.merial.com.
IVOMEC Plus (ivermectin/clorsulon): Do not treat cattle within 49 days of slaughter. Do not use in dairy cattle of breeding age or in veal calves. IVOMEC (ivermectin) Pour-On: Do not treat cattle within 48 days of slaughter. Do not use in dairy cattle of breeding age or in veal calves. IVOMEC 1% Injection for Cattle and Swine: Do not treat cattle within 35 days of slaughter. Do not use in dairy cattle of breeding age or in veal calves. Do not treat swine within 18 days of slaughter. IVOMEC EPRINEX® (eprinomectin) Pour-On for Beef and Dairy: No meat or milk withdrawal is required when used according to label. All IVOMEC Brand Products: Do not use in other animal species not on the label as severe adverse reactions, including fatalities in dogs, may result.
1Bulut H, Lawrence JD, Martin RE. The value of third-party certification claims at Iowa’s feeder cattle auctions. Iowa State University Extension. September 2006.
2Farm Income and Costs: 2009 Farm Sector Income Forecast. USDA ERS. Available at: http://www.ers.usda.gov/Briefing/FarmIncome/nationalestimates.htm. Accessed April 13, 2009.
3Avent RK, Ward CE, Lalman DL. Economic value of preconditioning feeder calves. Oklahoma Cooperative Extension Service AGEC-583. Available at: http://pods.dasnr.okstate.edu/docushare/dsweb/Get/Document-1969/F-583+we.... Accessed April 13, 2009.
4McKinney D. 2007 value-added calves marketed through Oklahoma livestock markets. Oklahoma Cooperative Extension Service ANSI-3285.
5Powell J. Preconditioning programs for beef calves. University of Arkansas Cooperative Extension Service. Available at: http://www.uaex.edu/Other_Areas/publications/PDF/FSA-3074.pdf. Accessed April 13, 2009.
6SUREHEALTH Commercial Assessment. Merial Animal Health LAGE. September 2006.
®MERIAL, EPRINEX, IVOMEC, RESPISHIELD are registered trademarks and SUREHEALTH is a registered certification mark of Merial Limited.
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