If preconditioning calves - either with a specific preweaning health program or weaning and 45 days of backgrounding on top of such a program - guaranteed a profit, everyone with two acres and a calculator would be hunting cows. As it is, adding value to calves through health management can at least boost a herd's performance and market immunity.
"It's a totally different way to market your management," says Ron Gill, livestock specialist for the Texas Agricultural Extension Service (TAEX). He's seen the challenges and opportunities of preconditioning first-hand with the producers he serves and with his family's own ranching operation.
"I see people spending $45-60 on a calf in a 45-day preconditioning program. I don't see how you can get it to return that much," says Gill. Conversely, when the cost of nutrition is reasonable, Gill's family has been able to wean and background calves 45 days for $25-27, including labor, interest and opportunity cost. In return, he says there are short- and long-term benefits.
First, weaning and straightening out calves should offer more pounds. John McNeill heads up the TAEX animal science program. He explains the 11/2-lb. average daily gain possible during those 45 days of backgrounding can pay for the $18-35/head such a program can cost. That's before you consider shrink.
"The only way I've found to get paid for it is to take them to the sale barn," says Gill. "We measured the shrink from the ranch to the sale barn (hauling them Saturday for a Monday sale). When they were sold, shrink was less than 1 percent. A lot of cattle sold off cows and sent to the sale barn can have shrink as high as 10-12 percent."
Even with the pencil shrink of direct sales, health can pay its way. That's because a growing number of buyers are willing to give more for calves with a health history, as long as they know the history and can buy volume.
"Our value-added calf program continues to grow every year," says Paul Branch, business manager of Superior Livestock, which markets over a million head of cattle each year via its national video auctions. Better than a third of the 375,000 calves they marketed last fall were the product of Value-Added Calf (VAC) programs (Table 1).
Branch explains VAC-34 calves are the most popular for buyers and for sellers who don't have the facilities or forage to wean and hold calves for at least 45 days. On average, buyers paid $1.61/cwt. more for those calves compared to unvaccinated calves.
Incidentally, Gill says weaning calves and holding them for fewer than 45 days dilutes the health benefits in the calves. And, it makes it tougher for cow/calf producers to realize potential weight gains.
With that in mind, buyers are willing to pay more for weaned, backgrounded calves. Last year, Superior buyers gave an average of $3.89/cwt. more for these VAC-45 cattle than for unvaccinated.
If producers have the facilities and the forage, but don't want to accept the additional risk of weaning, Gill says some buyers are willing to pay for the calves off the cow, then pay a fee for the owner to background the cattle. "The other thing we saw - especially in a down calf market like in 1996 and 1998 when a lot of calves come up with health histories that only include a 7-way Blackleg injection - you have to beg people to bid," says Branch. "The no-sale percentage of unvaccinated calves is significantly higher than our value-added calves in a down market."
Although buyers want to purchase the best they can for the lowest possible price, some will spend more for healthy calves. McNeill, who also heads up the Texas Ranch to Rail program, says that over five years, on average, the healthy cattle in the program were worth $93.20/head more than cattle that got sick. Said another way, sick calves were worth $16.32/cwt. less as feeder cattle.
Moreover, Gill points out the pound and dollar benefits come to cow/calf producers after the flexibility weaning and preconditioning can offer overall herd performance.
"Some people don't realize they can often wean earlier and use backgrounding to manage the body condition score (BCS) of cows," says Gill.
When groceries are scarce, early weaning can help maintain BCS, which leads to increased pregnancy rates and number of calves weaned, he says. Plus, Gill explains straightening out the calves means more market flexibility.
Bottom line, managing health could be the easiest money a producer ever makes on a calf. At the very least, competition and benefits mean the options should be penciled each year.