Evaluating marketing strategies to gain premiums for value-added cattle.
It is well understood that marketing a uniform group of steers or heifers that have a well-characterized health management history has the potential to increase the animals' value and producer profitability. However, many of the producers in the southern High Plains do not have sufficient animal numbers to meet the requirements for single truckloads that ensure maximum pricing. Thus, commingling of animals from divergent rearing environments is often used as a marketing tool through sale barn auctions. Unfortunately, this usually results in decreased animal performance due to disease and stress. To help minimize these risks and increase small producer profitability, the Noble Foundation investigated the use of a strategic animal health commingling protocol to increase the value of sale calves.
The animal health protocol employed was intended to minimize the risk of disease and stress. Between Oct. 14 and 24, 2008, 420 medium- to large-frame calves (239 heifers; 181 steers) were received from 11 producers. All calves were vaccinated twice (14-day interval) for BRSV, PI3, BVD and Blackleg, and dewormed, castrated and dehorned prior to delivery to the Noble Foundation's Oswalt Research and Demonstration Farm located near Marietta, Okla. Upon arrival, calves were branded, weighed, individually identified and commingled by sex and weight. During the feeding period (backgrounding), calves were maintained in 6-acre grass traps with free-choice access to rye hay while receiving 4 pounds of a 14 percent CP protein supplement.
The results from this initial commingling marketing strategy evaluation revealed important information about adding value to the product of small-scale beef producers. Average receiving weight for all calves was 580 lbs., and calves gained 1.2 lbs. per day for an average total of 34 lbs. Traditionally, a 34 percent to 40 percent morbidity rate is expected for commingled calves with an average 2.5 percent death loss industry-wide. Utilizing the Noble Foundation's commingling strategy, we decreased morbidity to 1.4 percent (six animals) with BRD and pinkeye being identified as the primary illnesses. In addition, no animals died during the feeding period. Overall, we found the cost of gain to be $2.30/lb., but would expect this to significantly decrease with experience and larger groups of more uniform calves. This would require increased participation and coordination among producers.
These animals were marketed at the OKC West sale on Dec. 3, 2008, and, due to the known health management history, we received a $5.82 per hundredweight premium as compared to similar lots that did not have a known health management history. More importantly, the commingling protocol enabled us to market larger lots of uniform calves resulting in a $2.82 per hundredweight premium as compared to similarly backgrounded lots of calves.
Our first attempt at developing a practical marketing strategy for a well-characterized uniform set of commingled calves from small-scale beef producers showed great promise and revealed several areas that need to be addressed to increase the success of this type of program. While evaluating the cost of the program, we found that feed accounted for the greatest portion (70 percent) of expenses. In addition, our analysis revealed that overall costs of the program are significantly reduced if animals are held for less than 30 days prior to marketing. This means that, in addition to proper health management, producers must coordinate breed type and weaning weight requirements to increase uniformity and decrease the number of feeding days.
Overall, we are very pleased with this year's results and are grateful to all of the producers that participated in this test. We know that the evaluation of this marketing strategy could not have occurred without the generous participation of our cooperators. It is our hope that the benefits of this type of program are apparent and that small-scale beef producers will cooperate to develop similar marketing strategies.
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