High feed costs make it riskier to add value to cull cows.
Used to be that keeping and feeding cull cows was a no-brainer: there's lots of compensatory gain to be had with mature cows in their worst condition post-weaning; historically, prices shift $5-$6 between predictable seasonal ebbs and crests; and there's an opportunity to move cows from lower value grades to higher ones.
None of that's changed, except for the fact that high feed prices make it a dicier proposition.
“If you assume a cow will gain 3.5 lbs./day (on a high-energy diet) at a dry matter feed conversion of about 8 lbs., you're talking about a cost of gain of about $1/lb.,” explains Cody Wright, South Dakota State University (SDSU) Extension beef specialist.
Keep in mind, this is the level of feeding used to aim cull cows at the higher paying white-fat market (60-63 Mcal net energy and 11.5% crude protein), which Wright says requires a minimum of 70 days of high-energy feeding.
“If the grain and cattle markets remain at current levels, I'm recommending to producers that their best cull-cow management opportunity is to identify them earlier, save some of the condition on them and target seasonal market strength,” Wright says. “From April to September is when you can capture the best part of the market.”
Generally speaking, Wright explains cow prices increase from February to May, drop $2-$4/cwt. through September and then take another $4-$6 drop October through January. At least that's how it's worked for the past five years based on Sioux Falls, SD market data. He notes that in the Northern Plains, the seasonal price low for cull cows has moved forward from November to January over the past several years.
More specifically, Wright is urging producers in his neck of the woods to consider weaning earlier and market the cows they've already identified as culls. If current market dynamics endure, he also suggests, “Preg-check as early as your veterinarian or technician feels comfortable.”
Feed costs drive opportunity
“The key is identifying your local and regional feed costs,” says Mike Murphy, Cattle-Fax analyst. “Once you know that, the math is pretty straightforward.”
For example, suppose you buy a 1,000-lb. cow at 50¢/lb. – or you realistically price your own at that – you've got $500 into her up front. A couple of months down the line, history says that same weight can be worth $55/cwt. or so. If you've fed the cow to gain 200 lbs., you're selling 1,200 lbs. for a gross of $660. “With that $160 difference, can you put the weight on her and make money?” Murphy asks.
As high as feed costs are, opportunities still exist to cheapen things up, at least for some producers. For instance, Wright says silage is an opportunity for producers who chop corn to open their fields. He adds, “Any off-quality grain you produce – light test-weight corn, green soybeans and the like – things that will take a substantial discount in the market may also have more value running through cull cows.”
In regions where winter range is available, Wright says cull cows can be grazed and supplemented to support reasonable rates of gain.
“Grazing is even more appealing if crop residues, especially corn stalks, are available,” Wright explains. “The general rule of thumb for gestating cows is 1 acre/cow/month. However, when feeding cull cows, it may be desirable to allow more acreage per cow to provide more corn residue for a longer period of time.
Under these conditions, it's not unreasonable to expect a cow grazing corn stalks to gain 1.5 lbs./day or more. Over two months, a cow could conceivably gain 90 lbs., or approximately one body condition score, or more. As the grazing period progresses, cows should be supplemented with a natural protein source to support forage digestion.
Even if not fed for white fat, inherent feed inefficiencies mean cows will take plenty of groceries. There's plenty of competition for feedstuffs, too, with the value of gain for stocker and backgrounder cattle at $1 (see “Value of gain historically high,” page 8).
“A cull cow is likely to require 7.5-9.5 lbs. of feed per pound of gain, depending on how long she is fed and how old she is,” Wright says. Typically, the older cows are, the longer they're fed, the poorer the feed efficiency.
In return are the gains that made keeping and feeding culls such a lucrative proposition for so many years.
All told, according to Murphy, Cattle-Fax members averaged $64/head profit between 1982 and 2005 by purchasing cull cows in November, putting 1.5 lbs. average daily gain (ADG) on them for 95 days, then marketing them in February.
In a study conducted by Iowa State University's Iowa Beef Center (IBC) in 2002-2003, profit from feeding beef cull cows – aiming for premium white-fat prices – ranged from $52-$89/head.
As for specific gains, SDSU research reports ADG of 2.81 lbs., 2.97 lbs. and 3.10 lbs./day for cows fed 50, 77 and 105 days, respectively. Research at the University of Nebraska indicated ADG of 3.46-4.63 lbs. on three different sets of cows fed 90 days.
“With the high ADG and relatively poor feed conversion, it's not unreasonable for a cow to consume dry matter at between 2.25-2.6% of her body weight,” Wright says.
That's why he suggests anyone considering the prospects of feeding cows also consider embracing technology that increases feed efficiency. For instance, he says cull cows should receive an aggressive implant strategy and be fed an ionophore and melengesterol acetate (MGA) at recommended levels.
Feed the right ones
Even if cost of gain looks profitable, and the requisite facilities and know-how are in place, it's as tough to make silk out of a sow's ear with a cull cow as anything else.
“Selecting the right kind of cows to feed is crucial to the success of the program,” Wright says. “First and foremost, cull cows should be sound and healthy and in thin to moderate condition. Cows that are unsound or injured should be marketed directly to a packer. Unhealthy cows should also be avoided. Keep in mind, if a treatment is required, it will likely come with a slaughter withdrawal, which could delay marketing.”
With these essentials in mind, Wright recommends producers work with their veterinarian to plan a vaccination and anthelmintic strategy. He also mentions it may be worth confirming the pregnancy status of supposedly open cows. He relates the story of researchers purchasing 306 cows as open; 70 ended up being more than five months pregnant. High as the current cull-cow market is, bred cows are still worth lots more.
Whether keeping and feeding cull cows or getting them gone quicker while exploiting seasonal markets, there's no question they represent a significant portion of annual ranch income.
“Depending on the relationships between cull-cow and calf prices, and the herd-culling rate, cull-cow receipts generally account for 15-30% of income from the cow-calf enterprise,” Wright says. The market has been historically high this year, too, thanks in large part to a dearth of beef imports.
“Cull-cow prices are very seasonal, and producers need to be cognizant of where their marketing strategy fits within the seasonal price trends,” Wright emphasizes. “Feeding cull cows is a viable option to improve grade and delay marketing. However, careful consideration should be paid to the type of cows to be fed, the cost associated with feeding cows, and when the cows will be marketed.”
Bottom line, Wright says, “Your calculator is by far your most valuable piece of equipment these days.”