Every stocker operator worth his cake wagon knows about using feed to extend forage, increase stocking rate, or increase pounds, while also delivering ionophores and whatnot.
To be clear, we're talking about light supplementation — feeding the equivalent of 2-4 lbs./day as an example — and heavy supplementation where cattle grazing forage are also fed a ration equivalent to 1-2% of their body weight.
Even at today's feed prices, value of gain can make supplementation an effective risk-management tool.
“With the right supplementation ingredients, the feed conversion can be incredible, as much as 3 lbs. of feed to 1 lb. of gain (3:1),” says Jason Sawyer, Texas A&M University stocker specialist.
Using mid-February value of gain, based on nearby futures feeder and fed-cattle prices, Sawyer says that at a 3:1 conversion rate, the breakeven cost of the supplement ingredient is 24¢/lb., about $480/ton. “So, yes, there are some very cost-effective feed ingredients to use, even at today's prices.”
Feed rather than forage
Plenty of stocker producers are familiar with the labor- and management-intensive practice of limit-feeding — controlling average daily gain (ADG) via intake of high-energy diets. In fact, 36.8% of stocker operators responding to last year's National Stocker Survey — those whose sole involvement in the cattle business is stockers — said they utilize limit-feeding with 75% or more of their cattle.
When corn is cheap, limit-feeding offers a clear alternative. When corn is expensive, not doing so is just as plain. When the price lies in between, while forage costs increase, sorting viable options gets murkier.
Though dramatically lower than last summer's highs, Sawyer says the relatively high cost of corn prohibits many stocker operators from limit-feeding today. For one thing, he explains that by definition, cattle biology means limiting intake will divert a higher percentage of consumed energy calories to maintenance over gain. Thus, it's not possible to achieve the lowest cost of gain (COG).
On the other hand, feeding stockers all they'll eat with cheaper feed ingredients — controlling ADG with energy density — offers some stockers a solution to scarce forage. Whether by design or necessity, Sawyer says, more stocker producers in his part of the world are learning the ins and outs of mixers and feed wagons. Some are transforming receiving pens into grower-yard space.
“The cost of feed commodities has stabilized and you can find some competitively priced ingredients,” Sawyer says. “Plus, risk in the stocker business is placing more importance on adding weight to cattle no matter what the weather gives you.”
Sawyer is talking here of the additional production risk some producers assumed last year when they mitigated price risk by forward contracting in the cash market. Lopsided basis made futures hedges impossible at the time. What they were left with was having to add weight specified in the contract, whether planned grazing went according to schedule or not.
Especially for producers who are creative and flexible, full-feeding a total mixed ration (TMR) can offer a COG competitive to forage.
As an example, establishing wheat pasture in Sawyer's part of the world last fall was costing $110/acre, or a pasture COG of 50-55¢/lb. Total COG was in the range of 65-68¢. One grow yard he works with has a feed COG of 45¢/lb.
“He has lots more overhead to feed the ration, though, so the total COG is in the mid 60s,” Sawyer says. On both counts, though, the cost remains significantly below feedlot COG, which is currently in the low to mid-80s.
“The wildcard is how much cost the producer has in forage,” Sawyer explains. “If you fertilized in September, the price was higher than if you fertilized in October, which was higher than if you fertilized pastures now.”
Of course, fertilizer application is itself a risk-management strategy. For instance, Darrell Rankins, an Auburn University Extension beef cattle nutritionist, explains that some producers in Alabama are simply applying less fertilizer to ryegrass, and will stock pastures with fewer head.
Evaluating the potential
To make full-feeding of stockers economically sensible, besides having the necessary facilities, Sawyer emphasizes you've got to be flexible.
“I can get 2.4 lbs. of gain with a ration consisting of 50% alfalfa, 40% corn and 10% cottonseed meal. But if alfalfa goes to $250/ton, I'm blown out of the water,” Sawyer says. “To make TMR economics work, you have to be flexible enough to substitute ingredients.”
Fortunately, wherever producers operate, there are likely local ingredients unique to the area that can offer cost advantages. As an example, Sawyer mentions one producer he works with who uses floor sweepings from a potato-chip factory. Another has a contract for all the grass clippings from a massive golf course.Continue on Page 2
“Every producer has different ammunition to work with,” says Dale Blasi, a Kansas State University stocker specialist. “The key is inputs and knowing your costs. It's just a function of what's available and what price you can lock in.”
Blasi recently helped a stocker operator devise a supplement based on cottonseed burrs to make do with available dry native grass — 1.76 ADG for a feed COG of 50¢.
For producers considering using feed beyond supplementation levels for the first time, Sawyer offers some considerations:
Can you handle bulk commodity ingredients? If the answer is no, the cost of premixed feed will make it difficult for you to make a full-feed stocker ration work.
Can you consistently source feed ingredients and substitutes for a ration that is consistently cost competitive? Over the past two years the relative prices among various ingredients have changed a lot week to week. Sawyer points out that if you can access substitute ingredients and build rations with them, you have the opportunity to always be competitive with gain cost.
Do you have the labor this type of program requires? It's one thing to figure you can grind the hay, mix the rations and feed the cattle every day; it's another to accomplish that consistently, Sawyer says.
As in most areas of business, Sawyer says, the innovators are the ones most successful at full-feeding stocker cattle. In this case, he explains, “When they lose, it's often because they remained too tied to their last innovation rather than look for the next one that is even more advantageous.”