Even with calf prices at historically high levels, buyers are willing to pay more for calves that are weaned and preconditioned.

In fact, according to the most recent analysis of Superior Livestock Auction data conducted by Kansas State University (KSU) for Merck Animal Health, weaned calves are worth $4.78/cwt. more than their non-weaned peers.

The Superior Livestock Auction analysis represents 6,891 lots marketed in 2013. The lots represent a total of about 682,000 calves averaging 566 lbs. each. Calves that were weaned and received at least one viral vaccination before marketing received an average price of $163.49/cwt. Non-weaned calves that also received at least one viral vaccination prior to marketing earned an average price of $158.71/cwt.

VAC 45 cattle — the gold standard of preconditioned calves — were worth about $6/cwt. more than the non-weaned calves, or about $1.25/cwt. more than the weaned calves receiving at least one viral vaccination. Along with other specific criteria, VAC 45 calves are weaned a minimum of 45 days prior to delivery and are vaccinated twice, with the first vaccination occurring prior to or at weaning.

Ken Odde, head of animal science at KSU, says the premium for weaned calves overall and for VAC 45 calves may seem static or less than folks remember from previous Superior analyses. However, he stresses that for the first time, the basis for comparison is non-weaned calves that received at least one vaccination prior to marketing. In early analyses, there were too few non-weaned calves that were vaccinated to reference. Producers have raised the bar, in other words, with calves vaccinated at least once ahead of marketing becoming the standard sellers provide.

In fact, only 15.9% of the Superior lots analyzed in 1995 (Table 1) were either VAC 45 or VAC 34. In 2013, 65.8% of the lots were. In 1995 44.7% of the lots were designated as “no program” cattle (not enrolled in a calf health program, not weaned, not virally vaccinated); there were virtually none in 2013.

calf health for marketing tipsOdde worked with Michael King, a KSU research assistant, to develop the initial Superior analysis in 1995. King has provided the analysis every year since.

Obviously, net economic benefit to sellers for weaning and preconditioning requires more than the average premium buyers are willing to pay. Besides necessary facilities and expertise, generally speaking, calves need to gain weight during the preconditioning period.

Be careful with the data

sale prices of calvesAs you peruse the data (Table 2), Odde cautions about getting carried away with addition. Though it’s true each component is additive in nature, so is the uncertainty associated with each estimate.

Consider a straight English calf, weaned and pre-conditioned through a VAC 45 program, marketed in a single-sex, uniform load lot in light medium to medium flesh. Because of the uncertainty associated with estimates for each of those components, it’s unlikely the value difference would command exactly $13.22/cwt. more than an English X Continental calf that is non-weaned and marketed in a multi-sex, uneven-weight lot sold in medium flesh.

By the same token, each component does offer additive value, and the regression analysis offers a notion of the degree by which each component adds value.

Weaning costs, too

In order to examine the potential net economic benefit of preconditioning calves to sell, Kevin Dhuyvetter, a former longtime agricultural economist at Kansas State University, says producers need to compare it to other options — selling right off the cow, for instance. That requires developing budgets.

According to Dhuyvetter, the basic budget information needed includes: purchase price (i.e., selling price of non-preconditioned calf); production, including expected average daily gain, estimated death loss and percent morbidity; and costs, including those for feed, labor, interest, marketing and the expected selling price with preconditioning.

Dhuyvetter emphasizes estimated selling prices should be adjusted for seasonality, with the realization that as weight increases, price per pound typically decreases.

In various insightful preconditioning analyses Dhuyvetter has provided over time, he offers the following questions that need to be considered in order to determine whether preconditioning provides sellers a net economic benefit.

To precondition or not

  • Why do you want to precondition? What are your goals for it?
  • Do you have the facilities that preconditioning requires?
  • When and how do you currently wean your calves?
  • Can you delay cash flow, retaining ownership through a weaning and preconditioning program?
  • Do you have the expertise, or access to the expertise, if you’ve never retained and grown cattle past weaning?
  • When and how do you currently market your calves?
  • Have you identified a specific marketing opportunity for preconditioned calves?
  • Do you understand the realistic costs of preconditioning — including labor and death loss, as well as the realistic returns of preconditioning — including a potential price premium compared to same-weight calves at the time of sale, and the additional pounds per calf that will be marketed?

Choosing a preconditioning program

  • Is the program recognized by buyers nationally, within a particular region or state, or not at all?
  • What specific requirements are there for the program?
  • Does the program require use of animal health products from a single source, be it one company or alliance of companies?
  • What is the cost of participation relative to other programs?
  • Does the program stand behind its products and services with any type of guarantee?
  • Does the program provide third-party source verification?
  • Does the program provide certified documentation of the health protocols and products applied to the calves?

Source: Kevin Dhuyvetter, Kansas State University

 

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