John Michael Riley, Mississippi State University Extension economist, says today’s high cattle prices mean “buyers are being critical of the animals they’re purchasing. If they see any kind of concern on the health side, that’s a red flag and they’re more likely to back off.”

Riley says special sales for value-added calf (VAC) cattle in Mississippi have illustrated how premiums are paid for quality, healthy animals.

“Across all the sales, steers sold for about $10/cwt. over the average in-state auction price,” he says. “Heifers sold for about $13/cwt. over. That shows people are willing to reward folks that manage their herds very precisely with a watchful eye to have good quality cattle.”

Ted Schroeder, Kansas State University Extension livestock marketing specialist, has analyzed Superior Livestock Auction sale data over 10 years. He says all signs point to higher premiums for healthier cattle, and the demand for those cattle is stronger today.

Vet's Opinion: Preconditioning Of Calves Is A Win-Win-Win Equation

“It resonates pretty loudly that buyers need calves that will perform well and efficiently,” he says. “We worry about it all the time, but when you have these kinds of economic conditions, paying close attention to factors like that is becoming more prevalent.

“They want some kind of a combined preconditioning program, with a 30- or 45-day weaning, and an animal health program that’s recognized and accepted, and maybe even third-party certification.”

Schroeder says feedyards continue to seek “lot sizes that match, but we’re hearing more and more feedyards which look for assurances that cattle are healthy and are likely to perform well.”

Grant says a solid animal health program helps him obtain top prices for backgrounded cattle. When he uses feeder cattle futures to lock in a strong price, he knows he will have the product to back up his hedges.

“We have strong predictability as to how these cattle will perform when they go on feed,” he says. “We’re able to maintain a good reputation with our customers. They know they’re going to receive animals that should perform.”

BEEF Video: Prep Your Calves For The Feedyard

Grant adds that no one single segment of his operation makes it successful. “Nothing will do the job by itself; it takes the whole package,” he says. “It’s hard to do any kind of hedging or price risk management if you don’t have a predictable program. Anything I can do to mitigate some of the risk helps.” 

Fox says the value of selling healthy cattle is felt more in the reduction of input costs. “By having a good animal health program, we don’t have to fight through a lot of problems,” he says.

“Our medicine costs are lower. It takes less manpower. It’s hard to know how much you’re saving, but with fewer pulls, a lower death loss and better gains that result from healthy cattle, we know the value is there. That helps bring back customers who background cattle with us.”

Confidence in cattle that leave his Tennessee operation for western feedyards continues in Fox’s retained ownership program. “We know they should perform well, and we feed those cattle at feedyards that PI test themselves. We know they won’t have to fight off BVD,” he says. 

Larry Stalcup is an Amarillo, TX-based freelance writer.