Low-Hanging Fruit Offer Profits to Cow-Calf Producers Submitted to NACAA Journal, March 2016

Economic Opportunities  Market calves using value-added practices  Castrating  Lot size  Vaccination  Pre-conditioning  Implants  Cull cow marketing  Bull selection  Cow size  Forage management  Improve hay feeding and storage  Forage systems research with limit grazing wheat  Managing costs

Management Choices for Specific Practices Source: Williams, Raper, DeVuyst, Doye, Peel, Lalman and Richards (2013).

Cow/Calf Returns from Kansas Farm Management Association data Source: Pendell, Kim and Herbel (2015).

Castration Prior to Weaning Source: USDA (2008).

Castrate Bull Calves  7.1% of lots contained bulls on value-added sale dates  USDA NAHMS (2008):  95% of operations with > 200 head castrate  50% of operations with < 50 head do  Lower stress, less sickness, lower death losses  Economics  Don’t castrate: Price discount $5-10/cwt ($25-$60+ per head)  Castrate after 3 months of age,  20# of gain less (at $174 = $34.8)  12 additional days in the feedlot  Looming animal welfare issue

Lot Size Herd size Calf crop uniformity Defined breeding season

Effect of Lot Size on Sale Price ( ) OQBN Sale Data Source: Mallory, DeVuyst, Raper, Peel and Mourer (2016).

Preconditioning Calves  Impacts of preconditioning  Feedlot and carcass performance increase  Medication costs decrease  OQBN Preconditioning Protocol  45 days minimum weaning; respiratory vaccinations; other standards  Third party certified Vac-45 program  Increase producers’ access to value added marketing opportunities  Encourage adoption of best management practices

OQBN Sale Data Source: Raper, personal correspondence (2016).

*Premiums calculated as difference in weighted average prices Source: Raper, personal correspondence (2016).

Estimated Returns from Value-added Practices and Likelihood of Positive Economic Returns Practice(s) Sale price premium ($/cwt) Net return ($/head) Likelihood of positive economic return 45 days weaned$5.23$ % Vaccination$6.79$ % Dehorn/polled$5.26$ % Wean+vaccinate$4.86$ % Wean+vac+dehorn$8.78$ % Certified vac-45$12.46$ % Source: Williams, DeVuyst, Peel and Raper (2014) using 2010 data.

Implants: Current Use in Cow-calf Operations Source: USDA (2008).

2014 Implant Study, OSU P<0.01 Source: McMurphy, Sharman, Cox, Horn, Lalman (2010).

Preconditioning Gain after Implant at Weaning (lb.) Source: McMurphy, Sharman, Cox, Horn, Lalman (2010).

Implants Work Better with Better Nutrition Summary of 25 Studies from Source: Bayliff, Redden, Cole, McGee, Stansberry, Lalman, Corrigan, and Burdett (2016).

Implant Economics  Calfhood implants are effective and more valuable than ever  18 lb. of gain  $1-2 cost  Value of gain: $0.80 => $14.40 to $1.50 =>$27

Maximizing Salvage Value of Cull Cows  Cull cows represent 15-30% of a cow-calf herd’s revenue  Does body condition score matter?  Is retaining and managing cull cows on native pasture or low-cost drylot systems more profitable than selling in October at the time of culling?  Is selling culls as bred cows a profitable alternative? Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Data Source: USDA-AMS, Compiled & Analysis by LMIC Livestock Marketing Information Center

Cull Cow Retention Management Systems  Drylot System  Start feeding rye hay with 10% crude protein in mid-October  Start feeding 25% crude protein cubes at ~ 5 lbs/day/head in December  Native Pasture System  Stockpiled native grass pasture (350 acres)  Hay and cubes only during icy periods Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Data and Methods  Culled cows randomly assigned to either native pasture or drylot systems:  Three categories for beginning BCS:  thin: 6.0  48 cows in 2007/08, 43 cows in 2008/09, and 71 cows in 2009/10  NF Cows; Black hided Angus; four years of age in 2007  Data collected monthly October - March  Weight  USDA grade and dressing percentage  Each grading period:  Calculate/simulate net return (revenue – costs) over revenue if sold at culling  Revenue (AMS price by grade and DP times cow weight)  Accumulated costs (feed, hay, labor, pasture, interest) Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Marketing Strategies for Cull Cows Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Marketing Strategies for Cull Cows Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Drylot System: Change in Net Revenue from Culling to Marketing Period Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Marketing Strategies for Cull Cows Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Preferred System and Feeding Length  Get rid of the big ones…  Heavy, higher BCS cows were not profitable in either system  Find an inexpensive way to feed the rest  Little difference in returns between thin and medium  Native grass system more profitable than low-cost drylot system in every case  Retaining on native grass from 90 to 150 days resulted in highest returns

Yet Another Option….  Marketing culls as bred cows  Retain cows beyond culling  Potential to breed back at least some of them  Market as bred  Potential replacements for fall calving herds or year-round herds  Bull has to eat regardless of where you keep him…

Bred vs. Slaughter, Native Grass System Source: Amadou, Raper, Biermacher, Cook, & Ward (2014).

Bull Selection  Polled/dehorned calves earn $3+ per cwt  No. 1 & 2 muscling earn $10+ per cwt over No. 3  Black hide earns premium over other colors  If retaining heifers, impacts herd genetics

Hide Color Discounts ($/cwt) – 2010 Brahman Influence $-3.48/cwt Source: Williams, Raper, DeVuyst, Peel, McKinney (2012).

Bull Purchase Calculator Bull costAnnual bull cost per cow exposed Cost per calf weaned Cost per cwt weaned Value of calfValue of pounds weaned per exposed female $2,000$20.14$23.24$4.79$970$853 $3,000*$32.08$37.02$6.92$1,016$895 * Same annual operating cost = $450, 50 lb. heavier calves, $10/cwt lower price (heavier, but also higher quality) Bull Investment Cost Calculator, beefextension.com

Cow Size  Maintenance requirements  Genetic potential for milk on maintenance requirements and/or biological efficiency  Interaction of cow size and milk yield on nutrient requirements and/or biological efficiency  Reproductive efficiency  Weaning weight  Biological versus economic efficiency

Differences between Big and Moderate Cows  Big cows  Bigger calves  Bit more cull cow income  Lower price per cwt  More acres  Higher maintenance costs  Moderate cows  Lower operating costs per cow (land, forage, other nutrition)  Lower fixed cost per cow

Budget Summary ($/cow) Native PastureIntroduced Pasture Moderate Cows Big CowsModerate Cows Big Cows Gross income Total operating cost Returns above operating cost Fixed costs Total costs Returns above all costs Ranch returns above all costs $1,500$(2,700)$(7,900)$(12,200) Source: Doye and Lalman, 2011

Big Cows versus Moderate Cows  Bottom line: Moderate cows were more cost effective and even more so when  Additional WW is more likely 12.5#/100 lb. rather than 45% of body weight  Calving rate on big cows is likely lower

Maximizing Net Present Value (NPV) and Optimal Mature Cow Weight Fall calving Angus cows on Bermuda Fall calving Angus cows on native Spring calving Angus cows on Bermuda Spring calving Angus cows on native Max NPV per head $647$1,291$2,921$3,937 Cow weight Max NPV per acre $42$16$189$46 Cow weight950 Source: Mallory, DeVuyst, Raper, Peel and Mourer (2015).

Hay Storage Hay Storage Calculator, beefextension.com

Hay Feeding ItemMCONEOBSRPolyRing Total waste, lb.71a283b294b170c Waste, % bale wt5.3 a 20.5 b 13.0 c Cost of ring$525$200$209$300 Value of hay wasted per $60/ton $3.18$12.3 $7.8 Value in hay savings per cow at ½ ton $1.59$6.15 $3.90 Source: Sparks, Sexton, McMurphy, Mourer, Richards and Lalman (2015) plus author’s calculations.

Economic Opportunities Value-added PracticesPrice impact ($/cwt) $/head (525 lb. calf) Per 30 cows Polled/dehorned $3.15-$5.25$16.54-$27.56$496-$827 Castration $5.00-$10.00$26.25-$52.50$788-$1,575 Lot size of 10 herd $5.18-$7.00$27.20-$36.75$816-$1,103 Vaccination $1.44-$6.69$7.56-$35.65$227-$1,070 Weaned 45 days $1.67-$5.23$8.77-$27.46$263-$824 Vac-45 $12.46-$15.54$65.42-$81.59$1,963-$2,448

Economic Opportunities PracticesPrice impact ($/cwt) $/head (525 lb. calf) Per 30 cows Implants $27$810 Market cull cows later $50 Market cull cows bred $140 Bull selection $42$220.50$6,435 Moderate cow size $40 $1,200 Reduced hay loss Hay ring type 10-15% Hay storage $4-$6 per ton

Cost of Production from Kansas Farm Management Association data Excludes depreciation, operator labor, interest on investment. Source: Kansas Farm Management Association, 2014 Profitability Group Dollars

Summary and Conclusions  Combining management, marketing and technology represents “low hanging fruit” for cow/calf operations  Informed decisions start with records  Measure then manage…

Record-Keeping Tools  Cow-calf record keeping tools  CR-3279 Cow-Calf Production Records Software on   Financial records  CR-324, Quicken for Farm and Ranch Financial Records  AGEC-266 Quicken or QuickBooks: What’s the Best Choice for Agricultural Producers?   More information on budgets, decision tools, record keeping  

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