The secrets of the low-cost cattle producer
Cattle prices may not be in the tube yet, but they’re circling the rim, and producers have no control over the markets. What we can control are input costs; it’s one way we can maintain profitability and ride out the hard times.
One of the quickest ways to go broke in the cattle business, or any business for that matter, is to live beyond our means. Even though our government doesn’t stick to a budget, it is advisable for families to do so. Unfortunately, we can’t continue to live like calves are $3 a pound, and in reality we probably never should have.
There is information available to help set up a family budget; check out your land-grant university, local county extension office or many of the resources available online to help you get started. Once you’ve done this, it’s time to examine areas in the beef cattle enterprise where you can cut costs.
A low-cost producer isn’t a tightwad and isn’t always a high-profit producer, but for this discussion, we are going to focus on how cost-control strategies can help producers maintain profit margins, even when the cattle markets aren’t favorable.
Calving and breeding
Producers with an eye to riding out the hard times have a short, clearly defined calving season and a marketing strategy. Managing breeding for a 60- to 90-day calving season decreases costs in terms of time and labor. By curbing the calving season, producers also control costs by reducing the number of times cattle are gathered and processed.
Additionally, having a short calving season reduces calf mortality because producers have a set period for frequently checking the herd and this has been shown to increase the number of live calves. Conversely, year-round calving increases the chance of missing a dam in distress.
Another advantage is in marketing a uniform group of calves and the resulting increased profits. Demonstrations in Arkansas showed that reducing the calving period decreased the direct cost per animal unit by 32 percent, the herd break-even by 38 percent and gross margin (gross income minus direct cost) improved by 75 percent.
Dr. Shane Gadberry, University of Arkansas, says, “For herds that don’t have a set breeding season, tracking cow postpartum interval, in addition to pregnancy, can be a helpful problem solver.
For an example scenario, consider over time, a herd has selected replacement heifers for increased cow size and milking ability in an effort to achieve a goal of increasing more pounds weaned per calf. But without a change in pasture or supplemental feed management, also led to fewer pregnancies or longer postpartum intervals.
Did the performance of the herd progress, regress or remain unchanged?” Year-round calving makes identifying and correcting efficiency problems more difficult.
Culling and forage supply
Producers who cull their cows, even the cows that have names, are more efficient. There are producers who keep cows well past their sell-by date because they are fond of them. An open cow isn’t an employee you want hanging around your business, eating your groceries and chatting up the other employees at the water cooler.
Pregnancy check and cull early. Don’t turn a blind eye to structural problems, bad udders, and “gummers.” Thank them for their service and show them the door. The salvage value of cull cows can make up 10 to 25 percent of gross income generated by the beef cow operation.
Another way to improve efficiency is to embrace grazing management strategies, extend the grazing season using complementary forages and feed less hay. Starting with a forage inventory, you can identify forage availability and gaps, then fill those gaps with complementary forages.
Find what works for you, but it is recommended to stockpile forages, include cool-season annuals and rotational or limit grazing. These systems will require a small investment in fencing, but temporary electric fences are serviceable and affordable.
Low-cost producers know the quality of their forages, match their herd’s nutritional needs to the available forage and supplement according to stage of production and nutritional requirements.
Testing hay and developing a least-cost supplementation program really only works if you have a defined calving season and group cows by stage of production. It’s wasteful to feed a group of cows in various stages of production; you’ll either be shorting the lactating females and losing body condition, or you’ll be over-feeding the open cows, which isn’t cost effective.
Targeting feed strategies
Here in the South we rarely see hay that is deficient in protein. When we test hay, what we typically find is our hay is adequate in energy for open cows, but not high enough to meet the lactating cows’ requirements.
Invariably, we see producers feeding hay that is adequate in protein, or grazing cool-season annuals that are also well able to meet the cows’ needs, and still supplementing protein.
Protein is the most expensive nutritional supplement and therefore, when there is plenty to meet a cow’s need in the forage or hay, it is an unnecessary cost.
There is high correlation between feed costs and total costs. Research has shown feed costs account for 60 percent of total costs of production and are the largest difference between high-profit operations and low-profit operations.
As feed costs increase, profit per cow decreases, making a strong case for targeting feeding strategies by stage of production, forage availability and quality testing, as well as least-cost supplementation strategies to increase profitability.
Low-cost producers keep herd performance records, set goals, monitor and adjust. Performance records can identify poor performing cows that should be culled. Gadberry says, “The most important benchmarks to start tracking would include cow pregnancy status at weaning, calving dates, calf weaning dates and weights and production expenses, particularly looking at fixed and variable costs.”
A young cattleman recently said, “I know I should be keeping more herd records, but the way my place is configured, right now the best I can do is a consistent head count. I’m hoping to cross fence, build some corrals and rotationally graze so I can get them up easier.
The way it is set up now, we can’t drive cattle to the pens, we can only coax them.” Which brings up a good point – without proper infrastructure it is difficult to implement many of the best management practices.
Health and marketing
Low-cost producers focus herd health on disease prevention. Since all operations are different, it is best to work with your veterinarian to establish a preventative herd health plan, rather than waiting until a crisis. Preventative measures should focus on parasite control, vaccinations tailored to your situation, reproductive diseases in adult animals and limited exposure to new animals, using a 30-day quarantine.
High-profit producers market calves, they don’t simply sell them. Invest time in things that make a difference at market, such as breed selection, dehorning and castration. Stocker cattle operators don’t mind one bit taking advantage of cow-calf producers’ failures to add value to their calves before market.
They’re more than happy to buy a bull calf with horns for a discount. If your goal is to make money on your calves, you select breeds that aren’t discounted at sale, market calves in uniform groups (which is an option if you have a short calving season), and you castrate, vaccinate and wean them before loading them on the trailer.
That’s all the information you need to make it more expensive for stocker operations to buy your calves.
Highly profitable producers don’t “save money” by neglecting the soil. They soil test and fertilize. Fertilizing without a soil test can be expensive and unnecessary. Research conducted in southwest Arkansas showed the cost per bale of hay decreases with the addition of appropriate fertilization.
Perhaps the hardest part of being a low-cost, high-profit producer is choosing to own the least amount of equipment possible. During our recent record-high calf prices, there was also a boom in the farm machinery sector.
The problem isn’t owning new equipment per se, but it is the leveraging and over-extending that may take place when prices are good that will catch up to producers when prices tank, like they have now.
Producers have opportunities for profit, despite the depressing cattle markets, simply by implementing these cost-conscious measures.
PHOTO: Highly profitable producers cull cows, even their favorites. Photo by Melissa Beck.
<![if !supportLists]>· <![endif]>Melissa Beck
- Freelance Writer
- Prescott, Arkansas
- Email Melissa Beckbeckm532@gmail.com