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September’s Animal Science: Today and Tomorrow

September 8, 2015

Dr. Tom Troxel                                                               Dr. Michael L. Looper

 

Cow-calf profit will become tighter and tighter

Calf prices will behave seasonally in the second half of 2015 – averaging $267/cwt for the year. A larger fall run in 2015 will be followed by a larger 2016 calf crop as the US cow herd expands at near record pace. Calves should average $237/cwt in 2016 which means weaned calves will bring $150 per head less in 2016 than 2015. In addition to a lower selling price, expect cow cost to increase 3 to 4% annually for the next 4 to 5 years. For example, if it cost $700 (indirect and overhead cost combined) to run a cow, costs will increase to $724 in 2016 and $750 in 2017.

To put the drop in selling price and increase in the operating cost into perspective consider this: with a $150 decrease of the selling value of a weaned calf and a $24 increase in the cow cost, a cow calf producer is giving up a total of $174 per calf in 2016. Therefore, for every 10 calves that’s $1,740 a cow-calf producer must manage around.

During the last couple of years, profits were rather easy to come by, but there is change in the wind. The next couple of years it’s going to be very important to become a cost manager by implementing management practices that make money and market calves that return profits to your pocket.\

Cost and returns from the 300 Day Grazing Herd at Batesville

The 300 Day Grazing herd is now in its seventh year at the Livestock and Forestry Research Station at Batesville. The purpose of this demonstration is to implement science based management practices to reduce dependence on harvest forages (hay) and improve beef cattle management. For the past seven winters, the 300 Day Grazing herd fed hay for 60 days or less 5 out of 7 years. With an exceptionally dry fall, stockpiling forage did not materialize, and due to a later than normal spring, spring growth occurred later than normal. Therefore, additional hay feeding was required this past winter (2014-2015). The other year we were unable to feed hay less than 60 days was the drought year of 2012. That year, however, hay was fed 86 days.

Listed in Table 1 are the annual expenses for the past year. The expenses are reported on an animal unit basis (animal unit is equivalent to a 1,000 lbs. mature cow).

Table 1. Annual cow cost from the 300 Day Grazing herd located at the Livestock and Forestry Research Station at Batesville
Item: $/Animal Unit Item: $/Animal Unit
Salt and mineral $32 Fertility testing bulls (BSE) $2
Supplemental feed $27 Replacement cow cost $40
Veterinarian medicine $11 Fertilizer $109
Growth implants $1 Purchased hay $65
Fly control $8 Herbicide $8
Sale commission $28 Miscellaneous $10
Hauling $4
Pregnancy testing $2 Total $22,019
Bull cost and AI $59 Total cost per animal unit $405

For most producers, hay feeding season is 150 to 180 days; therefore, hay cost is often $200 or more per cow. Therefore, total cost per animal unit could reach $550 per cow and that’s before overhead cost are added. Once overhead items are added to the direct cost, cow cost can easily reach $700 plus. In an article in Beef (August 2015), Harlan Hughes reported a cow cost of $947.

If you’re not keeping track of expenses – you should. Remember the old saying; you can’t manage what you don’t measure. Managing your expenses may be the key to future profits.

What about income?

During the past year, the 300 Day Grazing herd consisted of 46 cows and 46 calves. We sold 16 steers, 12 heifers and 1 cull cow. We kept 18 heifers for replacements. The steers and heifers weighed 648 and 551lbs., respectively, and were sold for $221 and $219 per cwt., respectively. Income per animal unit was $711. If we sold the additional 18 heifers, the income per animal unit would have increased to $1,112; but keeping replacement heifers is a cost of doing business. We kept so many heifers because the cow herd is getting older and it was time to re-invest into the cow herd with new genetics.

The gross income ($38,731) minus expenses ($22,019) left $16,712 ($307 per animal unit) to pay overhead expenses.  If we sold the 18 heifers, gross income would have been $60,524, and the amount to pay overhead expenses would have increased to $38,504 or $707 per animal unit).

Animal Science announces new demonstration

The Arkansas 300 Days Grazing Program was very successful in helping producers improve livestock system management. Recommended practices to reduce feeding expenses were verified through over 150 demonstrations and more than $300,000 documented savings. However, as with any new educational approach, some producers were not convinced that it would work. Demonstration and research results showed this opposition to be unfounded. The most common comment from producers regarding why they don’t adopt 300-Day Grazing principles is “I just don’t have time.”

So a new educational approach is being proposed for the 300 Days Grazing Program called “It’s About Time”. “It’s about time” would document time invested in various forage and livestock practices of traditional management compared to selected practices demonstrated through the 300 Days Grazing Program. The demonstration will document time spent on the following practices: stockpiling forage for fall and winter grazing, planting and grazing winter annual forages, improving grazing management, reducing hay waste, and developing a scheduled calving season.

The overall objective is to compare time invested with implementing these practices. For example, one producer may be recording his/her time with stockpiling and strip grazing forages while another producer documents his/her time with hay feeding. With enough producers participating across the state, data can be pooled and conclusions drawn. Remember your time is valuable. If you’re interested in participating with the “It’s about time” demonstration, contact your county extension agent.

For more information about cattle production, visit www.uaex.edu or www.arkansas-livestock.com or contact your county extension office.

 

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