It’s Time To Rethink Your Cow Herd Size And Marketing Opportunities

DR. TERESA L. STECKLER 

SIMPSON, ILL.
   The weather last and this year have not been cooperative regarding hay production and/or pasture growth. The lack of rain last fall (after July 4 through end of September) resulted in poor pasture growth early feeding of hay (July or early August). This spring the cool temperatures and overcast days was not optimum for pasture (fescue) growth. Thus, little forage growth last fall and this spring has also taken a toll on hay reserves. 
   I heard an interesting story yesterday. A cattleman, who has been in the business for 40+ years, purchased hay last fall and/or this spring for his cows. He relayed that it will take three years to pay off that hay purchase! I don’t know all the specifics, but there are several take aways from this story.
   In these times of high hay prices, it is important to calculate break-even costs of production.  By definition, break-even cost is the total cost of production divided by the total pounds of calf produced, whether marketed or retained. Another way to describe break-even is that it is the minimum sale price needed to recover all cash costs in a given year. 
   More profitability is a constant quest for beef-cattle producers. There are three basic ways to increase profit – get paid more for the product you're marketing, decrease the expenses incurred in developing that product, or reduce the number of head in your herd to reduce feed costs.
   Current cattle market prices are down compared to last year, but there are still opportunities available to maximize your profitability in these lean times. You must be willing though to make management changes, move out or your marketing comfort zone, and/or take advantage of cattle market opportunities. 
   First the uncut bull market is soft. Taking the time to castrate calves will bring you an additional $5-15 per 100 lbs at the sale barn. Preconditioning calf market is good right now but you must take the time to vaccinate the calves. A preconditioned 600 lb steer is worth $1.55 ($930) versus a 600 lb bull at $1.35-1.40 ($810-840). By not castrating those bulls, you are losing at least $90 per head.
   So let’s play with some numbers. You read this article and decide to sell your 10 bull calves as 600 lb preconditioned (two rounds of vaccine) steers. You decide that you will let the vet castrate the calves – $7-15 per head at the local veterinarian’s clinic (add $50 farm call fee). So those 10 calves will cost you $70-$150 to castrate. (Keep in mind that the younger the calves, the less stress and set back they will have after castration.) Two rounds of vaccine will cost you $14 to $24 per calf ($140 to $240 total for two rounds of vaccines). The overall cost is $210 to $390 for those 10 calves to be sold as 600 lb preconditioned steers. 
   At the current market price, the no preconditioned bull calves will bring you $8100 (600 lbs x 10 calves x $1.35) versus preconditioned steers at $9300 (600 lbs x 10 calves x $1.55). That is $1200 more for the preconditioned steers. But wait we still need to subtract out the vaccination and castration expenses. Your profit is an additional $990 to $810 for those 10 calves!
   If you still do not want to castrate those bull calves, then even one round of vaccination will bring $0.05 more. However, buyers may question whether bull calves were actually vaccinated when they enter the ring. Their thinking is if you took the time to bring the calves up to vaccinate, then why not castrate then as well. Also weaned, bunk broke calves are also more valuable ($0.05-0.10) than taking bawling, freshly weaned calves to the sale barn.
   Many cattlemen have complained to me about the cull cow price. But keep in mind that there are marketing strategies to maximize cull cow profitability just like there are calf marketing strategies to maximize profitability. So there are several concepts that cattlemen need to take into consideration about cull cows. 
   Many farms have one or two cows (or maybe more) that should have been culled the year before (or even before that). Those cull cows are kept around because they produce a calf. However, they are kept way too long on the farm and can barely walk and/or have little to no conditioning left and thus become junk cull cows that are worth $0.10-0.30. However, if you take that cow to the sale barn before she loses too much condition and is still mobile, she may bring good cull cow prices – $0.55-0.60. For a 1200 lb cow that difference is (on the high end) an additional $360. In addition to receiving an additional $360 for that cull cow, you are not incurring additional feed costs for that poor performing cow and/or taking the chance that she goes down on the farm and must be euthanized.
   Another marketing strategy for older cows or cows that underperform include is to market them in the spring as late second or early third stage pregnancy. Those cows will bring more due to grass availability. Too often cattlemen decide to sell in the fall after their pastures have played out which means there is no demand for her.
   You could also market that older cow as pair versus bred, open, or cull cow. Currently pairs are bringing approximately $1100-1200. That is a far sight better price than if you sell her as a cull, bred, or open cow.
   With many producers operating with lower than normal harvested and reserves of hay and played out pastures in many areas, the time may have come to make very hard decisions about calf and cow marketing strategies and cow herd size. ∆
   DR. TERESA L. STECKLER: Extension Specialist, Animal Systems/Beef, Dixon Springs Agricultural Center, University of Illinois