Healthy Calves, Healthy Profits

April 25, 2015 02:51 AM
Healthy Calves, Healthy Profits

Buyers seek calves that are weaned and processed, and they avoid cattle deemed “high risk”

High quality genetics and a solid reputation are no longer enough for your calves to top the market on sale day. 

“If you want to earn top-dollar for your calves, preconditioning is a must,” says Mark Harmon, Joplin 
Regional Stockyards (JRS) marketing manager. “The greatest demand from buyers is for calves that have been weaned and preconditioned prior to sale day.”

One of the nation’s largest livestock auction markets, JRS sold more than 430,000 cattle in 2014, claiming a primary market area consisting of 33 counties in Missouri, Kansas, Oklahoma and Arkansas. The area features beef operations of all sizes, but many of them are small. Harmon says those 33 counties are home to 50,000 cattle operations, with an average cow herd size of 32.

“On a normal feeder-cattle sale, we will have approximately 500 consignors with an average head count of 12 animals,” Harmon says. 

During the heavy fall feeder cattle runs, Harmon says buyers are looking for calves that are weaned and processed, and they avoid cattle deemed “high risk.” He encourages producers to do things that will “differentiate yourself and your product from the norm.”

As calf prices have risen substantially the past two years, there might be a tendency among some producers to believe the value of preconditioning is reduced. That’s a fallacy, Harmon says.

“The more calves are worth, the more preconditioning pays,” he says.

Purdue University veterinarian W. Mark Hilton concurs with that belief. “2014 was the biggest ‘no brainer’ year in history to precondition your calves,” he says. “2015 could be even better.”

Hilton and Purdue agricultural economist Nicole J. Widmar examined the profitability of preconditioning in an 11-year case study of an Indiana beef herd. They found that precondition was profitable for the producer in each of the 11 years of the study, returning an average of $80.70 per calf to labor and management per year. Annual returns ranged from $26.04 per calf to $116.48 per calf per year. 

“Profitability improved as the manager’s experience with managing the precondition component of the operation increased,” Hilton says. 

Factors that contribute to increased profit from preconditioning include average daily gain, days-on-feed, cost of gain and feed cost of gain. Overall, returns to preconditioning were primarily due to added weight sold, 63% of return, with the price advantage at a preconditioning health sale adding the remaining 37%. 

And that sales price advantage can be stunning. This past year, Superior Livestock Auction reported a $12.06 per cwt “health price advantage” for weaned and vaccinated calves. Hilton notes that even if a preconditioned calf only gained 1 lb. per day, the producer would earn $62.20 per head with that health price advantage. Increase the calf’s weight gain to 3 lb. per day, and the profit is $211 per head, or a 169% return on the preconditioning investment.

Hilton offers four keys to success in a preconditioning program:

1. Team building. Gather a team of experts willing to continue learning with you, he says. That might 
include a veterinarian, nutritionist, Extension personnel, etc.

2. Weight gain. “In preconditioning, if you’re not having those calves gain a significant amount of weight … you’re not going to have as much profit in them,” Hilton says. “The genetics we’ve got today—they can do it. In our 11-year study in Indiana, weight gain was the most important factor in profitability.”

3. Herd health and nutrition. Finding the right vaccination program and timing is essential to preconditioning success. Hilton encourages producers to have one-on-one consultations with their veterinarians. 

In the Indiana study, 79% of the cost of preconditioning was in the form of hay and feed, Hilton says, underscoring the importance of nutrition. “We found having a balanced diet was key to getting 3 lb. per day gain in our calves.”

4. Marketing. “Your calves are special,” he says. “You need to build a resume for them.” That includes finding out more about how the calves do after weaning by retaining some ownership or participating in a small-scale feedout. Hilton says the bottom line is that health pays—but it pays even more when marketing matches management.

“If you are not adding value to your calves, you are making a huge mistake leaving money on the table and giving feedlot owners poorer quality cattle,” Hilton says.

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