Post on 12-Jan-2016
Adding Value for Oklahoma Cow-Calf Operators
Kellie Curry Raper
Livestock Extension Specialist
Centra In-Service
November 14, 2012
Sources of Revenue for Cow-Calf Operations
Commercial Product Calves
Salvage Value of Assets Cull Cows
Marketing Calves: Why OQBN? Moving calves off the ranch means increased stress and illness
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
Asymmetric information Value in knowledge
DataCollected at 16 sales from 7 locations
in Fall 2010.Records on 2973 lots/ 25,839 cattle.
OQBN Cattle 833 lots (28.02%) 7,287 head (28.20%)
Reported characteristics of each lot.Physical characteristicsManagement characteristics
Lot Size Impact
1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121 1290
2
4
6
8
10
12
14
16
lnhead
Lot Size (hd)
$/c
wt
8 hd
75
%ile
16 h
d
90
%ile
29 h
d
9
5 %
ile
Price Slide – 2010
0
2
4
6
8
10
12
$9.69
$7.95
$6.22
$4.48
$2.74
cwt
$/cw
t
Dairy/Longhorn Other Hereford Mixed Red Red Mixed
White/Grey
Black Mixed
-30
-25
-20
-15
-10
-5
0
-27.71
-13.75
-7.47
-4.39-3.48 -2.91
-1.81 -1.21
$/c
wt
Hide Color Discounts ($/cwt) – 2010
Brahman Influence $-3.48/cwt
Black
Value of Subjective Traits 2010Flesh
Thin lots $9.26/cwt
MusclingMixed #2&3 -$10.11/cwtAll #3 -$20.07/cwt
Fill, Age & Source, and ReputationNo statistical difference
Gender Discounts 2010
Heifer Bull
-14
-12
-10
-8
-6
-4
-2
0-11.78 -5.77
$/cw
t
The Big Picture: OQBN Premiums at OQBN Calf Sales, Fall 2009-Fall 2011
2009 2010 20110123456789
8.12 7.84
6.54
2.051.44
OQBN Premium over Calves Marketed with No Preconditioning ($/cwt), Weighted Average*
$/cw
t
Calves Sold:2009
45 D
ay
Wea
ning
Vacc
inati
ons
OQBN History
2001 2002 2003 2008 2009 2010 2011 2012
Livestock Markets 6 7 7 1 3 7 6 6
Number of Sales 7 7 8 2 4 10 9 7 (Fall)
OQBN Lots 400 326 221 56 361 854 462
OQBN Total Head
6,999 5,214 4,169 1,120 4,498 9,262 3,611
Average Premium ($/cwt)
$1.51 $3.95 $5.89 $3.61 $8.12 $7.84 $6.54
OQBN – Fall 2012
Drought impact – Still down in numbersOne sale under our belt (172 calves)
Lightweights (<500) sold very well ($16 to $32 premiums)
Midweights (500-700) brought “standard” premiums of $6 to $7
Not much over 700 to compare to…. OQBN calves sold higher or very close to non-certified
preconditioned calves Weighted average prices – NOT adjusted for any quality
or breed differences
Does the premium tell the whole story?
Cost (feed, vaccines, handling) Increased revenue doesn’t come without costs!
Value of added weight gainValue of preconditioning “health benefits”Budgeting tool available at
www.agecon.okstate.edu/faculty/publications/3943.xlsx
Maximizing Salvage Value of Cull Cows Cull cows represent 15-30% of a cow-calf
herd’s revenue Determine if retaining and managing cull cows
on native pasture or low-cost drylot systems is more profitable than selling in October at the time of culling
Does body condition score matter? Is selling culls as bred cows a profitable
alternative?
Acknowledgements: Zakou Amadou, Clem Ward, Billy Cook (Noble), Jon Biermacher (Noble), Devlon Ford (Noble)
07/15/11Livestock Marketing Information CenterData Source: USDA-AMS, Compiled & Analysis by LMIC
Opportunity lies in the Seasonality…
SEASONAL PRICE INDEX -- UTILITY COWSSouthern Plains, 2001-2010
0.60
0.70
0.80
0.90
1.00
1.10
1.20
Jan Mar May Jul Sep Nov
Index
Max.Index
Avg.Index
Min.Index
Does BCS Matter?
Strohbehn and Sellers (2002) reported feeding sound and healthy cull cows with thin to moderate BCS led to overall profitability of cull cows
Peel and Doye (2004) indicated positive relationship between BCS , marketing classification and estimated dressing percentage
Apple (1999) and Cater (2007) showed that ending BCS and the value of cow carcass are related
BCS is a useful tool for making culling decision, but most previous research focused on the impact of ending BCS on carcass value
Cull Cow Retention Management SystemsDrylot 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 SystemStockpiled native grass pasture (350 acres)Hay and cubes only during icy periods
Data and Methods Culled cows randomly assigned to either native pasture
or drylot systems: 48 cows in 2007/08, 43cows in 2008/09, and 71 cows in 2009/10 NF Cows; Black hided Angus; four years of age in 2007
Data collected in October, November, December, January, February, and 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)
Beginning Body Condition ScoreThree categories for Beginning BCS
Thin: BBCS<4.5Medium: 4.5 <=BBCS<=6.0Heavy: BBCS > 6.0
Determine influence of beginning BCS on net returns by management system
Summary Statistics
Pooled Year 1 Year 2 Year 3
Beg BCS Mean 5.37 4.96 5.90 5.32
Beg BCS Std Dev 0.85 0.560 0.997 0.770
Beg BCS Minimum 4 4.162 4.000 4.000
Beg BCS Maximum8
6.293 8.000 7.500
N162
48 43 71
Pasture81
24 21 36
Dry lot81
24 22 35
Thin 30 6 6 18
Medium 102 35 22 45
Heavy 30 7 15 8
Drylot System: Change in Net Revenue from Culling to Marketing Period
Native Grass System: Change in Net Revenue from Culling to Marketing Period
Feed Cost for Pasture versus Drylot Management Systems
35 63 91 126 1550
50
100
150
200
250
300Feed Cost Comparison By Management System
Pasture Drylot
Days Beyond Culling
Ave
rag
e F
eed
Co
st P
er H
ead
Preferred System and Feeding Length
Get rid of your big ones…Heavy, higher BCS cows were not profitable in
either system
Find an inexpensive way to feed the restLittle difference in returns between thin and mediumNative Grass system more profitable than low-cost
drylot system in every caseRetaining on native grass from 90 to 150 days
resulted in highest returns
Yet Another Option….
Marketing culls as bred cowsRetain cows beyond cullingPotential to breed back at least some of themMarket 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
35(Nov) 63(Dec) 91(Jan) 126(Feb) 155(Mar)
-60
-20
20
60
100
140
180
Net Returns Comparison between Cows Marketed as Bred Versus Slaugh-ter in Native Grass Pasture System
Bred
Slaughter
Days Beyond Culling
Net
Ret
urns
($/h
ead)
Bred vs. Slaughter, Drylot System
35(Nov) 63(Dec) 91(Jan) 126(Feb) 155(Mar)
-60
-20
20
60
100
140
180
Net Returns Comparison between Cows Marketed as Bred Versus Slaughter in Drylot System
Bred
Slaughter
Days Beyond Culling
Net
Ret
urns
($/h
ead)
Limitations
Three years of data on young, well managed cattle (4 to 7 years age).
Small sample size each year (~50 cows).
We only compared two systems.
Level of variation in body condition of animals
Producer resources are key!
Questions?
Results
35(Oct-Nov) 63(Nov-Dec) 91(Dec-Jan) 126(Jan-Feb) 155(Feb-Mar)-0.50
0.51
1.52
2.53 ADG for Cull Cows on Pasture Thin(BCS<4.5)
Medium(4.5<=BCS<=6)Heavy(BCS>6)
Days
AD
G
35(Oct-Nov) 63(Nov-Dec) 91(Dec-Jan) 126(Jan-Feb) 155(Feb-Mar)-0.5
0
0.5
1
1.5
2
2.5
3ADG for Cull Cows on Drylot
Thin(BCS<4.5)Medium(4.5<=BCS<=6)Heavy(BCS>6)
Days
AD
G