Adding Value for Oklahoma Cow-Calf Operators

Kellie Curry RaperLivestock Extension Specialist

Centra In-ServiceNovember 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)

$/cw

t

8 hd

75

%ile

16 h

d

90

%ile

29 h

d

95

%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

$/cw

tHide 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 2010Heifer 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 7.846.54

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 History2001 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 2012Drought 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 StatisticsPooled 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 Maximum 8 6.293 8.000 7.500

N 162 48 43 71

Pasture 81 24 21 36

Dry lot 81 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

rage

Fee

d C

ost P

er H

ead

Preferred System and Feeding LengthGet 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 cows

Retain 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

ADG

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 Drylot Thin(BCS<4.5)

Medium(4.5<=BCS<=6)Heavy(BCS>6)

Days

ADG