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I often hear cattlemen say, “With the cost of hay so high, I cannot afford to also buy a supplement.” If a supplement makes sense in your operation with lower priced forage, it only makes more “cents” with higher priced forage.

When we buy a supplement, most of us want to know what sort of payback we get from it. Supplements replace nutrients that are either missing or only available in lower than desired quantities in the base diet/forage. Supplements can also provide performance enhancing additives that are not available naturally. Supplements can provide a third return—their ability to modify the grazing distribution of the herd in a pasture. This is best accomplished by self-fed supplements that are available 24 hours a day, 7 days a week. 

These three benefits “pay” you back for the cost of the supplements, generally with increased gain, better health/reproductive performance, or more efficient production overall. The payback can vary from supplement to supplement and situation to situation. 

Providing supplemental crude protein to low quality forages will boost the digestibility (release of energy). It is not uncommon for supplemental crude protein to increase the digestibility of a low quality forage by 10 percent. This gives you 10 percent more energy from every ton of forage or, theoretically, you could feed 10 percent less of the forage and achieve the same performance. Either way, you have 10 percent more forage energy than if you chose not to feed a supplement. Ten percent of $150/ton forage will always be worth more than 10 percent of $50/ton forage.

If you have two trucks and only have room to put one in a shed ahead of an oncoming hailstorm, which do you choose? The new truck worth $50,000 or the old one worth $15,000? Just as your reward today for saving a single 600 pound calf that gets sick at weaning is worth over $950 versus around $680 three years ago, your payback for using a supplement on $150 forage is far greater than on $50 forage.

CRYSTALYX^® Brand Supplements, available to your herd 24/7, are an excellent way to increase the payback from your forage, no matter the forage cost. Just remember that your payback increases as your forage cost increases.

Cash Flow Considerations THEN and NOW

As I travel in cow calf regions and visit with cattlemen, I have noticed a distinct shift in their plans for retaining heifers. Last year at weaning, a heifer calf was more valuable as a feeder than a breeding animal. On many farms and ranches cash was tight due to increasing input cost.  Generating some cash and paying bills by selling the heifer calf had very little risk. If a cow in the herd needed to be replaced a young cow could be purchased for about the same or less money.

This year the economic considerations for retaining heifers for replacements have shifted. Input costs have increased, most notably forage cost, but we are seeing record prices for feeder calves and replacement heifers. Projections are the nation’s cow herd will be smaller due to the prolonged drought in the southwest.

Another difference between this year and today is related to the value of ground for row crops versus pasture. People that had to decide between planting more acres verses keeping cows and pasture made their choice last fall. Those cows are not on the market today. These and other factors have pushed the value of breeding animals to the point where cash flow is not the only consideration in deciding to keep heifers for breeding stock. We now have more questions to discuss at meetings, coffee shops and sales barns.

1. What will replacement heifers and cows cost in the future?
2. Will raising your own replacements be less expensive?
3. Is there more income potential in selling replacement heifer?

Below is a summary of some recent bred heifer sales.* 

  *Sales results should not be considered “official” and were taken from posted sales data and radio market reports

Winter is coming. It’s not just a phrase on a popular premium cable TV show, it’s a fact. The leaves on the ground, the frost in the morning and the calendar tell us it’s inching closer. Whether your winter means a snow pack or grazing rye grass, the common denominator for all of us is what to do about supplementing.

More often than not, we use the cost per ton as the deciding factor when choosing a supplement program. However, we need to remember to add in other on-farm costs the cost per ton of supplement. These include labor to handle the supplement and mileage to and from the pasture. Derek Bailey, with Montana State University, looked at 2 supplement strategies, cake and low moisture blocks, to determine cost effectiveness. 160 cows were divided into 2 treatments, 20% cake fed 3 times/week and CRYSTALYX^® BGF-30 offered free choice, on pasture October thru December.

The results of study showed that cattle supplemented with BGF-30 performed the same as cattle supplemented with cake while eating less. The BGF-30 cattle consumed an average of 0.70 lb (with 0.46 lb of free choice salt) whereas the cake cattle consumed an average of 1.69 lb (with 0.13 lb free choice salt). The exact driver behind the performance results was not determined in this study, but it does leave a person with a lot to think about. Another interesting observation in this study is pasture utilization. The BGF-30 cattle were tracked utilizing pastures at higher elevations than cattle fed cake.

From this research we can pull out 3 criteria for determining the economics of a supplement.

Supplement Cost – The total cost includes cost per ton of supplement, cost per ton for delivery to farm/ranch and storage cost per ton in addition to how many pounds/head/day during the supplementation period.

Labor Cost – How many hours does it take to put out the supplement for each feeding, and how many times per week do you do this?  What is your time or the hired hand’s time worth when other tasks could be completed?

Travel and Equipment Cost – How much does it cost you to drive your truck/tractor to the pasture round trip?

What it adds up to is cost of feed + cost of labor + cost of travel = total cost of supplement program. To see the numbers come together for yourself, click on the Crystal Clear Economyx^® page. There you can use our cost calculator to do a quick comparison on the cost of a low moisture block to another type of supplement. Or you can download the Crystal Clear Economyx^® spreadsheet and really crunch some numbers.

For more information on the research mentioned above, click on the ‘HOW IT WORKS’ tab above, then Supplementation Research and select Effects of Self-Fed vs Hand Fed Protein Supplements… under the Northern Agricultural Research Center Montana State University drop down.

I recently had a visit with a 20+ year veteran of the livestock premix business. He told me his customers seem to be just as profitable, or more so, when feed costs are high. I’m sure that statement would open up a lot of argument, but there may be some interesting perspectives before jumping to any conclusions. One of which may be that fine tuning and optimizing nutrition for the best return on investment would make sense when profit opportunities are highest (high market value of cattle) or when managing overall high input costs.

I also remember a conversation in the middle part of the past decade with a well-known stocker operator in the Eastern U.S. that said, “Yes, these cattle are costing more money right now, but they will make me more money because the gain is worth more.” It makes sense that dollar for dollar, right now looks to be a good time for stocker cattle investments. There is always risk, perhaps more now than ever, with high price volatility, but nobody can predict the future. Many marketing analysts have demonstrated that the stocker market has been profitable more than 20 years out of the past 25.

When stocker cattle were selling for $85 per cwt, a supplement program costing  ~8 cents per animal per day resulting in 0.25 lbs of additional gain netted a return of 13 cents. Given today’s higher market, assuming cattle at $135 per cwt, the same supplement program that may now cost  ~12 cents per head per day would net a return of 21 cents. Hmmm – I guess what worked back then works even better now? The total dollar return per head is better today, thanks to higher valued cattle. Supplementation still works and is even better now. 

With feedlot cost of gain at or near record highs, it makes sense to add as much gain as possible on lower cost pasture grazing programs. Thus, there seems to be a lot more interest in the traditional yearling or stocker cattle market. Some areas of the U.S. are dry and some are wet but nevertheless, those areas with grass available should provide a good stocker cattle opportunity.

It’s probably not news that hay prices are climbing in many areas due to several factors (high demand, drought in the southern plains, and supply). With high cereal grain prices, hay and pasture supplies are not likely to increase anytime soon.  In fact, pasture rental rates are under upward pressure as well.

A good supplement program not only improves gain performance but can do so without adding any significant cost of gain on pasture. Assuming pasture rental rates at roughly $20 per animal per month (highly variable depending on locale and grass type for stocker cattle) with an average daily gain of 2 lbs without a supplement, cost of gain on pasture would be ~ 33 cents per pound. By adding 12 cents per day in supplement cost and achieving 2.25 lbs of daily gain, the cost of gain changes only to ~ 35 cents. With even higher pasture rents (or lower baseline gain performance), the spread narrows and actually becomes positive.

Yes, the investment paid for stocker programs is a large one. I often wonder if lenders and borrowers overlook the additional income a good stocker supplement program can provide. After all, the additional dollars needed to purchase supplement is a real cost, but the return on those dollars is money well spent – even better spent in today’s market!