The reduced cow herd and strong demand for fewer calves creates an optimistic outlook for the cow calf producer for the next several years. This is if you have both forage and cows. The drought in the Southwest is making it tough to maintain cow numbers in that region. One would assume the Southeast and Midwest would grow their cow numbers. However, the lack of affordable pasture is making that decision difficult. Using a dry lot feeding program for part of the year is a viable option; however, making the assumption that expensive feeding equipment is necessary can greatly reduce the income potential. The investment of tractors, feeder wagons and feed bins has to be paid for by pounds of beef sold.  

An advantage of a pasture-based system is the ability to produce marketable beef without a large investment in tractors, fuel and specialized feeding equipment. In areas where pasture has been converted to row crops some producers are making a modified dry lot feeding program work. Some of those farms are feeding free choice hay with some silage and self-fed supplements while others are feeding total mixed rations. Depreciation is often the largest expense for a beef cow-calf operation. The equipment depreciation, fuel cost and labor cost must be accounted for in a dry lot feeding program.   Most economic evaluations of cow-calf ranches are for a pasture based system. Stan Bevers of Texas AgriLive Extension Service has published benchmark expenses for pasture based ranches. The top expense items are listed in Table 1.  These benchmarks can be used as a point of reference for decision making related to dry lot feeding.  With the potential for sustained high calf prices and increased value of breeding stock over the next 3-4 year period, dry lot feeding may be feasible if the investment in equipment and fuel can be controlled. This system could offer an opportunity for entry into or expansion of the beef cow herd in the Midwest and Southeast.

Table 1:  Operating Expenses of the Cow calf Ranch – adapted from Bevers, 2007

In a dry lot program, rent and lease cost could be reduced while keeping depreciation, labor and fuel cost from increasing significantly.  Items to consider for a successful dry lot program include:

1. Be conservative with equipment investment.
2. Minimize additional labor and fuel cost.
3. Minimize shrink associated with storage and feeding of forages.
4. Utilizing grazing of crop residue.

Let’s look at of these items more closely.  Assumptions for cost will be per cow calf pair. 

1. Can the cost of an additional tractor and mixer wagon be supported?  You must first determine what percent of the equipment will be charged to the cows.  A conservative estimate of $100,000 investment and depreciated over 7 years has depreciation cost listed below.  The percentage is how much of the equipment is charged to the cow herd
   • 100% = $142
   •  50%=$71
   •  25%=$35.

This analysis would suggest a system where free choice feeding of hay/forage that minimizes equipment cost would be most economical.   

2. Labor cost accounted for 15% and fuel accounted for 4.5% of total cost in the Texas data.  A dry lot system will need more labor and fuel than a pasture system.  The time and fuel needed for daily mixing and delivery must be considered if a total mixed ration program is planned.  Each additional hour per day can add up to $36.50 per cow-calf pair, depending on wage and fuel cost. 
3. Forage costs have increased and if hay cost $200/ ton, each 1% shrink (waste and dry matter loss at harvest) will add an additional $2.00 per ton.  We need to consider both shrink at harvest and at feeding.  Extension service estimates of shrink for hay can be as high as 50% under poor conditions and poor management.  Efforts that reduce shrink will result in better returns and less total feed needed. 
4. Grazing crop residue such as corn stocks can be an excellent means of providing economical forage that can reduce dry lot feeding days.  This will have the benefit of lowering stored forage needs, labor and fuel cost.

If the cow herd is to stabilize and eventually expand, I believe that dry lot feeding of the cow herd in conjunction with limited pasture and grazing of crop residue will be implemented successfully in some areas of the country.  Attention to and controlling total feed cost will be necessary if this is to be a viable and profitable option to a traditional pasture based system.  Total feed cost is the combination of the investment in feed, feeding equipment, fuel and labor cost associated with delivering the diet to the animals.  Crystal Clear Economyx^® available on the Crystalyx.com website is a spreadsheet which allows you to evaluate various feeding situations.  Current and future calf prices offer an excellent opportunity to expand your herd or enter the cow calf business.  If pasture availability is an obstacle then a dry lot program may be an option.   Crystalyx^® offers a full line of self-fed supplements that have proven to be convenient, time saving and cost effective in many different feeding programs.  Look at all of your resources available to see if a beef-cow calf operation makes sense for you.