There is some apprehension about when the market will correct itself and who will be caught with expensive feeder calves. We should enjoy high feeder calf prices for a while given current market conditions. That said, the market will correct itself. When and how much are the real questions?
The concern is not only for the backgrounder and feed lot. Cow calf producers should have a long term mind set on which heifers to keep as replacements. Little mistakes can cost so much. Calve early and calve often is a pretty good motto. It is well recognized that calving heifers early helps keep them in the herd longer. Heifers that calve in the first 21 days of a calving season are more likely to remain in the herd and produce significantly more pounds of beef (2 calves) in her lifetime compared to later calving heifers. Actually we need to look back at the fetal history of the heifer. How was her mother fed? The plane of nutrition, specifically protein status, of the pregnant cow will impact the reproductive performance of the calf she is carrying. Heifers that were born to cows which had supplemental protein during early and mid-gestation had higher pregnancy rates and calved earlier in the calving season compared to heifers who’s dams did not receive supplemental protein. The table below is from a recent Beefmagazine.com post that summarized data from Rick Funston who is a University of Nebraska-Lincoln beef reproduction physiologist.
Table 1. Time of calving affects heifer progeny.
Replacement costs are at all-time highs for bred heifers and pregnant cows. The average price for a bred heifer at the Show Me Select Heifer sales has increased from $1,670 in 2011 to $2,550 in 2014. There are a couple sales yet to be held in November and December that will most likely push the average considerably higher.
If we think about the cow as a depreciable asset it demonstrates the significance of longevity and reproduction. Table 2 has several scenarios for looking at long term replacement cost. Scenario A considers cow death loss. Comparing scenario B and C shows the impact of the prices paid for the breeding female. The market is so strong that a bred female at $2,000 is considered a bargain. Scenario C could also be the opportunity value of home raised heifers on forage based development program. Let’s assume a salvage value of $1,200 realizing that this can and will change. Dollar values under the 1, 3, 5 and 9 columns for number of calves are the depreciation charges for each calf. The importance of having as many calves as possible is pretty clear. This example does not consider annual maintenance cost such as feed, land and taxes. If we assume a maintenance cost of $600, Cow A with 5 calves would need $2.18/lb. for a 550 lb. calf in 2019 to “break even”. If we only get 3 calves, she would need $2.91/lb. for a 550 lb. calf in 2017 to “break even”. Regardless of the scenario, we cannot afford to have just 1 or 2 calves during the cow’s productive life.
Table 2. Depreciation Charge per Calf – Impact of Number of Calves Born per Cow.
How can you impact these numbers on your operation? First and foremost is animal health. A solid nutrition and veterinary program is a must in today’s economy. Second is the need to focus on body condition and plane of nutrition which will impact reproduction. Third is the need to give extra consideration to heifer selection. Pick heifers from cows that were on a high plane of nutrition during gestation. Pick heifers that were born early and only keep heifers that become pregnant on the first or second service. A final item is keeping your heifer development program forage based and low cost.
CRYSTALYX® Brand Self Fed Supplements offers a wide variety of products that help meet the nutrition needs of your herd by maximizing forage utilization in an easy to use, time and labor saving program. With current cattle prices it may seem too easy to make money but it is too easy to lose a bunch of money with $1,700 calves and $2,500 bred heifers. A good nutrition program is actually a much better investment today than ever before and a relatively small investment relative to current calf prices.