How BSE affected cattle marketings

[cowman]

If the average weaning percentage is 88% then some people must be weaning a lot less? So many people suggest they got 100% calf crop...nary an open cow...in fact many say they got more than 100%!
Now after hearing that sort of thing quite often, I wonder where all these real losers are hiding out? They must be calving down in that 60% range!
Is it possible to survive calving 60%? They must have one hell of a good job?
If we say it costs $200/year winter feed and bedding, $150 grazing, $30/breeding, $20 salt and vet, $35/replacement, $50/cow interest, $50 labor, $15/misc., we have $550 in that calf? That doesn't take into account things like machinery costs or fuel, taxes, etc.
So if we get $650/calf we have a gross of $65,000, a cost of $55,000 for a net of $10,000? However if we only wean an 88% calf crop we have a gross of $57,200, but our costs still stay at $55,000 for a net of $2,200!
At 65% calf crop our gross is $42,250, cost still at $55,000 for a net LOSS of $12,750! I don't know why anyone would want to lose money, but obviously some must be?
Of course you are making money on your grassland and your crop/hay land...well maybe? Depends how much your inputs and machinery costs are? Not so sure about the land appreciation thing...in Alberta I think so but I talked recently to a newly arrived business man in Red Deer who sold his Sask. farm land...got less for it than he paid in 1980!
If you want to get the results Seans guy suggests, I agree you have to do things a whole lot different and that probably means moving up the food chain? In reality a lot of people have pretty well taken the cost side about as low as possible? Not much room to squeeze another nickel out of costs? The fact is with $1/liter gas and $150,000 tractors we need to get a better price for our product?
The way the system works is you must now become a feeder,packer, and yes retailer if you want to get a respectable price for your product. And for the majority of beef producers that just isn't going to happen?

[cowman]

One other thing...kpb: I suspect you and fellow feeders will do very well on feeders you bought last fall...if you still have them?
Last fall calves were very cheap in October, and feed was very cheap? Lots of heifer calves in that 500 lb. range got down into the high eighties? Even at 90 cents the price was around $450? Now take a maitenance ration at around 70 cents a day and you probably came to grass with maybe $600 in them? Three months grass at $20 and you come up with $660? What is a 950 lb. heifer selling for today?
Last fall you stated it very well...that you were pretty sure you could turn a profit on feeder cattle! Obviously you were right.
We should never be afraid to admit we did well!

[cowman]

I think that every producer should aim for 100% calving and weaning, but perhaps can settle for 95%. Anything less than that certainly does not bode well for the viability of the operation or say much for management practices.

As input costs continue to rise, those cows are going to have to produce and be fairly easy keepers to make any sort of bottom line.

Feed will be fairly reasonable this fall, and if the calf prices are better than last year at least there may be a chance for some producers to get back on track. Depending on how much of the BSE money they have to return !!!

[grassfarmer]

Cowman "So many people suggest they got 100% calf crop" - suggest being the operative word. This figure is calved weaned per 100 cows exposed not per 100 cows on farm at start of calving or at weaning. I suspect in truth most producers don't keep good enough records to know where they are. The difficulties many had providing simple inventory numbers for CAIS proves that.
In my experience a 100% weaning figure would be very hard to attain. We had many, many years in Scotland where we didn't hit 90% and it is only since moving here and learning an awful lot that I have been able to raise these higher. To reach 95% weaned you need to have excellent grass for conception, no scours - period, some twins and a touch of good luck. I don't think people weaning 60-80% are slackers or unfit to keep cows they are just poorer managers. It is very easy to get things wrong with cows - a bad scour outbreak can certainly reduce percentages. When you learn that if you give a cow every chance to be a cow it gets easier. Winter calving, continuous grazing,unsuitable bulls, confinement feeding, extended breeding seasons are not things a cow does naturally.

[pandiana]

grassfarmer, your statement "This figure is calved weaned per 100 cows exposed not per 100 cows on farm at start of calving or at weaning." illustrates the importance of defining the measurement. The figure "is" whatever parameter you are trying to measure. Harlan Hughes, in the same Cattlemen issue, uses several different formulas including calves per cow exposed, calving percentage per cows in inventory on January 1st. 100% calving can also mean that there was not a net loss of calves to dystocia, which is a valid measurement if it is defined as such. He also uses the formula lbs weaned per female exposed which I think is a good measure of productivity.

I am in agreement with most observations that an 88% loss to weaning would appear too high even measuring calves per cow exposed. This is one area where we have some control on out bottom line whereas increases in input costs, such as we are seeing with fuel prices, are well beyond our control. Without a doubt, I will have trouble matching Hughes feed cost benchmark of $27.25/month/cow, as in my area, summer pasture alone is valued at $30.00 per month.

[kpb]

cowman, I kept some of the heifers I bought last fall and they are on grass. The ones that were stretchy at Christmas I started feeding harder and sold them in the spring before the border opened. They did Ok.

I replaced them with light steers and they are also on grass. I should do fine on the remaining heifers that are now heavy on grass and the new steers, which with the good grass up north have gained about 300 to 350 lbs., will be very good. I'm starting to think it's better to be lucky than good when it comes to buying calves.

Along these lines I'd like to hear what you guys think about buying calves to backgrounding or retaining your own calves to background this fall. It seems a little slim to me given the price for the lights. Just don't think there's much advantage to backgrounding at this point.

kpb

[pandiana]

As usual, cowman, I appreciate your mathmatical anyalsis of the cost of production. It is very clear from the government statistics out there, as well as the "Easter Report", that a negative position is just where the 'average' primary producer finds themselves, hence requiring off farm income and supplements to survive.

I agree with you, to survive the primary producer most move up the production chain in order to hedge their losses (and risks) over a broader market.

Somewhere I read a phrase that price (value) follows the line of least resistance and are, therefore, borne by the primary producer. This term 'least resistance' has stuck in my minds since. Another indicator that the producer will continue to wait for next year for the market to suddenly become profitable for more than just the projected 5% who will earn $150,000.

[cowman]

kpb: It is too early to tell just how good backgrounding might be? If this crop comes off we are in all probability going to be awash in a sea of cheap grain? If it freezes we might have a major wreck on our hands although frozen grain can work, but it is more tricky than quality grain?
The other thing that might cause some people to be cautious is where we have been? We know how fickle the American government can be and how they can be influenced by protectionists? We all took a pretty good beating from the radical group R-CALF? Who knows what crazy things they might do to try to destroy the cattle business?
Personally I would be optomistic. Buy them right. Buy your feed right. Do your homework right, and I suspect you will probably do okay? Hey and besides you probably don't really have a lot of choice here? It's either take a chance or pay the taxman! It's a wicked little cycle we get in?

[pandiana]

I am interested in the disussion on preconditioning calves, and more importantly, getting paid for it.
kbp says" Grassfarmer, the reason, in my mind, that pre-conditioned calves do not get a premium is because, in the past, calves were marketed as pre-conditioned that were not. So how about this--I'll pay more for pre-conditioned calves if the cow-calf producer gives me a money back guarantee of no death loss for the first, say, 6 weeks I own the calf?"

So my first question is, How much premium would be generated for preconditioned calves. We vaccinate in the spring Starvac 4 $1.81, Somnustar PH $3.30, 8Way $.55 total 5.66. We boost Starvac and Somnustar in the fall for $5.11. We used Megamectin $3.10. All totalled $13.87 per calf. Add RFID tags $3.00. This does not include cost of handling these calves, etc.
I understand your proposition, sort of put your money where your mouth is...but not only are we expending the extra bucks but you are also asking us to accept the risks if you have a death loss, which as grassfarmer points out, could be totally unrelated to infections. In addition, vaccination is not guaranteed to prevent disease per se but only protect or mitigate the course of the disease. Serious challenge from stress due to weather or handling or dose-dependent contact with other sick animals could potentially overide any protection from vaccination. Possibly, you proposition would work if you were willing to accept a portin of the risk?

[pandiana]

cowman did you get frost last night ? My son works at the Joffre plant and he thought there had been frost down in that area. That will have a lot of bearing on the quality of the crop depending on what stage it is in won't it ?

[grassfarmer]

I think to an extent this preconditioning debate is yesterday's news anyway - just look at the thousands of calves advertised in the Pfizer Gold program alone. Producers are increasingly preconditioning more calves and feedlots are buying them. Many feedlot buyers are quoted as saying they wouldn't buy anything else so at least some of them believe in the program. I equally know some top feedlots that agree with kpb - they buy on price and can handle calves of any size and health status - I would suggest that is a profit opportunity for these feedlots and a profit lost opportunity for the calf producer.
I think there maybe is a price transparancy issue when it comes to working out what, if any, premiums are being paid. Do preconditioned calves make more because they are preconditioned or because the producer that practises this maybe is inclined to have better calves/management anyway?

This is also relevant to the initial post here about Harlan Hughes survey - the figures he shows for Manitoba herds were from herds that were recording their data - by implication I would expect recorded herds would have better results than the non-recorded herds. Maybe 88% calves weaned per 100 cows exposed is quite a bit higher than the overall Manitoba average? How many guys that are making a poor job and getting wrecks all the time will provide their production information?

[kpb]

pandiana, thx for your comments--I appreciate your concerns about my money back guarantee proposal. But I would point out that the reason I will not pay up for pre-conditioned calves is because some cow-calf guys continue to market calves that are, in fact, not pre-conditioned as treated animals. Because of this I have to treat every animal that I bring in as if it had no pre-conditioning and, therefore, I will not pay up for calves that I do not know what their past is.

In addition I would like to point out that backgrounders also assume a risk on the animal, pre-conditioned or not, because they do not generally know where the animal came from. If the cow-calf operator is a rough handler, those calves can be a nightmare to handle for a long time. And since the backgrounder is in the position of customer and the calf producer is the one that wants to sell the calf, I think that the cow-calf producer should be the one that provides the guarantee that the calves are, in fact, pre-condtioned.

kpb

[pandiana]

When you buy calves, kbp, that may not been vaccinated, and then throw the whole 9 yards at them, do you really expect that you are getting protection for those calves during this, the most stressful period of a calves life. It normally takes several weeks before the immune system responds to a vaccine challenge enough that they will recognize a pathogen and 'effective' immunity is usually not attainted until a second challenge or boost is given.

As a buyer, I would think the onus would be on you to search out 'reputation' sellers to give you the kind of cattle that will provide you with a risk you can live with. Under your scenario, the no frills producer's risk is zero when his calves are sold. The risk is all yours. In addition the seller could save as much as $13.87 per calf right off the top. On the other hand, right now, I would be paying $13.87 to lower your risk for no compensation. What kind of documentation do you require to confirm the calves are preconditioned?

[kpb]

pandiana, first of all I do not throw "the whole nine yards at them" as you put it when the calves arrive at my lot. My protocol is to get them eating and drinking as quickly as possible when they arrive, make them feel comfortable and quiet for a few days with no treatment at all. So the drug treatments usually don't start until the calves start to look a little under the weather. As someone once said "you can't make a well calf weller" so there's no sense in my book in treating something that does not get sick. My own calves, that I background off my own cows, are rarely treated with any drugs and I rarely lose any of them.

I'm not sure why you're defensive about selling pre-conditioned calves. If you are so confident in your treatment procedures then I see no reason why you wouldn't want to provide a money back guarantee for some period of time. What have you got to lose? A cattle feeder is unlikely to pay the trucking bills and so-called pre-conditioned premium to buy your calves and then kill them at his place.

As long as there are lots of guys out there who have weaned their calves last week, then shipped them to a pre-conditioned sale the following week to get mixed with a bunch of other calves and then sold as pre-conditioned, I and most other backgrounders will not pay a premium for them. We have no confidence in the system. It's pretty straightforward, pandiana, I can't afford to not treat these calves at some point because they are going to get sick and die if I don't so I'm not going to pay you extra for them. I am the customer and and as long as the sellers provide a commodity that cannot be trusted, I guess I'll buy on price and appearance not what somebody I don't know tells me is true. That may be hard news to you but I don't see it changing as long as some people try to twist the system. There's only one way I'd buy them and you, for some reason that escapes me, will not accept it. You lack faith in my ability to feed the calves properly--I lack trust in you treating the calves the way you said you did. So there's the impasse--but the difference between us is that you are trying to get me to buy something that is yours whereas I have lots of other choices.

kpb

[grassfarmer]

Fear not Pandiana, there are feedlots that are prepared to pay for preconditioned calves. Let kpb buy market calves and treat them as raw, weaned calves - that works for many feedlots as he says. I still think that the producers of many of the better calves will be selling preconditioned ones so we can all be happy.