Beef Cow Management: Keeping Up with the Change

By John Paterson, Extension Beef Specialist, Montana State University, Bozeman

Introduction

The immediate issues facing the cow calf producer in the Northern Great Plains during the Spring of 2002 were rapid changes in the way feeder cattle are being marketed, much lower than expected cash markets with increasing costs of production and four years of drought which has resulted in reduced forage availability and caused either herd reductions and (or) alternative methods of feeding cows, calves and replacement heifers. The aim of this paper is to focus on several of these issues and attempt to provide practical options for dealing with them.

The Current Beef Industry:

Dr. Larry Corah, Vice President of Supply Development for Certified Angus Beef was asked what he thought are the challenges for the beef industry.  He replied that in the future we will continue to emphasize safeguarding the quantity and quality of food produced for the consumer and the "new" agriculture of the 21st century will focus on at least five issues (Table 1).

Table 1. Challenges for the Beef Industry in the 21st Century (from  Beohlje et. al., 1999 as cited by Corah, 2002)

Taylor Brown, President of Northern Broadcasting System was recently quoted as saying that, "Agriculture will not return to traditional production methods of the past; get over it."

What are the expectations between the feedlot manager and the feeder calf producer with regard to calf value?

If there is to be a successful relationship between the feedlot sector and the cow/calf sector, then the expectations between both parties must include those presented in the following table (Table 2).

Table 2. Expectations of the Feedlot Operator of the Cow/calf Producer and Expectations of the Cow/calf Producer of the Feedlot Operator (Boehlje et al., 1999 as cited by Corah, 2002).

Profitability

Among the factors which have influenced the profitability of the cow/calf producer are 1) the yearly feed and non-feed costs of maintaining a cow, 2) the number of cows exposed to the bull that wean a calf, 3) the weaning weight of calves and  4) the price received for calves and cull cows (Rasby and Rush, 1996). Unlike the swine and poultry industries, the beef industry in the Northern Great Plains is dynamic and ever changing because of arid environments and the effects of unpredictable precipitation on forage quantity and quality. The Northern Great Plains ranch is usually described as extensive in nature and optimal livestock production is a function of the forage resources each ranch has available and how successfully the manager can match the nutritional needs of the cowherd to the available forage (Del Curto et al., 2000).  It appears that successful producers are able to demonstrate a balance between input costs for the cowherd and production of feeder calves.

Dr. R.J. Lipsey, CEO of American Simmental Association suggested that ranchers desire a cow herd with 1) low production costs (or at least controlled costs), 2) reasonable performance (minimal dystocia but explosive growth of calves), 3) cull cows with value, and 4) market demand for the calves (top of market and/or everybody wants your calves).

In 1985 the average US rancher spent $267 (USD) a year to maintain each cow in his herd.  By 1995 cash costs increased to $322 per cow and could reach $357 by 2002.  This expense places today's cash costs fully $90/cow higher than 15 years ago (up 34%; Brink, 2001).  In 1985 the breakeven cost for a 450 lb weaned calf was estimated to be $.67/lb compared with $.90/lb for that same 450 lb weaned calf in 2001.  Duane Griffith from Montana State University has tracked 60 Montana ranches for the past decade to determine costs of production and profitability.  Table 3, shows the differences between the top and bottom 25% of producers from this database.

Table 3. Comparison of Total Costs Per Cow Per Year, Breakeven Calf Costs and Net Income for Montana Ranches ^a

 ^a Data  provided by D. Griffith, MSU Department of Ag Economics and Economics

These data indicate that the top 25% of ranches could produce a calf for approximately $.50/lb while the bottom 25% of the ranches required $1.13/lb to produce a calf.  Expressed another way, the top 25% of ranches were making a profit with their calves ($135/cow) compared with a significant loss for the bottom 25% of ranches (-$223/cow). 

How is the money spent in maintaining a cow?  The following table presents a generalized accounting for yearly cash expenses.

Table 4. Generalized Cash Expenses for Maintaining a Beef Cow

Expense	Cost/year
Forage	$125		59% of total
Additional feed	$86
Veterinary/medical	$17
Labor	$29
Interest	$21
Other Costs	$77
Total cow costs	$356

The largest expenses were for feed (59 % of total).   Brink (2001) believes that operating a profitable cowherd breaks down into following three basic rules:

• Rule 1. Hold your annual cow-carrying costs to $300 per cow (cash expenses) or less,

• Rule 2. Keep your calf-crop weaned calf-crop percentage at 88% of exposed cows or higher,

• Rule 3. Wean calves that are average or above for weaning weight (at least 475 lbs).

Return to regular view	Text-only	Updated: 08/29/2006