The perfect storm

Author: Kristy

Laura Mushrush, Assistant Editor, Drovers CattleNetwork  |  Updated: 08/14/2014

Record-setting cattle prices, a projected bumper grain crop on the horizon, moderation in grain prices — for cattle producers, the opportunity to fully maximize profits has finally arrived.

“In all the years I’ve been doing this, I’ve never seen a more perfect storm brewing for huge profitably,” says director of MFA Health Track operations Mike John. “With the cattle supply shortage combined with the feed-cost situation, I think we’ve got a real opportunity to add to our bottom line, building equity in our operations without having to invest in anymore overhead.”

For cow-calf producers, a simple preconditioning program can yield substantial returns on their investment. While there are multiple programs producers can choose to fit their program, building immunity in a calf before it is weaned is essential. According to John, taking care of booster vaccinations, castrations, dehorning and similar practices while the calf is still on the cow greatly reduces stress inflicted on the calf.

“Giving rounds of vaccinations when calves are still on the cow drastically reduces the stress they’re under when you’re trying to build their immunity before weaning. Also, teaching them to eat from a bunk and drink from a water tank is important,” John says. “When it’s time to wean the calves, it will be an incredibly painless operation since they already know how to eat from a bunk, and they’re less likely to get sick.”

With 25 years of experience under his belt in preconditioning programs, John has seen a vast array of tactics used in different environments. According to him, producers who take care of all vaccinations prior to weaning on the home ranch before selling the calf bring an optimal calf to the market — typically with a sickness pull rate of around 0.3 percent.

On the other end of the scale, producers who don’t start the vaccination process until the day of weaning are choosing the most stressful point in a calf’s life to start building its immunity and can expect to see a 5 percent sick rate post weaning.

“Both of those strategies, however, drastically reduce health problems when compared to the normal process of pulling a bunch of naive calves together and trying to keep them healthy when they’re weaned. I’ve seen 20 to 30 percent pull rates in that scenario and 5 percent death loss,” he says. “This is typically people who buy bawling calves from a bunch of different sources and put them together. Those are very costly processes to build a group of feeder cattle.”

And while John says there is a market for higher risk calves, livestock marketed under a healthcare program brings cow-calf producers a higher premium — significant enough to make it worth their time.

“You can count on the cost of gain today being 60 cents to 80 cents a pound, which would include the processing costs of the vaccination and deworming of $10 to $15 a head. If a high-efficiency starter feed is used, you can see conversions as low as 3.5 to 4 pounds of feed to 1 pound of gain. These types of feed will be in the 70 cents-per-pound range in today’s pricing,” he explains. “If you look at a $15-per-hundredweight spread — in other words, a $15 difference in every 100 pounds you add with the 70 cent cost of gain — you can literally be looking at almost $200-per-head net profit on 150 pound gain. This fall, those price spreads will narrow considerably as well.”

On top of bringing in great returns on minimum vaccination and processing costs, calves that are put through a preconditioning program prior to weaning and are also weaned 45 days prior to shipping suffer significantly less shrink on sale day.

“If cattle aren’t bawling the day they’re sold, they’ll have a drink of water and be more likely to eat when they go to the auction market,” John says. “A preconditioned and weaned calf will have less than half the shrink a bawling calf will. When you’re looking at $2.30 to even $3 a pound, every ounce of shrink that you suffer in this market is horrendous.”

According to John, cow-calf producers who feel their facilities are inadequate to handle weaning on the home ranch should look for a method that works for their ranch because of the cost benefits involved.

“There are as many different ways as there are operations — from anti-nursing devices to fenceline techniques and everything in between,” John says. “Somebody is going to wean those calves, and I think the person who does it and creates their health has the ability to create record-high profit right now.”

Posted in In The Industry |

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