At the KOMA Beef Cattle Conference held recently at the Springfield Livestock Marketing Center, experts explained how beef producers could take a second look at their operations to improve profitability.
Joe Horner, University of Missouri Extension agricultural economist, stated the cost to take care of a cow for a year, including operating and fixed costs as estimated in extension budgets, is $713.52 but can vary widely depending on the operation.
“Labor is probably the hardest thing for us to get right,” Horner said.
He acknowledged though there are economies of scale where costs reduce as an operation get larger, there are also diseconomies of scale, such as increased labor costs with larger cow herds.
The average cattleman most likely does not account for labor costs like economists do in extension budgets, Horner explained, but the goal should be to be competitive rather than average.
Above all, Horner recommended producers take a look at their records, especially around tax time with their Schedule F forms, and analyze them for three to four years to get reliable data on their costs. Also, he also suggested analyzing costs on a pounds-per-calf-sold basis.
According to David Lalman, Oklahoma State University Harrington Chair professor and extension beef cattle specialist, cost explains 63 percent of the variation in profitability among beef operations.
“The industry has really been in a never-ending arms race since 1970,” Lalman said, pointing out the “eras of insanity” where cow size went from one extreme of very small frame to the other of very large cattle. These eras should be a lesson to producers, Lalman said, because it is evidence the industry can and has overdone trends.
“We are in the middle of an era of aggressively selecting for growth in this part of the country,” Lalman said, though other parts of the country are not seeing the same emphasis on growth traits.
“If you just blindly select for performance, you’re going to get bigger cows,” Lalman said.
Eric Bailey, University of Missouri state beef cattle nutrition specialist, also addressed how cow-calf producers can take a look at cow size to identify opportunities to improve their operations.
Bailey asked producers in attendance to consider if, as the genetics and management of their operations have changed over time, they are feeding more hay and more often than they did in the past.
“Cow size is increasing over time,” Bailey emphasized.
“In 1998, the average steer finished at about 1,250 pounds after being fed for 133 days,” he continued. “In 2018, that changed, and you see the cattle they are feeding are about 176 pounds heavier and they were on feed for an additional 31 days.”
He pointed out an old rule-of-thumb is a steer will generally finish at a weight similar to its dam at her mature size. Though the steers are being fed longer, that doesn’t explain all of the change in size.
“Essentially, only about 30 percent of the change in finish weight in cattle over time is due to the number of days on feed,” Bailey said, referencing research data on the subject, “so 70 percent of that change that we show, that 176 pounds, is due to something other than increasing the number of days on feed.”
He attributed genetic selection for carcass merit as part of the reason for changes in finish weights.
“There’s one thing that’s fundamentally different about the beef industry than any other animal protein,” Bailey said, explaining in the hog and poultry business one entity owns the animals over the course of their lives. However, the beef industry sees animals change hands multiple times.
“When we focus on the endpoint — you know, red meat production as a whole — there’s potential for improvements in segments of the industry to the detriment of other segments,” Bailey said. He explained focusing on making the ideal feedlot steer may result in reduced productivity in certain environments. This is a challenge poultry and hog producers don’t face because animals are all raised in similar environments.
“Our cow-calf operations are based in a lot of different production environments, and I wonder if we’ve not considered how selecting for the ideal feedlot animal might have some detriment in some of these forage systems,” Bailey said.
In research conducted at West Texas A&M University, cow size and calf weaning weights were compared, and the data showed calves did not necessarily get bigger as cow size increased — an important consideration because larger cows require additional nutrients and feed.
“We see that the cow-calf business is a pretty low margin deal,” Bailey said, adding he’s sees opportunities to roll back costs when it comes to stored forages.
“In general, for a cow-calf business, about 60 percent of the annual cow costs are wrapped up or rolled in to feed, so efficient feed management really represents an opportunity for us to do better and to cut on costs,” he said, adding there is an imbalance of forage demand and forage supply because stocking rates haven’t been reconsidered as cow size increased.
“We’ve always used acres per cow and the cow is a fixed unit,” Bailey explained. However, there can be a significant difference between the size and nutritional requirements of moderate Angus-Hereford cows and larger continental, SimAngus-type cows.
He emphasized considering the productivity of the female and pointed out lighter cows weaned about half of their body weight while the heavier females weaned about a third. In the data he presented, a 33 percent increase in cow weight only resulted in about a 7 percent increase in calf weaning weight.
By reducing cow size, producers can run a greater number of more moderate cows which should result in more pounds weaned, he said. In other words, producers can generate more revenue from more moderate cows.
He also pointed out the beef industry has the tools to increase growth in the feedyard so it doesn’t have to rely solely on genetics at the cow-calf level.
Moving forward, Bailey suggested producers match cow size and milk production to their forage bases by selecting for moderate cattle and tightening up breeding seasons. He also recommended culling heavily for two to three years and remembering the power of heterosis.
“There is opportunity now to select and breed for curve benders,” Lalman said, adding it has been done for a long time with bulls but it can be done with cows, too. The trick is to select for cattle that are below breed average for cow size but are above average for growth and yearling weight.
“We can create cows that are less expensive but have outstanding post-weaning performance,” Lalman said.
“I think we need to see some downward pressure on cow size,” he concluded.