Beef Market Advisor

Thursday, May 03, 2001

The Econoics Of Culling Cows The Summary From My Lastest Paper Drafted

Managers of the high profit IRM herds taught me that the key to herd profits is how they market the females in the herd. Certainly, marketing cull cows is an important component of any high profit herd. Three primary economic factors impacting cull cow profits are 1) why are the cows being culled, 2) how are the cull cows being marketed and 3) what counter cyclical culling strategies are being used.

CHAPS herd performance records suggest that producers are culling around 16 percent of their cows annually. The largest culling reason is for open/fertility problems at 36 percent of all cows culled. The data indicates that in most high production herds, most cows are culled before they reach “old age.”

Today, the long-run trend in cull cow prices is upward and price is projected to trend upward through 2003. When cull cow prices are trending upward, optimum cull cow marketing strategy has to consider the feeding of cull cows to capitalize on next winters projected higher cull cow prices. Using the same cull cow marketing strategies over the total 10 year cattle cycle appears to be sub-optimal.

Cull cow prices tend to reach their annual low in the month of November when the most cull cows are sold. Data suggests that cull cow prices increase 9 to 15 percent as market grade increases. Feedlot research suggests that most cull cows can be upgraded one grade by feeding. Budgets suggested that a profit of $71 existed for feeding fall 2000 cull cows.

Counter cyclical culling strategies have consider wealth generating potential. Some high-profit IRM Cooperators have demonstrated that wealth generation can come from changing to cow culling strategies that take advantage of the cattle cycle. The management challenge, however, is to have the IRM herd performance records and economic analysis to know which cows in the herd are making money and which cows in the herd are losing money.

posted by Dr. Harlan Hughes 2:08 PM [edit]

Sunday, April 29, 2001

Visit to Southeastern Manitoba’s Value-Added Agriculture In Action

This last Thursday I had a real opportunity to spend the afternoon touring a grass cattle farm in Southeastern Manitoba. The Manitoba Agriculture Regional Livestock Specialist and Manitoba Forage Specialist toured with me.

Besides it being one of those perfect spring days around 75 degrees and no wind, it was a chance to see a region investing in value-added agriculture first hand.

This region had been cleared of trees in the 1950s and 1960s and farmers. The soil, however, was poor and did not support farming very well. Today, most of this land has been put back to native or seeded grassland and is being used to graze cattle. Population in this region is sparse.

Large hog barns are going up in the area and the liquid manure is being spread and consumed on grass land grazed by yearling steers. It was neat have this grass farmer take us around the country looking at the integration of swine production and cattle into a coordinated environmentally sound system. We saw highly fertilized grass land just starting to green up. In fact, the fertilized pastures were greener than the non-fertilized pastures.

Our tour guide was in the business of running the yearling grassers. He purchases steer and heifer calves starting in Feb and Mar and backgrounds them until grass turnout. He does this to reduce the cost of his grasser cattle. He then runs them on fertilized pastures as grasser until fall marketing time. These grassers consume the fertilized grass, which in turn, consumes the nutrients from the liquid hog manure spread on the pastures.

Environmental laws of Manitoba require a minimum amount of land per hog facility to ensure that the manure is spread out properly. This grass farmer contracts with the various hog producers to provide the acreage needed to spread the liquid manure. The hog producers pump the liquid manure through large drag lines to machines that travel across the pasture land spreading the fertilizer. He indicated that they can pump that liquid up to five miles from the source.

Being from North Dakota and another low densely populated area, I was asked why we did not have this kind of integrated economic investing going on in North Dakota. I had to respond that the North Dakota Laws would not allow this kind of economic investing. You should have seen the puzzled look on these Canadians' faces.

My job now is to work with Manitoba Agriculture Representatives in conducting an economic analysis of this integrated livestock production system.

While on this trip I also picked up some IRM (Integrated Resource Management) Beef Cow Herds to analyze. The grand plan is to take a systems look at beef cattle production systems in Manitoba and report on my findings at a series of Winter Education Seminars around the Province in January 2002.

I would have to say that this was one my most enjoyable days in a long time.

While data confidentiality precludes my reporting any private data here, general observations and generalized economic analyses will be presented here. I can, however, share the analytical tools (and the Northern Plains comparative data) that I will use in conducting this economic analysis of Manitoba’s beef cattle industry. My goal in sharing this Northern Plains data will be to stimulate U.S. and Canadian ranchers to consider conducting similar Cost & Return Studies on their ranches. The payoff now that calf prices are high can be substantial.

posted by Dr. Harlan Hughes 3:19 PM [edit]

This page is powered by Blogger, the easy way to update your web site.