There is no doubt that in nearly every aspect of life, change is inevitable. You don’t have to look too hard to find examples of this in everyday life. Changes such as automated steering in farm equipment, self-driving cars, the home delivery of meal kits, “smart” phones, DNA tests in humans and animals to identify genetic traits and defects, Facebook, and YouTube are a few of the changes that have impacted countless lives since the turn of the century. These changes remind me of the phrase that goes “Not all change is progress but progress is certainly change!”
The cow-calf sector of the beef industry is currently undergoing significant change. In a period of less than five years, the herd will grow from a historic low of 29 million cows in 2014 to an expected 32 million cows by the beginning of 2018. It appears that the bulk of herd expansion has already occurred and numbers will stabilize somewhat for the short to intermediate term. However, the fact remains that the nation’s larger cowherd is going to produce a larger calf crop. We are seeing the time-tested laws of supply and demand kick in as prices of all classes of cattle have moderated from the record highs of 2014 and 2015.
What can the cow-calf producer do to combat the reality of downward price trends that we will likely experience? Are you going to be willing to change your business model or will you continue to do things the way you always have and hope for a positive result? What can the producer do to maintain and potentially expand their access to markets in the future?
Producers need to be willing to implement practices that can add value to their calf crop. The market is currently sending a clear message that buyers are demanding more for their purchasing dollars. Significant discounts are occurring in the market place for feeder calves that are not weaned 45-60 days, castrated & healed, dehorned, and given 2 rounds of a modified live vaccine for the shipping fever complex. In 2019, a major restaurant chain is going to start requiring their suppliers to be Beef Quality Assurance certified. This will in turn be pushed down to the producer level. Exports to China and other countries are going to require age and source verification. These are growing realities for cow-calf producers if they want access to as many markets as possible.
One of the most highly debated subjects in the industry relates to weaning management of calves. Do you sell your calves straight off the cow or do you implement some type of weaning and preconditioning program? The common excuses given for not weaning prior to sale include a lack of facilities, a lack of time, or the belief that the seller does not get paid for the extra expense of weaning and preconditioning programs. While these reasons may have had some validity in the past, buyers today are less willing to take the risk of buying higher stress cattle with little or no health and management history. They may be willing to buy a “bawling” calf at the weekly auction but it will be at a discounted price.
Consider utilizing one of the VAC-45 type programs where calves are weaned for at least 45 days, bunk broke, and follow a recommended vaccination program. These calves should be identified with a traceable ear tag for source and age verification programs. Also don’t overlook the basic management practices of castration, dehorning, and parasite control. The producer that is willing to implement these various management strategies will be on their way to becoming a source of “reputation” feeder cattle.
Even purebred beef cattle associations are taking measures to help add value or identify quality differences in feeder cattle. Several major breeds are promoting a variety of programs targeted at identifying value differences amongst feeder cattle and providing source verification information for producers who purchase bulls from their respective breeds. This information will hopefully add value to the bull customer’s calves in the eyes of feeder calf purchasers.
If you have a smaller number of calves, marketing can be very challenging. Large feedlots in the Midwest like to purchase similar color, weight and sex in semi-load lots of approximately 48,000 lbs. They won’t be buying 5-10 head at a time if at all possible. If you aren’t already, I suggest that you visit with your local livestock marketing agent to provide them with all the information and history on your calves. Work with any other local producers with similar genetics and management to market larger groups of calves. Seek out any feedlots in your area to try any direct marketing options.
If I haven’t convinced you that there are significant changes coming in feeder calf marketing, please ponder the following hypothetical situation. If you (the commercial cow-calf operator) suddenly became a feedlot operator, would you expose your enterprise to greater financial risk by purchasing feeder calves that were not weaned, not vaccinated, and with no other genetic or management history? Feeder calves selling for $750 – $1,000 per head become very expensive when they find their way to a sick pen or become death loss.
Cow-calf producers are facing new economic realities in the immediate future. The producers that will be successful in the long-term must be willing to change their management practices as dictated by the current economy. Those unwilling to do so face an uphill battle to stay viable in the beef industry.
Source: Ohio Beef Cattle Letter