In response to high input prices
By Alfredo DiCostanzo
Drought created a situation of low pasture, forage and grain yield. In some cases, partial or complete herd dispersals occurred in the Great Plains states to cope with this situation. Concurrently, the persistence of low beef cattle prices until recently led to beef cow liquidations which reduced the beef cow herd prior to the drought. This will ease some of the pressure on feed and forage supply.
During previous droughts, producers and their consulting veterinarians or nutritionists, looked for alternative feedstuffs to supplement or make up the shortage in feeds harvested on their operations. This time, other inputs, including those derived from petroleum, are expensive. Considerations for conserving fuel while satisfying nutrient needs of crops and livestock are new to farming and ranching operators.
Feeds (or mixed diets) that require extensive preparation time (loading, grinding, mixing and delivering) will create additional feeding costs not generally considered in least cost ration formulation. Diesel price at $4.50/gallon and fuel use of 4 gallons/hour determine hourly cost of using a tractor to prepare and deliver feed at $18/hour. For an operation spending one hour to feed a group of 50 cattle under these conditions, the daily fuel cost alone would be $0.36/cow. Grouping cows or growing cattle in larger groups to maximize feed delivery over groups to feed is an additional consideration under current economic conditions.
Targeting cattle healthFeeder calf, procurement, and transportation costs are from $1,200 to $1,300 per head for a 550-lb calf. At these costs, for every 100 head, a single mortality percentage costs the lot $13/head. At this weight, respiratory disease treatment costs range from $15 to $20/head. Therefore, a single incidence of respiratory morbidity in a 100-head lot adds $0.15 to $0.20/head to the lot cost.
These considerations are appropriate for the cow-calf operator as well. Preserving calf health from conception to sale date (weaning or after backgrounding) is the only way a cow-calf enterprise can capitalize on better calf prices.
Implications of morbidity or mortality on finishing cost are greater as cattle grow. Because of high fuel and feed costs, each day on feed will cost from $2.30 to $3.00/head. With these feed and yardage costs, a single mortality in 100 head at day 21 on feed will bring the cost of the lot to $14/head. Similarly, morbidity increases of 10 percentage units, with $20 to $30/head treatment cost, drives cost of a 100-head lot $2.50/head.
Because costs of filling a pen with cattle increased and fed cattle prices, though increasing, are slow to respond, temptation to keep cattle on feed longer will creep in.
Choosing to keep cattle on feed longer will dictate that personnel continue to be vigilant of health issues; cumulative feeding costs reaching $500/head or more will make a late-season death cost over $1,800 ($18/head) or more. Late-season illness is usually sudden and with little symptoms.
When the prospects for net profit are positive but not large, even low incidence of morbidity and mortality eats away at profit rapidly. Therefore, with high feeder cattle, feed and fuel prices, our attention must be placed on managing and watching cattle to preserve their health and well-being.
This is the time to schedule a visit by the consulting veterinarian. Veterinarians are regularly updated on pathogens responsible for current respiratory and digestive disease and antibiotics or other medications to which they are susceptible. A thorough discussion with the veterinarian should lead to updated protocols to prevent or identify, diagnose, and treat respiratory and digestive disease. Also, this is the time to review incidence and response to foot conditions experienced in the yard: foot rot or digital dermatitis. Cattle kept on feed longer will have a greater propensity for late-season digestive and foot disorders.
Personnel responsible for reading bunks, riding pens, pulling and treating cattle should be reminded of the importance of their role in identifying cattle displaying signs of illness or any other condition. In some cases, a discussion on the implications of death and illness costs to the feedlot bottom line is in order.
Pen-riding protocols should be reviewed and posted in the office and at hospital sites. Personnel tasked with administering disease-prevention and treatment should also be presented protocols verbally and in writing.
Preparations for cattle arriving at the yard include cleaning and disinfecting water troughs thoroughly before arrival and at regular intervals (seven days or fewer) after arrival. At the processing or hospital facility, thorough cleaning, disinfecting and greasing equipment is recommended. Also, at the hospital or processing facility, managers should make sure that tagger and tag removal equipment, refrigerator, vaccine cooler and equipment to administer vaccines, antibiotics, implants and dewormers is in good working order and resupplied.
Other items to keep in mind, in addition to recommendations by consulting nutritionists and veterinarians: water supply should be ample, and from a fresh and clean source, and strategic inclusion of long grass or mixed legume-grass hay during the first days after arrival helps attract calves to the bunk.
Although another difficult year growing and finishing cattle awaits, it is my hope that these observations will help in preparing for it. Although we are assured nothing, not being prepared will ensure we fail.
Alternative feeds: There are no bargainsPrice drivers for alternative feeds are the cost of energy or protein from traditional energy (corn grain) or protein (soybean meal) sources. In areas of high feed demand, alternative feed prices closely track these two commodities. In other words, generally, there are no bargains in distillers grains and solubles, corn gluten feed, soyhulls, small grains or grain screenings. If the reader finds one, they must proceed with caution: either quality (mold, excessive moisture content, toxins or anti-quality factors may be present) or quantity (insufficient supply) may be a feature of the bargain. One may expect bargains where feed demand is less but the cautionary statement above should always be considered.
A simplified nutrient composition table of alternative feed ingredients, based on dry matter (DM) concentration, with respective opportunity price based on corn grain priced at $7/bu, is provided for a quick reference below. Energy is presented as total digestible nutrients (TDN) to simplify comparisons between feed ingredients. Crude protein (CP) is presented as total protein content (nitrogen concentration times 6.25).
When evaluating alternative feeds, reference feeds are used to determine price based on the reference feed nutrient content. For energy pricing, corn grain is the reference feed while for protein pricing, soybean meal is the reference feed. The simplicity of the method described here is derived from pricing feeds based on their energy content only and correcting for moisture in the feed being appraised.
If corn grain is the reference, then the energy concentration (TDN) of each alternative feed relative to that of corn grain represents the relative energy value of the respective feed to that of corn grain. The proportional energy value of milo to that of corn is 98% (86% TDN/88% TDN). Similarly, wet distillers grains is represented in the table as having 102% the energy value of corn grain (90% TDN/88% TDN).
Concurrently, most alternative feed sources are traded on a dollar per ton basis. When determining the price as dollars per ton for corn grain, one simply divides the dollar per bushel price by 56 to determine dollar per pound price. This value is then multiplied by 2,000 to obtain the dollar per ton price of corn grain. With corn grain at $7/bu, this calculation yields a value of $250/ton of corn grain.
When relating corn grain price as dollars per ton to its corresponding value as dollars per bushel, one obtains a factor of 36 ($250/$7). Let us name this factor the multiplier factor. This multiplier factor is used to determine the opportunity price of an alternative to corn grain; the maximum price one could pay for a feed of similar energy and moisture content as corn. A column referencing the dry matter content of each feed is used to demonstrate how much dry matter is derived from each ingredient relative to corn grain. A ton of wet corn distillers grains delivers only 38% of the dry matter delivered by a ton of corn grain.
An appropriate example of this application is the determination of the opportunity price of dry distillers grains based on corn grain price and this multiplying factor ($7 x 36 = $250). Yet, the table shows an opportunity price of $260 not $250/ton for dry distillers grains. This is because dry distillers grains contains less moisture (more dry matter) than corn grain: a ton of dry distillers grains yields 5% more dry matter. Therefore, the multiplier factor is adjusted once for energy and once for moisture content as follows: 36 * 1.00 * 1.05%. This yields a factor to use for dry distillers grains of 38. Therefore, one can pay as much as $263/ton of dry distillers grains when corn is priced at $7/bu.
Applying the same concept to pricing wet distillers grains using corn grain price at $7/bu would dictate that we use a multiplier factor of 14. This factor is derived from multiplying the corn grain multiplier factor (36) by the energy adjustment for greater concentration of energy in wet distillers grains (102%) but lower dry matter concentration in this alternative feed (38%): 36 * 1.02 * 0.38 = 14. Therefore, one could pay as much as $97/ton for wet distillers grains when corn grain is priced at $7/bu.
A current review of corn grain and corn co-product prices for various states can be used for a comparison with values generated in the table. In Nebraska, average price for corn grain was $7/bu and average price for dry, modified wet and wet distillers grains was $268, $132 and $97/ton, respectively. Comparing these average prices with values reported in the table, one would conclude that, of these three co-products, the best option are dried and modified wet distillers grains.
Reviewing another website that displays regional prices for various alternative feeds, one might declare that options to purchase alternatives to corn grain are few. Soyhull prices listed on that website are high relative to the opportunity price of $231/ton discovered for this feed. The price range for corn gluten feed of $225 to $260/ton FOB at Iowa plants represents a possible opportunity as determined by this method.
When pressed to make a fast determination on the price acceptability of a given alternative feed, one could further simplify this method by remembering three multiplying factors (rather than going through the steps of calculating them): 36 for feeds that have similar energy and dry matter content as corn grain, 20 for feeds that have similar energy as corn but contain 50% moisture, and 15 for feeds that have similar energy as corn but contain 35% moisture.
DiCostanzo is a beef systems educator for Cuming County Extension, University of Nebraska.
