Without question, the landscape of the beef business has changed. All of us are fully aware of the impact of rising feed, fuel and fertilizer prices, and much discussion has taken place (and will continue to take place) on how energy, economic, and many other policies and factors will affect our industry. "How will this impact us in Kentucky?" is a primary topic of discussion amongst all of us with a vested interest in the beef industry. While none of us have a crystal ball, the hard facts tell us that annual production costs are up $100-150 per cow for many Kentucky producers. As we work through the many external factors that will shape our industry's future, dealing with the realities of production costs and today's market are most imperative. Following are a few factors to evaluate that relate to both production costs and gross income. While none are silver bullets, they represent fundamental approaches to controlling costs and optimizing value, which are key in today's beef business climate.
Ag Notes: Changing times -- Management considerations for cow-calf producers
Maximize forage utilization
Our ability to grow and utilize forage has long been the strength and foundation of our cattle industry. The price of grain and supplemental feed dictate that we make prudent use of our forage resources. Evaluate your stocking rate and carrying capacity of your pastures and forage system, and make use of grazing and forage management systems that maximize the utilization of forage resources. Stockpiling for fall-winter grazing, pasture rotation and proper soil/forage plant management are examples that have stood the test of time and proven to be effective and economically sound. From an economic perspective, running a few less cows on the available forage system may be advantageous to a larger herd size that requires more purchased supplemental feed. Simply put - forage is our cheapest and best resource, maximize the use of it.
Make winter feed plans now
Compared to a year ago, most areas of Kentucky are in much better shape regarding hay inventory. Now is the time to inventory both the quantity and quality of your hay on hand.
Hay yields were high in many areas, although due to weather conditions some hay may not have been put up optimally, thereby impacting quality. Quality will impact the need for more expensive supplements this winter and next spring, depending on the production stage of the cows. Proper inventory of hay quantity and quality will allow for more accurate planning of supplement purchases that will be needed to compliment the forage.
Don't forget to account for stockpiled forage that may be available in the fall-winter as well potential changes in cow herd size.
Once a plan is put together, begin the process of looking for opportunities to acquire necessary supplements, including grain. All indications are that the grain markets will continue to be very volatile through fall harvest. Watch these markets closely and work with suppliers to acquire what is needed at an optimum time.
Add value to the calf crop
Annual feeder calf sales represent the majority of the income for most cow-calf operations. There is substantial evidence to support that there are several strategies that enhance returns on these calves. Programs such as the Certified Preconditioned for Health program, which documents and verifies a management program (vaccinations, weaning, genetics) and offers cattle in load lots, provide an opportunity to enhance value of the calf crop. While these programs do require additional input costs, including labor, these additional costs are offset by the additional value received for the calf. In recent years, the value difference has grown between calves sold through programs such as CPH compared to freshly weaned calves with no reputation. With the increased costs of gain and tight margins being experienced by feedyard operators, many expect the value differentiation for feeder cattle to be even stronger.
Additionally, there is speculation that feedyards will be increasingly interested in placing heavier calves. For certain, there will be a premium on cattle that will stay healthy and have a reputation.
Evaluate cow herd
Open cows (regardless of age) will not generate revenue through calf sales in the coming year, and consume forage that could be used to support other animals in the herd. Pregnancy checking the cow herd has always been an economically sound management practice. Given the carrying costs of cows, working with a veterinarian to identify open females will provide significant return on investment. All cows should be evaluated as to their productivity and profitability. Generally, cows with the poorest returns are those that produce less pounds of saleable calf and calve late.
